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2023 (11) TMI 11 - AT - Central ExciseExcisability - spent solvent (DMF) arising during course of manufacturing of dutiable Sucralose - reversal of CENVAT Credit as per the provisions of Rule 3 (5A) of the CENVAT Credit Rules, 2004 - clearance of waste and scrap arising out of items on which CENVAT Credit was not availed at the time or purchase and on items which were packing material of inputs which were used in the manufacture of dutiable goods - Personal penalties imposed under Rule 26 of Central Excise Rules, 2002. HELD THAT - So far as the dutiability of the spent solvent is concerned same has already been decided by Hon ble Apex Court in decision of COMMISSIONER VERSUS AUROBINDO PHARMA LTD. 2011 (5) TMI 925 - SC ORDER , the Hon ble Supreme Court s decisions has endorsed the findings given by Hon ble Andra pradesh High Court in case of above mentioned party s case in COMMISSIONER OF C. EX., HYDERABAD-I VERSUS AUROBINDO PHARMA LTD. 2010 (10) TMI 175 - ANDHRA PRADESH HIGH COURT where it was held that the department accepted the assessee s contention that at the relevant period the spent solvent is not a marketable product after process of manufacture. Thus, the waste solvents is not dutiable and therefore the demand of Central Excise duty amounting to Rs. 2,02,242/- is not sustainable. Dutiability of the waste scrap cleared by the appellant - HELD THAT - The department has not produced any evidence to contradict the submissions which have been made by the appellants that the waste and scrap which have been cleared without payment of duty has arisen from the materials on which CENVAT Credit has not been availed by the appellant - Similarly for the waste of drums and packaging material which have been cleared without payment of duty. It is found that matter is no longer res integra as Hon ble Supreme Court in case of COMMISSIONER OF CENTRAL EXCISE VERSUS WEST COAST INDUSTRIAL GASES LTD. 2003 (4) TMI 110 - SUPREME COURT has already decided the matter holding that waste in form of drums/ barrels in which the raw material has been received by the manufacturer could not be treated as waste arising out of processing of the inputs for which the credit has been taken and therefore no duty can be demanded on the same. Personal penalties imposed under Rule 26 of Central Excise Rules, 2002 - HELD THAT - Since the issue on merit is being decided in favour of the appellant as in the foregoing paras the cause of penalizing the appellants get extinguished automatically and therefore we hold that no penalty is imposable on the appellants. Accordingly the appeals are allowed. The demand on the above mentioned two issues are not maintainable and therefore impugned order set aside - appeal allowed.
Issues Involved:
1. Excisability of "spent solvent" (DMF). 2. Reversal of CENVAT Credit on clearance of waste and scrap. 3. Personal penalties imposed under Rule 26 of Central Excise Rules, 2002. Summary: 1. Excisability of "Spent Solvent" (DMF): The Tribunal addressed whether the demand of Central Excise duty of Rs. 2,02,242/- on spent solvent (DMF) arising during the course of manufacturing of dutiable "Sucralose" is sustainable. The learned Advocate for the appellant argued that "spent solvent" is not excisable, citing the Supreme Court decision in Commissioner Vs. Aurobindo Pharma Ltd., which held that "spent solvent" is not taxable. The Tribunal upheld this view, stating that the issue is no longer res integra and has been consistently decided in favor of the assessee in multiple cases, including CCE, Hyderabad Vs. Aurobindo Pharma Ltd. and M/s. Orchid Chemicals & Pharmaceuticals Ltd. Therefore, the demand of Rs. 2,02,242/- was not sustainable. 2. Reversal of CENVAT Credit on Clearance of Waste and Scrap: The Tribunal examined whether credit of Rs. 13,84,146/- needs to be reversed under Rule 3(5A) of the CENVAT Credit Rules, 2004 on the clearance of waste and scrap arising from items on which CENVAT Credit was not availed. The appellant contended that the waste and scrap, including MS, SS, and GI scraps, arose from parts and components of capital goods on which no CENVAT Credit was taken. The Tribunal found no evidence from the department to contradict this claim. It relied on the decision in M/s. Padmashri Dr. Vitthalrao Vikhe Patil SSK Vs. CCE, Aurangabad, which held that waste and scrap generated during maintenance of machinery is not excisable if no CENVAT Credit was availed on the items. Similarly, waste from drums and packaging material was also deemed non-dutiable, supported by the Supreme Court decision in CCE Vs. West Coast Industrial Gases Ltd. Consequently, the Tribunal set aside the demand. 3. Personal Penalties: The Tribunal addressed the appeals of Shri J.D Gandhi & C.J. Lohani regarding personal penalties imposed under Rule 26 of Central Excise Rules, 2002. Since the main issues were decided in favor of the appellant, the cause for penalizing the appellants was extinguished. Therefore, no penalties were imposable, and the appeals were allowed. Conclusion: All three appeals were allowed, setting aside the impugned order-in-appeal. The Tribunal pronounced this decision in the open Court on 31.10.2023.
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