2003 (4) TMI 148 - AT - Central Excise

Excisability - Marketability - Waste - Cenvat/Modvat - Capital goods - Penalty - Imposition of

Summary

Issues:
Classification of waste sugar and waste paper for duty liability, applicability of penalty under Section 11AC of the Central Excise Act, imposition of penalty under Rule 9 of the Central Excise Rules, 1944.

Classification of Waste Sugar and Waste Paper:
The appellant argued that waste sugar and waste paper are not liable to duty as they are not specified in the Central Excise Tariff and do not qualify as manufactured products. They contended that waste sugar should be classified under Heading 23.01 with a nil rate of duty, not under Heading 1701.90. However, the tribunal ruled that waste sugar is appropriately classifiable under Heading 1701.90 as per the Tariff and is not covered by Chapter 23. Similarly, waste paper was correctly classified under sub-heading 4702.90. The tribunal held that duty of excise is payable on these waste products when sold by the appellants, rejecting the argument that they are non-excisable.

Penalty Under Section 11AC and Rule 9:
The appellant challenged the imposition of penalties under both Section 11AC of the Central Excise Act and Rule 9 of the Central Excise Rules, 1944 simultaneously. The tribunal agreed that both penalties cannot be imposed concurrently. While upholding the duty liability on waste products, the tribunal deemed the penalties imposed as excessive. To ensure justice, the tribunal directed the appellants to pay a reduced penalty of Rs. 25,000 only, considering the high amount initially imposed.

Conclusion:
The appellate tribunal upheld the duty liability on waste sugar and waste paper, rejecting the appellant's classification arguments. It clarified the applicability of penalties under Section 11AC and Rule 9, reducing the penalty amount to Rs. 25,000 for the appellants. The appeal was disposed of with these decisions, providing clarity on duty liability and penalty imposition in the case.