2019 (1) TMI 235 - AT - Central Excise

Waste product or not - gad, sludge, acid oil and spent earth, etc. - N/N. 89/95 CE dated 18.05.1995 - whether the impugned by-products arising in the course of said crude vegetable oils are to be treated as waste or not? - Held that - This issue has been dealt with by this Tribunal in Ricela Health Foods Ltd. Vs. CCE, Chandigarh & Allahabad 2018 (2) TMI 1395 - CESTAT NEW DELHI where it was held that the removal of unwanted materials resulting in products like gum, fatty acid and wax (as therein) cannot be called as the process of manufacture of these products and the same cannot be considered to be manufactured excisable goods. It was further held that same were merely waste and thus eligible for exemption under Notification No. 89/95-CE. The Order confirming the demand even for the normal period is therefore not sustainable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to Order of Commissioner (Appeals) regarding duty payment on goods other than refined edible oil under Notification No. 115/75-CE dated 30.04.1975 despite withdrawal of exemption by Notification No. 21/2006-CE dated 01.03.2006. Reduction of penalty by Commissioner (Appeals). Interpretation of exemption under Notification No. 89/95-CE for waste products during manufacturing of refined oil. Judicial discipline in considering precedents for duty liability.

Analysis:
The appellant contested two Show Cause Notices demanding duty payment for goods other than refined edible oil, cleared under an outdated exemption notification. The Commissioner (Appeals) upheld the demand for the normal period and reduced the penalty. The appellant argued for complete exemption under Notification No. 89/95-CE for waste products during oil refining, citing a previous Tribunal decision. The Department supported the impugned order, emphasizing the reasoning provided by the Commissioner (Appeals).

The Tribunal analyzed whether the waste products like gad, sludge, acid oil, and spent earth emerging during oil refining should be considered as exempted under Notification No. 89/95-CE. Citing precedents like Ricela Health Foods Ltd. and CCE, Hyderabad Vs. Priyanka Refineries Ltd., the Tribunal concluded that these by-products are not manufactured excisable goods and are eligible for exemption. The Commissioner (Appeals) was faulted for not following proper judicial discipline by relying on a precedent overruled by a Larger Bench. Consequently, the demand even for the normal period was deemed unsustainable, and the appeal was allowed.

In summary, the Tribunal ruled in favor of the appellant, holding that waste products arising during the manufacturing of refined oil are exempted under Notification No. 89/95-CE. The Commissioner (Appeals) was criticized for not adhering to judicial discipline in considering precedents. The demand for duty payment, even for the normal period, was set aside, and the appeal was allowed.