2013 (12) TMI 746 - AT - Central Excise

Benefit of SSI Notification No. 89/95 Fatty Acid, Soap Stock and Spent Earth used for processing of refining of crude oil Waiver of Pre-deposit - Revenue was of the view that these products are dutiable from 1.3.2006 when notification 115/75-CE was rescinded Held that - Following CCE Vizag Vs Jocil Ltd. 2010 (12) TMI 24 - Supreme Court of India - there is no specific finding in respect of Palm Fatty Acid which is main disputed item giving rise to most part of the amount confirmed - The demand confirmed in respect of spent earth which prima facie appears to be a waste product is a few thousands only - the contention of the appellant that palm fatty acid is a waste product cannot be accepted the appellant is directed to deposit Rupees One Crore as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
1. Whether excise duty is leviable on Fatty Acid, Soap Stock, and Spent Earth products resulting from the processing of refining crude oil.
2. Eligibility of the appellant company for exemption under Notification No.89/95-CE dt. 8.5.95.

Issue 1:
The main issue in this case revolves around the question of whether excise duty is applicable to the products Fatty Acid, Soap Stock, and Spent Earth, which are by-products of the refining process of crude oil. The Revenue contended that these products became dutiable from 1.3.2006 after the rescission of Notification 115/75-CE. The appellant argued for continued exemption from excise duty on these products, initially claiming exemption under Notification No.8/2003-CE for small scale units and later under Notification No.89/95-CE dt.8.5.95. Four Show Cause Notices were issued by the Revenue to the appellant for different periods, leading to adjudication orders now under challenge. The crux of the matter lies in determining the dutiability of these by-products.

Issue 2:
The second issue pertains to the eligibility of the appellant company for exemption under Notification No.89/95-CE dt. 8.5.95. The appellant argued that Fatty Acid, Soap Stock, and Spent Earth are waste products arising from the processing of crude oil and should be exempt from excise duty. The appellant cited relevant case law to support their position. However, the Revenue contended that these are by-products and not waste, relying on judicial decisions that classified similar products as dutiable. The Tribunal considered the arguments from both sides, noting the decisions of the Apex Court and Tribunal regarding similar products. The Tribunal found that there was no specific finding on "Palm Fatty Acid," a major disputed item, in the decisions cited by the appellant. Consequently, the Tribunal called for a pre-deposit of Rs.1,00,00,000 for the admission of appeal, while waiving the pre-deposit of the remaining dues during the appeal's pendency.

This judgment delves into the intricacies of excise duty applicability on specific by-products of the oil refining process and the interpretation of relevant notifications and case law. The Tribunal's decision to call for a pre-deposit reflects the nuanced analysis of the dutiability of these products and the legal principles governing such exemptions.