2016 (10) TMI 673 - AT - Central Excise

100% EOU - procurement of cement without payment of duty under the authority of CT 3 certificate in terms of N/N.22/2003 CE dated 31.3.2003 - The said cement was used for treatment and disposal of hazardous waste generated during the zinc smelting operations - whether the denial of exemption on the ground that the cement is not required in the manufacturing activity of final products of the appellant? - Held that - Without controlled disposal of hazardous effluent no manufacture of zinc is possible/permitted. The lower authorities held the view that once the zinc/ lead is manufactured, the treatment of effluent is nothing to do with such manufacture. Such view is factually and legally unsustainable. Cement helps to stabilize the material and prevents leaching when dumped in landfill. We note that under clause (a) (i) of Notification No.22/2003-CE the exemption from duty is available to all goods specified in Annexure 1 to the notification when brought in in connection with manufacture or packaging of articles or for export of goods. There is no dispute in the proceedings before lower authorities about cement being covered by Annexure 1. The only dispute is that cement is not brought in connection with manufacture of zinc. We find such interpretation is too restrictive and untenable in the factual context of the usage of cement in present case. The decision in the case of INDIAN FARMERS FERTILISER COOP. LTD. Versus CCE., AHMEDABAD 1996 (7) TMI 141 - SUPREME COURT OF INDIA relied upon. where it was held that that use of ammonia in the effluent treatment plant was a necessary part of manufacture of urea. Denial of exemption not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Exemption claim on procured cement for hazardous waste treatment in a 100% EOU manufacturing unit.

Detailed Analysis:

1. Exemption Claim Dispute:
The appellant, a 100% EOU, procured cement without duty payment under a specific notification for hazardous waste treatment during zinc smelting operations. The Revenue contended that the cement was not connected to the manufacturing activity of final products (lead, zinc, or sulphuric acid) and thus denied the exemption. The original order and subsequent appeal upheld the duty demand and penalty. The issue revolved around whether the cement usage for hazardous waste treatment was connected to the manufacturing process.

2. Legal Interpretation and Analysis:
The Tribunal analyzed the technical aspects of hazardous waste disposal in the case. It was observed that the cement was used for stabilizing hazardous waste generated during zinc manufacturing, as mandated by environmental guidelines. The Tribunal referred to Notification No.22/2003-CE, emphasizing that the exemption applied when goods were brought in connection with manufacturing or packaging of articles. The lower authorities' interpretation was deemed restrictive and legally unsustainable, as the treatment of hazardous waste was integral to the manufacturing process of zinc.

3. Precedents and Legal Position:
The Tribunal cited a Supreme Court judgment regarding the essentiality of effluent treatment in the manufacturing process, drawing parallels to the present case. Previous Tribunal orders and a High Court decision supported the view that cement usage for hazardous waste stabilization was part of the manufacturing activity. The impugned order's reasoning was found to lack merit, and the Tribunal concluded that the cement was indeed brought in connection with the manufacturing of the final product by the appellant.

4. Decision and Ruling:
Based on the legal analysis and precedents, the Tribunal held that the impugned order denying the exemption claim was devoid of merit. Consequently, the appeal was allowed, setting aside the original order and the duty demand imposed on the appellant. The judgment highlighted the holistic approach required in considering the environmental aspects of manufacturing processes and affirmed the connection between cement usage for hazardous waste treatment and the manufacturing activities of the appellant.

This detailed analysis of the legal judgment showcases the Tribunal's thorough examination of the issues, legal interpretations, precedents, and the ultimate decision in favor of the appellant regarding the exemption claim related to cement procurement for hazardous waste treatment in their manufacturing unit.