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Issues:
1. Challenge to show cause notice regarding excise duty on waste products. Analysis: The petitioner, a manufacturer of paper and paper boards, addressed a communication to the Assistant Collector of Central Excise regarding the sale of waste products generated during the manufacturing process. The communication admitted that causticizing lime sludge was marketed by the petitioner, leading to a show cause notice from the third respondent. The notice demanded classification under Tariff Item 68 and payment of duty on the lime sludge cleared without following excise formalities. The petitioner challenged this notice through a writ petition, arguing that causticizing lime sludge should not be considered excisable goods as it is a waste product. The petitioner relied on a High Court judgment stating that refuse or scum generated during manufacturing cannot be classified as a byproduct. However, the court referred to a Supreme Court decision which affirmed that waste and scrap can be considered capable of being produced or manufactured. The court concluded that waste and scrap are by-products of the manufacturing process and upheld the imposition of excise duty on such items. Therefore, the writ petition was dismissed, and no costs were awarded. This judgment addresses the issue of whether waste products generated during manufacturing processes, specifically causticizing lime sludge, are liable for excise duty. The court considered the petitioner's argument that waste should not be classified as excisable goods based on a High Court judgment. However, the court referenced a Supreme Court decision affirming that waste and scrap can be considered products of the manufacturing process and are subject to excise duty. The court emphasized that waste and scrap are integral parts of manufacturing, and legislative competence allows for their classification as excisable goods. Consequently, the court dismissed the writ petition challenging the show cause notice and upheld the imposition of excise duty on waste products like causticizing lime sludge.
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