1999 (8) TMI 276 - AT - Central Excise

Summary

Issues:
Classification of goods as Polyester Chips or Polyester Chips Waste under Central Excise Tariff Act.

Analysis:
The appeal involved the classification of goods cleared by M/s. DCL Polyester Ltd. as either Polyester Chips or Polyester Chips Waste under the Central Excise Tariff Act. The appellants manufactured Polyester Polymer Chips through a specific process and faced allegations of misdeclaring and clearing goods without paying duty. The Collector demanded duty, imposed penalties, and confiscated goods, asserting that the cleared goods were not waste but chips misdeclared by the appellants. The appellants argued that the goods collected as waste during manufacturing were classified under waste, pairing, and scrap of plastic, not as chips. They presented evidence, including test reports, to support their claim that the seized goods were waste chips unsuitable for manufacturing polyester filament yarn. The appellants also highlighted discrepancies in statements and transactions to challenge the Collector's findings.

The Department contended that the cleared goods were chips, not waste, emphasizing that the goods were sold at a higher price than waste material. They argued that even if the chips were of inferior quality, they were still chips usable for downstream processes. The Department relied on layman observations and pricing to support their classification of the goods as chips. They asserted that the appellants were clearing inferior grade chips without mentioning them as waste in the classification list.

The Tribunal analyzed the facts and submissions from both sides. It noted that the seized goods were spilled chips with foreign particles, collected after the manufacturing process, and separated by a classifier. The Tribunal agreed that while the chips might not be prime quality, they were still chips and not waste like lumps or ribbons generated during manufacturing. Referring to legal precedents, the Tribunal emphasized that goods of varying quality do not automatically become waste products. The Collector's findings of suppressed facts regarding the classification of goods were upheld, as the appellants had not disclosed the nature of the cleared goods accurately. The Tribunal directed the appellants to present evidence to the Commissioner to prove eligibility for duty exemption under a specific notification, allowing further review and action by the Commissioner. Ultimately, the appeal was rejected based on these findings and directions.