2024 (2) TMI 666 - AT - Central Excise

Taxability - Excisable goods or not - waste and scrap namely paper/paper boards, corrugated boxes, aluminium foils etc., arose during manufacturing of cigarettes - HELD THAT - Section 2(d) provides the definition of excisable goods and its explanation on goods includes any article, material or substance which is capable of being bought or sold for a consideration and such goods shall be deemed to be marketable but the starting lines of the Central Excise Act, 1944 says that the Act is passed to consolidate and amend the law relating to Central Duties of Excise as it was expedient to consolidate and amend the law relating to Central Duty of Excise on goods manufactured or produced in certain parts of India - Taking both the provisions together, it has been consistently held by the Court of law that to levy duty of Excise, both manufacturing and marketability conditions are required to be fulfilled and the same view continues even after proviso is introduced in Section 2(d). It has also been consistently held even by the Hon'ble Supreme Court that waste and scrap, in West Coast Industrial Gases Ltd. (Res.) 2003 (4) TMI 110 - SUPREME COURT and also in respect of bagasse and other waste products, DSCL Sugar Ltd. case 2015 (10) TMI 566 - SUPREME COURT are not excisable articles on which duty liability can be fastened. The following order in order to maintain consistency and predictability to the order passed by this Tribunal and to carry forward the judicial precedent set by it - Appeal allowed.

Summary

Issues Involved:
Confirmation of excise duty on waste and scrap arising during the manufacturing of cigarettes for the period from January 2012 to December 2012.

Summary:
The appeal challenged the confirmation of excise duty of Rs. 2,45,726/- with interest and equal penalty on waste and scrap like paper/paper boards, corrugated boxes, aluminium foils arising during the manufacturing of cigarettes. The Appellant argued that no process of manufacture had taken place to attract Central Excise duty on such waste and scrap. The Appellant cited previous Tribunal decisions and Supreme Court judgments to support their stance that waste and scrap cannot be subjected to excise duty. The Departmental Representative, however, supported the order passed by the Commissioner (Appeals) by referring to Circulars clarifying that certain waste products are excisable goods.

Upon hearing the submissions and examining the case record, the Tribunal noted that both manufacturing and marketability conditions are required to levy excise duty. It was held that waste and scrap, including rejected, deformed, torn, wet paper/paper boards, corrugated boxes, aluminium foils, are not excisable articles. Referring to previous decisions in the Appellant's own case where duty on such waste products was held to be not leviable, the Tribunal allowed the appeal and set aside the order passed by the Commissioner of Central Excise (Appeals-I), Mumbai Zone-I.

The order was pronounced in the open court on 08.02.2024.