2018 (11) TMI 1080 - AT - Central Excise

CENVAT Credit - manufacture of dutiable as well as exempt goods - Bio-compost and Bio-super used as fertilizers, are classifiable under CETH 3101.00 attracting Nil rate of duty as per Sl.No.63 of the Notification No.04/2006-CE dt.01.03.2006 - demand of an amount equal to 10% / 5% of the value of these goods when they were cleared - Held that - The judgement of the Hon ble Madras High Court in EID Parry (I) Ltd. 2013 (3) TMI 366 - MADRAS HIGH COURT applies in the present case, where it was held that When spent wash and press mud had emerged as inevitable wastes during the process of manufacturing of final products viz., sugar and Denatured Ethyl Alcohol and the said wastes are combined and treated together to form another final product viz., bio-compost, the said final product cannot be brought under Rule 57CC - demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of Bio-compost and Bio-super under CETH 3101.00 for duty exemption.
2. Demand of payment equal to a percentage of the value of goods cleared without duty payment.
3. Imposition of penalty under Rule 15(2) of CCR 2004 read with Section 11AC of the Central Excise Act, 1944.

Analysis:

1. Classification of Bio-compost and Bio-super:
The appellants were involved in processing spent wash and press mud to produce Bio-compost and Bio-super used as fertilizers. The issue revolved around the classification of these products under CETH 3101.00 for duty exemption. The adjudicating authority initially held that the goods were liable for payment equal to a percentage of their value upon clearance. However, the appellants contended that similar cases had been decided in their favor by higher appellate forums, citing judgments such as CCE Pondicherry Vs EID Parry (I) Ltd. and CCE Tirunelveli Vs Dharani Sugars & Chemicals Ltd. The Tribunal, after considering these precedents, ruled in favor of the appellant, stating that the matter had been settled by higher forums, and set aside the impugned order.

2. Demand of payment without duty:
The show cause notices issued to the appellants proposed recovery of an amount equal to a percentage of the value of goods cleared without payment of duty. The adjudicating authority confirmed the demand of a total amount with interest and imposed a penalty under Rule 15(2) of CCR 2004 read with Section 11AC of the Central Excise Act, 1944. However, the Tribunal, after considering the settled matter and precedents in favor of the appellant, held that the impugned order could not be sustained. Consequently, the demand for payment without duty was set aside, and the appeal was allowed with consequential benefits, if any, as per the law.

3. Imposition of penalty:
In addition to the demand for payment without duty, the adjudicating authority imposed a penalty under Rule 15(2) of CCR 2004 read with Section 11AC of the Central Excise Act, 1944. However, the Tribunal's decision to set aside the impugned order also nullified the imposition of the penalty. The appeal was allowed in favor of the appellant, with any consequential benefits to be provided as per the law.

In conclusion, the judgment by the Appellate Tribunal CESTAT Chennai resolved the issues of classification, demand of payment without duty, and imposition of penalty in favor of the appellant based on settled matters and precedents, ultimately setting aside the impugned order and allowing the appeal.