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2024 (9) TMI 1593 - AT - Central Excise100% EOU - Classification of spent solvent as waste or by-product - basic contention of the department was that the spent solvent emerging during the manufacturing process of bulk drugs is a by-product and not a waste and scrap and therefore, the appellant has wrongly availed the benefit of exemption N/N. 23/2003-CE dated 31.03.2003 - HELD THAT - The matter is no longer res-integra as the issue has already been decided by Hon ble Andhra Pradesh High Court in the case of COMMISSIONER OF C. EX., HYDERABAD-I VERSUS AUROBINDO PHARMA LTD. 2010 (10) TMI 175 - ANDHRA PRADESH HIGH COURT which has also been upheld by the Hon ble Supreme Court in COMMISSIONER VERSUS AUROBINDO PHARMA LTD. 2011 (5) TMI 925 - SC ORDER , where it was held that ' It has been clearly brought out that the spent solvents had already been utilized in the factory and latter it had undergone further purification for reuse. The excess spent solvents were sold to the outsiders, as it had lost its value and therefore, what was sold was not new goods but only spent solvents which had undergone certain purification process. Such purification process of chemicals has been held to be not a process of manufacture.' The impugned order-in-appeal is not sustainable in law and therefore set aside - appeal allowed.
Issues Involved:
1. Classification of spent solvent as waste or by-product. 2. Applicability of Notification No. 23/2003-CE. 3. Excisability and dutiability of spent solvent. 4. Consistency of departmental stance in similar cases. Issue-wise Detailed Analysis: 1. Classification of Spent Solvent as Waste or By-product: The appellant, a 100% Export Oriented Unit (EOU) engaged in manufacturing bulk drugs, contended that the spent solvent emerging during the manufacturing process is waste, not a by-product. The department argued that the spent solvent is a by-product and not waste, thus the appellant wrongly availed the benefit of Notification No. 23/2003-CE. 2. Applicability of Notification No. 23/2003-CE: The department issued a show cause notice demanding Central Excise duty of Rs. 45,42,195/- for the period 2009-10 to 2013-14, asserting that the appellant did not meet the conditions of Notification No. 23/2003-CE. These conditions include: - Goods cleared in Domestic Tariff Area (DTA) must be similar to those exported. - The total value of goods cleared into DTA should not exceed 50% of the free Board Value of exports. - The balance of production must be exported or disposed of in DTA per the Export and Import Policy. 3. Excisability and Dutiability of Spent Solvent: The appellant argued that the spent solvent is neither excisable nor dutiable under the Central Excise Act. The Tribunal referenced the Andhra Pradesh High Court's decision in Commissioner of C. Ex., Hyderabad-I vs. Aurobindo Pharma Limited, which held that spent solvents, having lost their value and not being new goods, are not dutiable. The Supreme Court upheld this decision, reinforcing that the spent solvent does not satisfy the twin tests of excisability. 4. Consistency of Departmental Stance in Similar Cases: The Tribunal emphasized that the issue is no longer res integra, citing the Andhra Pradesh High Court and Supreme Court rulings. It was noted that the department, having accepted the principle in earlier cases, cannot take a contrary stand in subsequent cases. The Tribunal cited several precedents, including Indian Oil Corporation Ltd. v. Collector of Central Excise and CCE, Hyderabad v. Novapan Industries Ltd., which established that the department must maintain consistency in its stance on similar issues. Conclusion: The Tribunal concluded that the matter is settled by higher judicial authorities, and the department cannot re-agitate the issue. The impugned order-in-appeal was set aside, and the appeal was allowed, following the established legal principles and precedents. The Tribunal's decision was pronounced in the open court on 27.09.2024.
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