1995 (11) TMI 224 - AT - Central Excise

Summary

Issues Involved:
1. Excisability and dutiability of Waste Liquor I and Waste Liquor II.
2. Limitation period for the demand.
3. Estoppel in changing the approved classification.

Issue-wise Detailed Analysis:

Issue 1: Excisability and Dutiability of Waste Liquor I and Waste Liquor II

The primary issue was whether Waste Liquor I and Waste Liquor II, obtained as by-products in the manufacture of caprolactum, are excisable and dutiable. The appellants argued that these by-products are hazardous, toxic, and useless, and are destroyed to prevent pollution. They contended that these products are not marketable and cited various judgments to support their claim that waste or refuse arising in the manufacturing process is not excisable. The Department, however, maintained that these by-products were goods and were marketable, as evidenced by occasional sales, and thus excisable.

The Tribunal referred to the Supreme Court's judgment in *UOI v. Indian Aluminium Company* (1995), which held that aluminium dross and skimmings, although arising during the manufacturing process, are not marketable commodities and thus not excisable. Similarly, the Tribunal found that Waste Liquor I and Waste Liquor II are not marketable goods and are merely refuse or rubbish generated during the manufacturing process. Consequently, the Tribunal held that these by-products are not excisable and no duty is leviable on them.

Issue 2: Limitation Period for the Demand

The second issue was whether the demand for duty was barred by limitation. The appellants argued that the demand pertained to the period from 1-3-1986 to 31-3-1987, while the show cause notice was issued on 2-1-1989, thus falling outside the limitation period. They contended that there was no suppression of facts or wilful mis-statement, as all relevant information had been disclosed to the Department through various correspondences.

The Tribunal found that the appellants had indeed disclosed all pertinent facts to the Department, including the production and destruction of Waste Liquor I and Waste Liquor II and the generation of steam. There was no evidence of wilful suppression or mis-statement. Therefore, the Tribunal held that the demand was hit by limitation and not sustainable in law.

Issue 3: Estoppel in Changing the Approved Classification

The third issue was whether there was an estoppel in changing the approved classification of the products. The appellants had classified Waste Liquor I and Waste Liquor II under sub-heading 2909.90 of CETA, 1985, and argued that there is no estoppel in case of classification. The Department contended that the approved classification could not be challenged.

Given the findings on the first two issues, the Tribunal deemed the question of estoppel to be of academic interest and did not comment further on this issue.

Conclusion:

The Tribunal concluded that Waste Liquor I and Waste Liquor II are not excisable goods and thus no duty is leviable on them. Additionally, the demand for duty was barred by limitation. Therefore, the impugned order was set aside, and the appeal was allowed.