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TMI Blog1995 (11) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... e of caprolactum classifiable under Chapter 29; that in product. It was stated by him that the above two products are of no use and if they are drained out, it would create pollution and therefore, they used waste liquor II came out as by product. It was stated by him that the above two products are of no use and if they are drained out, it would create pollution and therefore, they used waste liquor II as fuel to destroy the waste liquor I in the waste liquor combustion unit and they drained the resultant refuse obtained out of waste liquor I and waste liquor II. He also stated that on certain occasions, they had cleared waste liquor II to some customers. It was also stated by Shri Akolkar that in the process of burning, a lot of heat is generated and to keep the temperature within limit, water is circulated. In the process, steam is generated due to burning of waste liquor I and waste liquor II which is used for concentrating waste liquor I to level of 40% solid. The Department was of the view that steam is produced in the process of burning/destruction of waste liquor I and waste liquor II in waste liquor combustion unit of the company; that the steam falling under Chapter 28 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enerated in the process of anone distillation. The ld. Counsel for the appellants submitted that both these are by-products; that they are stored in a tank; that they are only of no use or value; that they are hazardous and toxic and that they are prone to create obnoxious pollution if merely drained out; that under Pollution Control Act they are required to destroy; that the applicant company have installed a combustion unit where these two products are completely destroyed; that waste liquor I and waste liquor II clearly suggests that there are waste or refuse arising in the process of manufacture of caprolactum; that these products are hazardous, toxic and useless. The learned Counsel submitted that the company had spent more than Rs. 4 crores for installing the combustion unit and recurring cost for burning them comes to Rs. 1 crore annually; that they are not marketable as items in heading 2909.90 of CETA, 1985; that sales of the products was rare and for experimental purpose; that these stray sales cannot be said to establish the regular market; that the admitted position was that these by-products were destroyed completely by burning. He therefore, submitted that the goods a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the waste liquor l to a level of 40 per cent solids; that further on December 4, 1986, the appellants company wrote to the Supdt., Central Excise about the composition of waste liquor I and II. The learned Counsel submitted that well before the date of raising the demand as also immediately when a new Central Excise Tariff was introduced with the Finance Bill of 1986, the appellants took the question of production of waste liquor I and waste liquor II in the process of manufacture of caprolactum and also the production of steam in the process of burning the waste liquor I II. He therefore, submitted that there was no suppression, wilful mis-statement and therefore, the demand was barred by limitation. In support of his contention, he cited and relied upon the judgment are as under : (i) 1989 (40) E.L.T. 276 (SC) = 1989 (21) ECR 182 (SC) - Collector of C Ex. v. Chemphar Drugs Liniments. (ii) 1989 (43) E.L.T. 195 (SC) - Padmini Products v. CCE (iii) 1992 (58) E.L.T. 76 (T) = 1992 (39) ECR 32 (Trib.) - Neyveli Lignite Corpn. Ltd. v. CCE That the appellants of their own did classification of the disputed products under sub-heading 2909.90 of CETA, the ld. Counsel submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t they had claimed the classification of the goods under this heading and the classification was approved; that the approved classification cannot be challenged and therefore the question of estoppel does not arise. 8. Heard the submissions of both sides and considered them. We find that there are three issues for determination before us : Issue No. 1. whether waste liquor I and waste liquor II obtained as by-products as are excisable and dutiable. Issue No. 2. whether the demand is hit by limitation and Issue No. 3. whether there was an estoppel for changing the approved classification. 9. On the question of excisability and dutiability on waste liquor I and waste liquor II, we find that the admitted position is that waste liquor I and waste liquor II are obtained as by-products in the process of manufacture of caprolactum. We also observe that there were a few occasions when these items were sold in the market. The ld. Counsel for the appellants in his arguments had submitted that a similar issue was before the Hon ble Supreme Court in the case of UOI v. Indian Aluminium Company reported 1995 (77) E.L.T. 268. In Para 13 of their order, their Lordship held : 13. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luminium dross and skimmings are marketable goods. For reasons which we have set out earlier, it is not possible to consider aluminium dross and skimmings as goods" or as a commercial and marketable commodity. Dross and skimmings are merely refuse or ashes given out in the course of manufacture, in the process of removing impurities from the raw material . This refuse is quite different from waste and scrap which is prime metal in its own right." And again in Para 25, it was held : 25. The appellants have drawn our attention to the decision in the case of Khandelwal Metal and Engineering Works Anr. etc. v. Union of India Ors. [1985 (20) E.L.T. 222 (SC) = 1985 Suppl. (1) SCR 750] where this Court has held that brass scrap which comes into being in the process of manufacture, is a dutiable commodity. It has said that brass scrap is a well known marketable commodity and is a by product of manufacture. This, however. will not help the appellants in the present appeals because dross and skimmings are not waste and scrap as understood in common or commercial parlance. These are ashes and impurities and contain only a small percentage of metal which it may or may not be economic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading of the above two judgments, we find that the issue whether waste liquor I and waste liquor II are goods is fully covered by the above judgments. In the case decided by the Hon ble Supreme Court in Indian Aluminium Co. Ltd., there were some sales also we respectfully agree with the rulings of the Hon ble Supreme Court and hold that waste liquor I and waste liquor II are not goods for purpose of levy of Central Excise duty. 10. On the question of time-bar, we find that the appellants brought out lucidly in the arguments adduced by the ld. Counsel that all the facts namely the production of waste liquor I and waste liquor II in the course of manufacture of caprolactum and burning of waste liquor I and waste liquor II and production of steam and its utilization for concentrating waste liquor was fully disclosed to the Department. There was no mis-statement of facts or wilful suppression in the instant case. We therefore, hold that the demand is hit by limitation and is not sustainable in law. The question of estoppel now being only of academic interest is not being commented upon. 11. Having regard to the above findings, we set aside the impugned order and allow the appeal. ..... 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