2008 (2) TMI 62 - AT - Central Excise

Appellant s contention that waste generated by way of sweeping the floor could not be considered as having been manufactured by the appellant, is sustainable hence, demand cannot be confirmed on ground that they have not filed classification list/declaration under Section 173B for such waste and scrap with intention to evade duty - Invocation of extended time-limit for demand of duty is not justified - appeal is allowed on the limitation

Summary

Issues: Appeal against duty demand on sale of waste and scrap, classification of waste as manufactured goods, imposition of penalty on appellant and Works Manager, invocation of extended time-limit for demand of duty.

In this case, the appellant, a manufacturer of laboratory instruments, sold waste and scrap of different categories during a specific period. The Original Authority held that the waste and scrap constituted manufactured goods, and duty was demanded along with penalties. The Commissioner (Appeals) upheld the duty demand on the appellant but set aside the penalty on the Works Manager. The appellant argued that the waste generated during the manufacturing process, collected during floor sweeping, was not manufactured goods and was sold as scrap without proper identification or segregation. The appeal was based on the grounds of merit and limitation.

The Tribunal considered the submissions and agreed with the appellant that the waste generated through floor sweeping could not be considered as manufactured by them. Therefore, the finding that duty evasion was intentional due to the lack of classification list or declaration was deemed unsustainable. The Tribunal also found the invocation of an extended time-limit for the demand of duty unjustified. Consequently, the appeal was allowed based on the limitation issue.

The judgment highlights the importance of correctly classifying waste and scrap generated during manufacturing processes and the implications of duty demands on such materials. It emphasizes the necessity of proper identification and segregation of scrap items to avoid duty evasion allegations. Additionally, the judgment clarifies the circumstances under which the invocation of an extended time-limit for duty demand can be considered unjustified.