1992 (3) TMI 187 - AT - Central Excise

Summary

Issues:
Interpretation of Rule 56B of the Central Excise Rules, 1944 regarding the movement of goods for processing and duty implications on waste generated during the process.

Detailed Analysis:

The judgment by the Appellate Tribunal CEGAT, New Delhi involved a case where the appellants were engaged in texturising polyester and nylon yarn, a process that generates waste. The appellants received polyester filament yarn from another company for texturising under Rule 56B of the Central Excise Rules, 1944. The issue arose when the Superintendent of Central Excise demanded duty on the waste generated during the process. The appellants classified the waste under TI 18-IV and paid duty as per Notification No. 272/83. However, the department proposed a higher duty rate applicable to basic yarn, leading to a dispute regarding the correct duty rate on the waste.

The Assistant Collector initially held the appellants liable to pay duty at a higher rate, which was upheld by the Collector (Appeals). The Collector (Appeals) determined that the duty rate should be based on whether the waste had any texturising features, directing chemical analysis to ascertain this. Additionally, concerns were raised about the irregularity in the permission granted to the company supplying the yarn for processing.

Upon appeal, the Appellate Tribunal analyzed the movement of goods under Rule 56B and the jurisdiction of the authorities involved. It was established that the movement of goods from the supplier to the processing unit was not irregular, and the duty on waste should be governed by the rate applicable to waste, not yarn. The Tribunal concluded that the demand for duty on the waste was not sustainable, setting aside the previous orders and allowing the appeal. The appellants were granted a refund of the duty paid under protest and the amount paid in compliance with a stay order.

In summary, the judgment clarified the duty implications on waste generated during the processing of goods under Rule 56B, emphasizing the correct classification and duty rate applicable to the waste. The Tribunal highlighted the importance of jurisdiction in granting permissions for movement of goods and upheld that duty on waste should be distinct from that on the processed goods.