1989 (10) TMI 164 - AT - Income Tax

Summary

Issues:
- Confiscation of HDPE circular bag waste and HDPE laminated fabric waste
- Imposition of Central Excise duty and penalty
- Allegation of suppression of facts and intention to evade payment of duty
- Adjudication on excisability of waste material

Confiscation and Imposition of Duty:
The appeal was filed against the order of the Collector of Central Excise confiscating HDPE circular bag waste and HDPE laminated fabric waste, along with the imposition of Central Excise duty and penalty. The Central Excise Department alleged that the appellants suppressed the fact of manufacturing and clearing these items without following proper procedures and without paying the required duty. A show cause notice was issued invoking relevant sections of the Central Excises & Salt Act. The Collector found the allegation of manufacture and non-accountal of the items to be proved. The Collector emphasized that the appellants failed to inform the Department about the waste material generated during manufacturing, which constituted suppression of facts. The appellants' defense claiming lack of tariff description or departmental directions was deemed insufficient. The Collector concluded that the waste material was cleared without accounting in statutory records to evade duty, leading to the confiscation of the goods.

Allegation of Suppression and Intent to Evade Duty:
The Collector highlighted that the appellants did not disclose the generation of waste material during manufacturing to the Department, indicating a deliberate attempt to evade payment of Central Excise duty. The Collector dismissed the appellants' defense regarding the lack of a statutory record for waste movement and the use of delivery challans for transportation purposes. The failure to seek approval for clearance or disposal of waste material demonstrated a mala fide intention to avoid duty payment. The Collector held that the seized goods, HDPE circular bag waste, and HDPE laminated fabric waste were dutiable and liable for confiscation due to the proven suppression of manufacture and clearance without proper accounting.

Adjudication on Excisability of Waste Material:
Upon review, the Tribunal noted that the show cause notice and the Collector's order treated the goods as waste, specifically HDPE circular bag waste and laminated fabric waste. The Tribunal referred to established legal precedents, including decisions by the Delhi High Court and the Tribunal itself, regarding the excisability of waste material. It was noted that unless waste is specifically mentioned in the Central Excise Tariff for levy, it is not subject to Central Excise duty. Since there was no tariff entry for HDPE circular bag waste and laminated fabric waste, the Tribunal ruled in favor of the appellants, setting aside the impugned order and allowing the appeal.