1988 (1) TMI 216 - AT - Central Excise

Summary

Issues:
Liability of the appellants to Central Excise duty under Tariff Item 68 for Coal cinder sold between 1.4.1981 to 31.1.1983 and the legality of the personal penalty imposed against them.

Detailed Analysis:

Issue 1: Liability of Appellants to Central Excise Duty
The appeal questioned the liability of the appellants to Central Excise duty under Tariff Item 68 for the sale of Coal cinder between 1.4.1981 to 31.1.1983. The proceedings began with a show cause notice dated 17.10.83 based on Trade Notice No. 82-CE, classifying coal cinder as waste under Tariff Item 68. The appellants contested this classification, arguing that coal cinder was not excisable goods. The Additional Collector, after due procedure, found against the appellants and imposed duty and penalty. However, the appellants argued that coal cinder was waste material and not excisable, citing relevant case laws to support their position.

Issue 2: Legality of Personal Penalty
Apart from the liability for Central Excise duty, the appellants also challenged the personal penalty of Rs. 3,000 imposed against them for breaching Central Excise rules. The appellants denied the allegations, contending that coal cinder was not excisable goods and disputing the validity of Trade Notice No. 82-CE. The representatives of the appellants argued that the demand for duty and penalty should be set aside, relying on precedents that waste or scrap, even if sold, cannot be considered goods under Central Excise law.

Analysis of Arguments
During the appeal hearing, the appellants' representatives emphasized that coal cinder, being a residue of burning coal, was waste material and not excisable goods. They cited relevant decisions, including the Modi Rubber Ltd. case and the Collector of Central Excise, Allahabad v. Captainganj Distillery case, to support their argument that waste material, even if sold for a price, does not fall under the purview of excisable goods. On the other hand, the Departmental Representative argued that the meaning of cinder/slag, as per The Condensed Chemical Dictionary, and Rule 50 of the Central Excise Rules supported the classification of cinder as goods subject to duty.

Judgment
The Tribunal, after considering the arguments and precedents cited, concluded that coal cinder, being waste material, cannot be classified as excisable goods under Tariff Item 68. Referring to the decisions in the Modi Rubber Ltd. case and the Captainganj Distillery case, the Tribunal held that waste material, even if it brings revenue, does not qualify as excisable goods. Therefore, the impugned order demanding duty and imposing penalty was set aside, and the appeal was allowed in favor of the appellants. The Cross-objection filed by the respondent was dismissed as superfluous.

This judgment clarifies the distinction between waste material and excisable goods under Central Excise law, providing a significant interpretation of the classification of coal cinder and the applicability of penalties in such cases.