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2017 (4) TMI 799 - AT - Central ExciseManufacture - purification of the mixed solvents - whether the mixture of solvents, which is sold by the appellant, is excisable products or not for the period prior and post 15.6.2008? - Held that - the solvents are repeatedly used after purification within the factory premises and they get mixed up with various impurities and at a stage when they cannot be reused, they are cleared by the assessee for a consideration. In short, clearances of the mixed solvent, which is done from the factory premises, is the residue, which gets retained after the manufacturing of final products by repeated use of the solvents during the course of manufacturing of final products - The appellant s claim that these goods are not excisable is supported by the judgment of the Tribunal in the case of CCE, Hyderabad vs. Aurobindo Pharma Ltd. 2009 (3) TMI 455 - CESTAT, BANGALORE . Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Excisability of the mixture of solvents. 2. Applicability of Section 2(f) of the Central Excise Act, 1944. 3. Applicability of Section 2(d) of the Central Excise Act, 1944 post-10.5.2008. 4. Demand of duty, interest, and penalties. 5. Reliance on previous judgments and case laws. Issue-wise Detailed Analysis: 1. Excisability of the Mixture of Solvents: The appellant, a manufacturer of bulk drugs, used various solvents in the manufacturing process, which were later purified and sold as a mixture of solvents. The appellant cleared these mixtures without paying duty, believing they were not excisable. The Revenue argued that these mixtures were liable to duty under the definition of manufacture in Section 2(f) of the Central Excise Act, 1944, and Note 1 to Chapter 29 of the Central Excise Tariff Act, 1985. The Tribunal found that the mixture of solvents, being a residue from the manufacturing process, was not excisable, referencing the case of CCE, Hyderabad vs. Aurobindo Pharma Ltd., which was upheld by higher courts. 2. Applicability of Section 2(f) of the Central Excise Act, 1944: The adjudicating authority concluded that the purification of the admixture of solvents amounted to manufacture under Section 2(f). However, the Tribunal referred to the Aurobindo Pharma Ltd. case, where it was decided that such processes did not constitute manufacture. The Tribunal reiterated that the mixture of solvents, being a by-product of the manufacturing process, did not fall under the definition of manufacture as per Section 2(f). 3. Applicability of Section 2(d) of the Central Excise Act, 1944 Post-10.5.2008: For the period after 10.5.2008, the Revenue invoked Section 2(d), which defines excisable goods and includes any article capable of being bought and sold. However, the Tribunal noted that the show cause notices did not invoke Section 2(d) but rather Section 2(f). The Tribunal referenced the Supreme Court judgment in DSCL Sugar Ltd., which clarified that for goods to be excisable under Section 2(d), the process must fall within the definition of manufacture under Section 2(f). Since the process did not constitute manufacture, the demands post-10.5.2008 were also set aside. 4. Demand of Duty, Interest, and Penalties: The Revenue issued show cause notices demanding duty, interest, and imposing penalties for the period September 2006 to December 2012. The Tribunal found that the appellant's actions were supported by judicial precedents, and the demands were unsustainable. The Tribunal set aside the demands, interest, and penalties. 5. Reliance on Previous Judgments and Case Laws: The appellant relied on the Aurobindo Pharma Ltd. case, which was affirmed by higher courts, and other similar cases like Lee Pharma Pvt. Ltd. The Tribunal found that these judgments directly applied to the appellant's case. The Tribunal also considered the apex court's judgment in DSCL Sugar Ltd., which further supported the appellant's position. The Revenue's reliance on other case laws related to different contexts (e.g., spent sulphuric acid) did not advance their case. Conclusion: The Tribunal concluded that the mixture of solvents was not excisable under both pre and post-10.5.2008 provisions. The demands, interest, and penalties imposed by the lower authorities were set aside, and the appeals were allowed. The Tribunal's decision was based on consistent judicial precedents that supported the appellant's position.
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