2009 (11) TMI 540 - HC - Central Excise

Waste and scrap Coper sludge Excisability Copper sludge arising in process of manufacture of zinc sulphate whether can be said to be a waste or not - Mere fact that even the waste could be sold in the market or it could be dealt with in the market itself is not sufficient to come to the conclusion that it is different product having marketability - marketability of the product as a result of the process is one aspect and the disposal of waste is another aspect Submission of Revenue that duty payable on such waste not accepted

Summary

Issues involved:
1. Whether copper sludge and copper mud arising during the manufacture of zinc sulphate are waste capable of attracting excise duty?
2. Whether the Tribunal erred in applying legal ratios in confirming the findings of the Appellate Commissioner?
3. Whether the Tribunal erred in confirming the decision of the Appellate Commissioner and allowing the appeals of the respondent assessee?

Analysis:

Issue 1:
The appellant contended that the copper sludge and mud were not considered properly by the Tribunal, emphasizing that the unit cleared waste scrap without duty payment or central excise invoice. The appellant argued that the waste products were sold in the market and thus liable for penal action under the Central Excise Act. The Senior Standing Counsel further highlighted the marketability aspect of the waste arising during the manufacturing process, asserting that it was not merely waste but a marketable product. However, the Tribunal found that the burden was on the department to prove marketability, which it failed to do. The Tribunal referenced a Supreme Court judgment to support its conclusion that not everything sold is necessarily a marketable commodity. Ultimately, the Tribunal held that the waste products were not marketable commodities.

Issue 2:
The Tribunal considered the legal aspect of marketability in the context of the waste products arising during the manufacturing process. It referenced a Supreme Court judgment to emphasize that marketability means selling a commodity known in commerce and worthwhile for trade. The Tribunal noted the department's failure to establish the marketability of the waste products, leading to the conclusion that they were not marketable commodities. The Tribunal's decision was based on legal principles regarding marketability and the burden of proof on the department.

Issue 3:
The Tribunal analyzed whether the waste products, specifically copper sludge, could be considered waste or a separate article resulting from the manufacturing process. It was clarified that the primary aim of manufacturing was zinc sulphate, not the waste products. The Tribunal emphasized that the waste products did not have a separate commercial identity as a product and were not excisable articles. By referring to Supreme Court judgments, the Tribunal concluded that the waste products were not excisable merely because they could be sold in the market. The Tribunal upheld the decision of the lower authorities, dismissing the appeal based on the concurrent findings of fact.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of proving marketability and clarifying that waste products arising during manufacturing may not necessarily be excisable items.