2004 (2) TMI 117 - AT - Central Excise

Summary

Issues:
1. Whether the benefit of Notification No. 1/95-C.E. is to be denied in respect of inputs used in the manufacture of cotton waste during the production of cotton yarn.

Analysis:

1. The main issue in this appeal was whether the benefit of Notification No. 1/95-C.E. should be denied for inputs used in manufacturing cotton waste during the production of cotton yarn. The Departmental Representative argued that excise duty should be payable on cotton waste as it falls within the ambit of non-excisable goods. They cited the Proviso to Para 5 of the notification, which states that duty must be paid on articles like waste if they are not excisable. The argument was based on the premise that excisable goods are those specified in the Tariff Act and subject to duty. Since cotton waste is not subject to excise duty, it was considered non-excisable, and duty should be paid on it.

2. On the other hand, the opposing party contended that cotton waste is mentioned in Heading No. 52.02 of the Central Excise Tariff Act, with a nil rate of duty. Therefore, they argued that cotton waste should not be considered non-excisable goods as defined in the Central Excise Act. They also referred to a Supreme Court decision stating that goods exempt from duty do not become non-excisable. The argument was that since cotton waste is listed in the Tariff Act with a nil duty rate, it should be considered excisable goods.

3. The Tribunal considered both arguments and analyzed the relevant provisions. They referred to the Second Proviso to Para 5 of Notification No. 1/95-C.E., which requires duty payment on articles like waste if they are not excisable goods. The definition of excisable goods in the Central Excise Act includes goods specified in the Tariff Act and subject to duty. Since cotton waste is listed in the Tariff Act and subject to a nil duty rate, it was deemed excisable. The Tribunal also referenced a Supreme Court decision confirming that goods exempt from duty do not lose their excisable status. Therefore, the Tribunal rejected the appeal by the Revenue, concluding that cotton waste is excisable goods, and the duty under the notification was not applicable in this case.