1990 (8) TMI 147 - HC - Central Excise

Summary

Issues:
Challenge to order declining revision application regarding payment of duty on waste during manufacturing of nylon yarn.

Analysis:
The petitioners, a Private Limited Company, challenged an order declining their revision application regarding the payment of duty on waste generated during the manufacturing of nylon yarn. The waste is an unavoidable byproduct of the manufacturing process, occurring at different stages such as polymerisation, spinning, take up waste, and draw twister waste. The polyamide chips produced from this process are intended for the manufacture of nylon yarn for fishing nets and parachute cords, which are dutiable under Item 15A of the Central Excises and Salt Act, 1944. The Central Government had exempted these polyamide chips from excise duty if intended for specific use, as certified by the Collector of Central Excise.

The petitioners argued that waste should not attract duty under Item 15A as waste is not a product that can be assessed for excise duty. They relied on a Delhi High Court decision supporting their stance and pointed out that waste was only included in Item 15A after a subsequent amendment in 1982. The Court agreed with the petitioners, emphasizing that waste or scrap should be explicitly mentioned in the tariff item to be liable for duty. The Court held that waste generated during the manufacturing process, not as a result of a new article emerging, should not be subject to excise duty. The Court referenced the post-1982 Item 15A, which specifically included waste and scrap, further supporting the petitioners' argument.

Consequently, the Court allowed the petition, setting aside the orders of the Assistant Collector of Central Excise, Pune, the Collector of Central Excise, Pune, and the Government of India. The Court clarified that the duty liability on waste arises only after the amendment to Tariff Item 15A. The petitioners succeeded in their challenge, and no costs were awarded in the matter.