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2024 (2) TMI 614 - CESTAT CHANDIGARHClassification of goods - scrap-veg-refuse - classifiable under Chapter Heading 23080000 as vegetable waste as claimed by the Appellant or potato starch classifiable under Chapter Heading 1108 as claimed by the Department? - HELD THAT:- The HSN explanatory notes clearly provide that the potato starch falling under Chapter Heading 1108 shall be physically in white powdered form, however, in the present case, the ‘scrap-veg-refuse’ is physically in the form of a wet paste. It is seen that the only reason for upholding demand against the Appellant No.1 is on the basis that the said ‘scrap-veg-refuse’ has starch contents in it. Here, it is noted that just because the product has some starch contents does not qualify it as potato starch classifiable under Chapter Heading 1108. It has been held by the Tribunal in the cases cited supra that mere presence of certain elements of starch in the residue or scrap does not take it out of the purview of a waste or residue and the Department has to bring sufficient evidence to establish that the said product is not residue or waste. The impugned goods is not a manufactured product as per Section 3(1) of the Central Excise Act, 1944, which mandates that excisable goods must come into existence as a result of manufacturing process so as to attract the levy of excise duty; whereas in the present case, ‘scrap-veg-refuse’ came into existence pursuant to process of recycling of waste water, undertaken only to reuse the reusable water content in the waste water - further, test report of Central Revenue Control Laboratory produced by the Revenue, is not conclusive as it only states that the sample tested positive for starch without going into the details of the composition of the sample and has not given any conclusive proof. The impugned orders are not sustainable in law and therefore, are set aside - Once, the demand itself is set aside, the question of interest and penalties on the Appellant No.1 and Appellant No.2 does not arise - appeal allowed.
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