2001 (4) TMI 393 - AT - Central Excise

Summary

Issues:
1. Duty demand on waste ABS Polymers
2. Valuation of goods and duty calculation
3. Imposition of penalty
4. Demand for interest

Analysis:

1. Duty demand on waste ABS Polymers:
The appeal challenged the demand of duty, penalty, and interest related to the use of about 111 M.T. of waste ABS Polymer for manufacturing re-processed granules. The appellant argued that waste ABS Polymers were not marketable goods, questioning the duty liability under Chapter 39. However, it was found that waste ABS Polymer was indeed sold in the market and used for re-processing into granules. The absence of evidence showing the non-marketability of the product led to the dismissal of the appellant's plea.

2. Valuation of goods and duty calculation:
The appellants contended that the goods were overvalued, leading to an inflated duty demand. They argued that the value of ABS Polymer waste should have been assessed after deducting the costs involved in re-processing. The Tribunal agreed with this argument, noting that the deduction of Rs. 5 per kg. towards reprocessing costs should have been allowed, as re-processing incurs additional expenses. Therefore, the valuation of ABS Polymer waste needed adjustment based on the cost of processing.

3. Imposition of penalty:
The appellants objected to the imposition of a penalty, stating that there was no fraudulent evasion of duty and no suppression of relevant facts. The Tribunal concurred, observing that it was a case of short levy without any intent to evade duty. As the show cause notice was issued within the statutory period and there was no evidence of clandestine activities, the penalty was deemed unjustified and set aside.

4. Demand for interest:
The appellants argued against the demand for interest, claiming it was not included in the show cause notice and therefore exceeded the scope of the claim. The Tribunal agreed, stating that demands in an adjudication order must align with those in the show cause notice. Consequently, the demand for interest was deemed unsustainable and set aside.

In conclusion, the appeal was allowed concerning the penalty and demand for interest, both of which were overturned. The duty amount was ordered to be recalculated after allowing the deduction of Rs. 5 per kg. towards reprocessing costs. The case was remitted to the Jurisdictional Dy. Commissioner for the recalculation, and any excess duty paid by the appellant was to be refunded.