2021 (1) TMI 1057 - AT - Central Excise

Levy of Excise Duty - lime sludge obtained as residue - Department was of the view that appellant is liable to pay excise duty on the lime sludge as it is classifiable under CETH 3825 - HELD THAT - The issue is with regard to demand of excise duty on lime sludge sold by the appellants. It is not the case of the department that the appellant has manufactured lime sludge. It is only generated in the process of manufacture of paper. The decision in the appellant s own case, SESHASAYEE PAPER AND BOARDS LTD. VERSUS COMMISSIONER OF C. EX., SALEM 2016 (12) TMI 1690 - CESTAT CHENNAI , has held that lime sludge is not subject to excise. The demand cannot sustain - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of excise duty on lime sludge sold by the appellants.

Analysis:
The case involved the demand of excise duty on lime sludge sold by the appellants, who were engaged in the manufacture of paper and paper boards. The Department contended that the lime sludge was classifiable under CETH 3825 and hence, excise duty was applicable. Show cause notices were issued, and the original authority confirmed the demand along with interest. On appeal, the Commissioner (Appeals) upheld the decision, leading to the current appeals.

The appellants argued that a similar issue had been decided in their favor in a previous case, citing the decision in Seshasayee Paper and Boards Ltd. Vs CCE Salem. They highlighted that the Tribunal in that case had relied on the decision of the Hon'ble Apex Court in UOI Vs DSCL Sugar Ltd., where it was held that waste generated in the course of manufacture is not excisable as it is not "manufactured" by the assessee. The appellants also pointed out that the amendment to Section 2(d) of the Central Excise Act, 1944, which brought goods capable of being marketed under excisable goods, was not applicable to the current case as it was prior to the amendment date.

The Tribunal, in its analysis, referred to the previous decision in the appellant's own case and reiterated that the lime sludge generated in the process of manufacturing paper was not subject to excise duty. The Tribunal emphasized that the law at the time of the case did not fasten the appellant with liability, and charging provisions could not be loosely interpreted to support the Revenue's proposition. Therefore, considering the facts and the previous decision, the Tribunal held that the demand for excise duty on lime sludge could not be sustained. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential reliefs as per law.

In conclusion, the judgment by the Appellate Tribunal CESTAT CHENNAI, delivered by Hon'ble Ms. Sulekha Beevi C.S. and Hon'ble Shri P. Anjani Kumar, ruled in favor of the appellants, stating that the lime sludge generated in the manufacturing process was not subject to excise duty, aligning with the previous decision and legal provisions applicable during the relevant period.