2017 (3) TMI 709 - AT - Central Excise

Clandestine removal - waste - clearances of waste and empty tins without payment of duty - demand - Held that - As the appellant is clearing the packing material of inputs and the said issue has already been settled in favor of the appellant by the decision of the Hon ble Apex Court in the case of West Coast Industrial Gases Ltd. 2003 (4) TMI 110 - SUPREME COURT OF INDIA and as per circular dated 6.6.2003, no duty is payable by the assesse - the packing materials of the inputs are not dutiable and hence no duty is payable by the appellant on the packaging materials of the inputs cleared as such. During the course of conversion of bigger drums, certain scrap is generated - on the said scrap duty is payable or not is as required to be examined by the adjudicating authority. As the said issues have not been examined by the adjudicating authority while passing the impugned order, therefore the same needs examination at the end of the adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
- Duty liability on clearances of waste and empty tins
- Applicability of circular on duty payment for packing material
- Duty liability on conversion of smaller drums into bigger drums
- Examination of benefit under Notification No.67/95-CE
- Duty liability on scrap generated during conversion

Analysis:
The appellant, engaged in manufacturing Rosin Turpentine, oil, and derivatives, faced demands for duty on clearances of waste and empty tins without payment. The appellant contended that as per a Supreme Court decision and a CBEC circular, they are not liable to pay duty on packaging material clearances. The Tribunal agreed, holding that the packing materials of inputs are not dutiable, and no duty is payable on such clearances.

Regarding the conversion of smaller drums into bigger drums for packing finished goods, the Tribunal found this activity to amount to manufacture. The issue of whether the benefit of Notification No.67/95-CE applies and the duty liability on the scrap generated during conversion were not examined by the adjudicating authority. Therefore, the Tribunal remanded the matter back for further examination on these aspects.

In conclusion, the appeals were disposed of by way of remand, emphasizing the need for a detailed examination by the adjudicating authority on the issues related to the conversion of drums and duty liability on the scrap generated during the process.