2019 (2) TMI 10 - AT - Central Excise

100% EOU - excisability - spent solvents - Post manufacturing process, spent solvents arise as mother liquor - clearances of sludge, residue of oil that remains in the tank in the form of sludge - Held that - The Hon ble Apex Court in the case of M/s. Grasim Industries Ltd. 2011 (10) TMI 2 - SUPREME COURT OF INDIA , where it was held that the metal scrap and waste arising out of the repair and maintenance work of the machinery used in manufacturing of cement, by no stretch of imagination, can be treated as a subsidiary product to the cement which is the main product - impugned order cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Tax liability on clearances of spent solvents and sludge residue.

Analysis:
The case involved a 100% Export Oriented Unit (EOU) engaged in manufacturing Bulk Drugs. The dispute arose regarding the tax liability on the clearances of spent solvents and sludge residue. The Department contended that duty liability should be discharged on the clearances of these by-products. The appellant argued that the issue is settled by various judicial decisions. The appellant relied on several case laws to support their position, emphasizing that excise duty is levied on goods manufactured in India. The Tribunal examined the facts and concurred with the appellant's argument. The Tribunal referred to a judgment by the Hon'ble Apex Court, which clarified the conditions for imposing excise duty, emphasizing that goods must be manufactured in India to be subject to excise duty. The Tribunal concluded that the impugned Orders were not sustainable in light of the legal principles established by the judicial precedents cited. Therefore, the appeals were allowed, and any consequential benefits were granted as per the law.

This judgment highlights the importance of the manufacturing process in determining excise duty liability. It underscores that goods must be produced or manufactured in India to be subject to excise duty. The Tribunal's decision was based on a consistent legal principle established by the Hon'ble Apex Court and various Tribunal decisions. The judgment provides clarity on the interpretation of the term "manufacture" in the context of excise duty, emphasizing the transformation of raw materials into a new and distinct product. Overall, the judgment reaffirms the legal requirements for imposing excise duty and sets a precedent for similar cases involving the tax liability on manufacturing by-products.