2018 (12) TMI 1469 - AT - Central Excise

Valuation - scrap - Appellants have worked out the waste generated as 0.2% department contended it to be 1% - demand of duty on excess quantity - Held that - This is unique case where the revenue has issue the notice claiming that the total waste generated, is much higher than the waste as claimed o be generated by the assessee. It is not the case of the department that total of finished products and waste generated is not in accordance with the raw material received and consumed by them. In case if there was any difference, then why should duty not be demanded on the finished good. Appellants have in fact paid the duty on the waste as actual cleared by them. When they have paid the duty on the waste cleared by them, and range officer has determined that actual waste generated was only 0.027%, then where is question of any further demand being made by arriving at imaginary percentage of waste generation as 1% or 0.137% - Appellants have themselves, classified and paid the duty on the waste cleared by them. The goods cleared by them were actually marketed or sold by them and they have paid duty on the actual transaction value in respect of these sale. Once having accepted that the goods were marketed by them the appellants could have not claimed in any subsequent proceedings that department has not established the marketability of the said goods or classification of the same. Since the appellants have paid the duty on the actual quantum and the value of clearances there cannot be any further demand on the basis of imaginary or hypothetical figures - Further with effect from 1st July 2000, with the introduction of transaction value concept in Section 4 of the Central Excise Act, 1944, duty has to be determined on the basis of actual transaction value and not on the basis of any contemporaneous value as has been held by the Commissioner (Appeal). Appeal allowed - decided in favor of appellant.

Summary

Issues: Valuation of scrap, Classification of waste, Marketability of waste, Duty payment on actual quantity cleared, Penalty and Interest imposition

Valuation of Scrap:
The appeal challenged the order of the Commissioner (Appeal) regarding the valuation of scrap generated during manufacturing. The lower adjudicating authority did not give a finding on the valuation issue but confirmed the demand based on a percentage of total quantity. The appellant argued against the presumption of scrap generation percentage and contended that the cost of scrap cannot be equated to tissue paper cost. The appellant paid duty on the actual quantity cleared and presented evidence supporting their valuation method. The Tribunal noted discrepancies in waste generation percentages claimed by the department and the appellant, ultimately ruling in favor of the appellant's valuation method based on actual transaction value and waste generation percentage.

Classification of Waste:
The appellant argued that no duty was payable as the department failed to classify the waste under a specific heading in the Central Excise Tariff Act. They emphasized that the waste was not marketable, placing the onus on the department to prove marketability. The appellant had paid duty on the actual quantity cleared and contended that the issue had been previously decided in their favor. The Tribunal analyzed the marketability aspect, citing legal precedents, and concluded that the appellant had classified and paid duty on the waste cleared, making subsequent challenges on marketability untenable.

Marketability of Waste:
The Tribunal delved into the marketability of the waste, referencing legal cases to emphasize the importance of marketability in determining dutiable goods. It highlighted that the appellant had marketed and paid duty on the waste based on actual transaction value, underscoring the significance of marketability in excise duty assessments. The Tribunal rejected the department's claim of duty demand based on hypothetical figures, emphasizing the duty determination on actual transaction value post the transaction value concept introduction in the Central Excise Act.

Duty Payment on Actual Quantity Cleared:
The appellant had paid duty on the waste cleared by them, and the Range Superintendent determined the actual waste generation percentage. The Tribunal emphasized the appellant's compliance with duty payment on actual quantity cleared and rejected the department's demand based on hypothetical waste generation percentages. It underscored the importance of actual transaction value in duty assessments post the transaction value concept's introduction in the Central Excise Act.

Penalty and Interest Imposition:
The appellant argued against the imposition of penalty and interest. The Tribunal did not delve into this issue in the judgment, focusing primarily on the valuation, classification, marketability of waste, and duty payment aspects.

In conclusion, the Tribunal allowed the appeal, setting aside the order of the Commissioner (Appeal) based on the detailed analysis and findings on the valuation, classification, and marketability of waste, emphasizing duty payment on actual quantity cleared and rejecting demands based on hypothetical figures.