2008 (2) TMI 159 - AT - Central Excise

Demand on floatation reject generated during the purification of lime stone by Froth Floatation Method - demand is contested mainly on the ground that the above Commodity is not excisable - department has not got any sample of the item tested so as to show that it is classifiable under Heading 68.07 as article - prima facie Floatation reject does not appear to satisfy the tests for excisability stay granted

Summary

Issues:
1. Demand of duty on "floatation reject" for the period 2002-03 to 2005-06.
2. Imposition of penalties under various provisions of law.
3. Classification of "floatation reject" under Heading 68.07 of the Central Excise Tariff Schedule.
4. Excisability of "floatation reject" based on manufacturing and marketability tests.

Analysis:

1. The Appellate Tribunal noted that the lower authorities demanded duty of over Rs. 26.5 lakhs from the appellants for "floatation reject" generated during the purification of limestone. The appellants contested the demand, arguing that the item is not excisable. The Tribunal observed that the item is subjected to chemical treatment for environmental purposes and ultimately disposed of by sale. The lower authorities imposed penalties along with the duty demand.

2. The representative of the company contended that "floatation reject" does not meet the criteria for excisability as it is neither manufactured nor marketable. The company argued that the item is not an 'article' as required for classification under Chapter 68.07 of the Central Excise Tariff Schedule. The learned SDR, however, classified the item under Heading 68.07 and relied on a Supreme Court decision in a similar matter.

3. After reviewing the submissions, the Tribunal found a prima facie case for the appellants against the duty demand on "floatation reject." The item did not appear to satisfy the excisability tests, and the department had not provided any sample for classification under Heading 68.07. The Tribunal emphasized that only 'articles' are classifiable under this entry, and the lower authorities did not categorize the commodity as an "article." The case law cited by the SDR was not directly applicable to industrial waste like "floatation reject."

4. Consequently, the Tribunal decided in favor of the appellants, waiving the pre-deposit and staying the recovery of duty and penalty amounts. The judgment highlighted the lack of evidence supporting the excisability of "floatation reject" and the absence of classification as an 'article' under Heading 68.07.