2004 (4) TMI 109 - AT - Customs

Summary

Issues: Classification of waste materials for Central Excise Duty

1. Classification of waste materials under Central Excise Tariff Act:
The case involved the classification of waste materials by the appellants, engaged in the manufacture of Ferro Alloys, under the Central Excise Tariff Act. The Department contended that the waste materials, including Ferro Manganese, Ferro Silicon, Ferro Chrome, sand, etc., should be classified under sub-heading 7204.90 based on Rule 3(b) of the Rules for Interpretation of the Schedule to the Central Excise Tariff Act. The appellants argued that the waste cleared by them contained only 2 to 5% of Ferro Alloys and did not satisfy the criteria for classification under the said sub-heading.

2. Marketability of waste materials:
The Department argued that since the waste was being sold at Rs. 250/- per metric ton (PMT), it should be considered a marketable commodity. The appellants contended that the waste, comprising mostly of sand, clay, charcoal fine, and coke fine, was being sold below the tariff rate of Rs. 800-1000 PMT, indicating that it was not a marketable commodity as per legislative intent.

3. Interpretation of Note 8(a) of Section XV:
The appellants relied on Note 8(a) of Section XV of the Central Excise Tariff Act, which defines waste and scrap as metal waste and scrap arising from the manufacture of metals and metal goods, not usable due to breakage, cutting up, wear, or other reasons. They argued that since the waste contained only 2 to 5% of Ferro Alloys, it did not meet the criteria for classification under Heading 7204.90.

4. Burden of proof and marketability:
The Tribunal noted that the Department failed to produce evidence showing that the waste materials should be classified as Ferro Alloys under the Central Excise Tariff Act. It emphasized that the waste and scrap should have a higher metal content as per Note 8(a) of Section XV, which was not the case with the waste in question. The Tribunal also referred to past judgments, including those of the Apex Court, to support the appellants' argument that the waste materials were not marketable commodities and did not meet the criteria for classification under the relevant heading.

In conclusion, the Tribunal found merit in the appellants' contentions that the waste materials in question did not qualify as waste and scrap for classification under the specified Chapter Heading. The impugned orders were deemed not legal and proper, leading to their setting aside by allowing the appeal.