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2024 (6) TMI 619 - AT - Central ExciseClassification of goods - polyester waste - to be classified under Chapter heading 3907 or under Chapter heading 5505? - differential cenvat credit on clearances of waste raw materials - HELD THAT - It is observed that all type of waste purchased by the respondent were generated by the suppliers during production of textiles fibers, textiles yarns. The suppliers have classified such waste under Tariff heading 55051090 and paid excise duty accordingly. However in the present matter revenue try to re-classify the product under different chapter heading. To our mind this proposition of the law is incorrect. The assessee/respondent purchased the disputed raw materials from their suppliers and suppliers had classified their final products as per the classification indicated on the invoices. There is no dispute at the supplier end as regards the classification of the products purchased by the respondent. It is settled law that once the classification is not challenged at the end of the seller, the same goods cannot be re-classified at the recipient end. Since respondent have not availed the exemption notification No. 4/2006-CE question of application of rule 6 does not apply. Moreover in respect of the goods respondent have admittedly paid the excise duty, once the excise duty has been paid the Cenvat cannot be denied. In the present case, serial No. 78 of Notification No. 4/2006-CE was not absolute exemption and have conditions. It cannot be said that serial No. 78 of Notification No. 4/2006-CE provides absolute exemption. In such circumstance, excise duty was therefore correctly paid by the respondent and Cenvat Credit of the inputs was also admissible. In our view Excise Duty paid cannot be appropriated under Section 11D of the Act. Demand of differential Cenvat Credit of Rs 3,12,27,981/- - HELD THAT - Sub-rule (5)of Rule 3 of Cenvat Credit Rules 2004 applies only when the inputs which are brought into the factory is now to be removed in the same condition i.e As Such in their original condition. In the instant case, it is on record that the input is not removed, as such from the respondent premises but after the various process the resultant goods obtained in form of residual waste were cleared and therefore the said Rule has no application to the facts of this case - the revenue has not produced any corroborative documentary evidences to prove that the respondent had cleared the waste raw materials as such. Therefore the demand of differential Cenvat Credit is legally not sustainable and demand in the present case was rightly dropped by the adjudicating authority. Demand of Rs. 1,07,88,395/- - it is the revenue s case that the respondent s general manager during the recording of statement on 12.12.2014 could not explain or clarify who were the persons to whom residual waste was sold under the few of invoices at Rs. 1. per kg., and he also agreed that as per RTO reports etc., the vehicle number shown in the sale invoice were not for vehicles capable of being used for transportation - HELD THAT - In the present matter revenue has not produced any evidence to show that the respondent had cleared Polyester Staple Fibre in guise of residual waste. As Tribunal in the case of Kothari Pouches Ltd. v. CCE, New Delhi 2000 (9) TMI 177 - CEGAT, NEW DELHI held that confirmation of demand entirely on the basis of documents of the transporters, without any independent corroborating evidence cannot be upheld. It is well settled law that charges of clandestine removal are serious charges and are required to be established by production of positive and tangible evidence. The same cannot be upheld on the basis of surmises and conjecture. There has to be some cogent evidences so as to prove such charges and the same cannot be simplicitor based upon third parties documents and the statement of transporters - In such circumstance and lack of evidences, since the Commissioner has recorded the specific findings that clandestine removal of goods has not been proved by the Department with any tangible evidence and dropped the demand in favour of the respondent, it is not found appropriate to interfere with the said findings in the impugned order at this juncture. The department s appeals are found devoid of merit. Accordingly, the impugned order is upheld - appeals filed by the revenue are dismissed.
Issues Involved:
1. Classification of Polyester Waste 2. Availment of Cenvat Credit 3. Demand of Differential Cenvat Credit 4. Demand of Central Excise Duty on Finished Goods 5. Validity of Authorization by Review Committee Summary: 1. Classification of Polyester Waste: The primary issue was whether polyester waste should be classified under Chapter Heading 3907 instead of 5505. The Tribunal found that the suppliers classified the waste under 55051090 and paid excise duty accordingly. It was held that once the classification is not challenged at the supplier's end, it cannot be reclassified at the recipient's end. The Tribunal relied on settled law and previous judgments to support this conclusion. 2. Availment of Cenvat Credit: The Revenue argued that the respondent was not entitled to avail Cenvat Credit on raw materials used for manufacturing fully exempted goods under Notification No. 4/2006-CE. The Tribunal observed that the exemption under Sl. No. 78 of the Notification was conditional and not absolute. Since the respondent did not avail the exemption, they were entitled to Cenvat Credit. The Tribunal emphasized that Section 5A(1A), which mandates non-payment of duty on absolutely exempted goods, was not applicable here due to the conditional nature of the exemption. 3. Demand of Differential Cenvat Credit: The Revenue contended that the respondent cleared raw materials as such, without any manufacturing process, and thus was not entitled to Cenvat Credit. The Tribunal found that the respondent undertook various processes like segregation, cleaning, and packing, which constituted manufacturing. The Commissioner's finding that the respondent did not clear raw materials as such was upheld, and the demand for differential Cenvat Credit was deemed unsustainable. 4. Demand of Central Excise Duty on Finished Goods: The Revenue alleged clandestine removal of usable polyester staple fiber in the guise of residual waste. The Tribunal found that the Revenue failed to provide concrete evidence of such clandestine removal. The Tribunal emphasized that allegations of clandestine removal must be proved beyond a reasonable doubt with tangible evidence. The Commissioner's decision to drop the demand due to lack of evidence was upheld. 5. Validity of Authorization by Review Committee: The respondent argued that the authorization for filing appeals by the Review Committee was defective as there was no meeting of minds between the Chief Commissioners. The Tribunal did not find it necessary to delve into this issue in detail, as the appeals were dismissed on substantive grounds. Conclusion: The Tribunal upheld the Commissioner's order, rejecting the Revenue's appeals and confirming that the respondent was entitled to classify the polyester waste under Chapter Heading 55051090, avail Cenvat Credit, and that there was no evidence of clandestine removal of goods. The appeals filed by the Revenue were dismissed, and the cross-objections were disposed of accordingly.
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