TMI Blog2008 (9) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... he fatty acid as well as vegetable oil residues generates as waste which are also exempted from Central Excise duty vide Notification No. 89/95 dated 18-5-1995. (1) The show cause notices were issued against the appellant wherein it was alleged as to why the Central Excise duty amounting to Rs. 13,21,294/- and Rs. 4,99,674/- should not be demanded and recovered from them under Section 11A along with interest under Section 11AB of Central Excise Act, 1944. (2) Penalty should not be imposed upon them under Rule 25 of Central Excise Rules, 2002. Appeal No. 29/08 - the case was decided by the Additional Commissioner, Central Excise, Lucknow vide O-I-O 04/ADC/JC)/LKO/08 dated 20-1-2008 wherein the demand of Rs. 13,21,294/- was confirmed and equal amount of penalty of Rs. 13,21,294/- was imposed upon the appellant under Rule 25 of Central Excise Rules 2002. Appeal No. 83/08 - the show cause notice was decided by the Asstt. Commissioner, Central Excise, Division-II, Lucknow wherein a demand of Rs. 4,99,674/- was confirmed and the equal penalty of Rs. 4,99,474/- was imposed. In both the adjudication orders it was imputed that their by-products cannot be considered as waste produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. (b) Waste - damaged, defective or superfluous materials produced during or left over from a manufacturing process or industrial operation : material not usable for the ordinary or main purpose of manufacturing. (Web. Third) Waste matter, refuse, usable material left over from a process of manufacture, the use of consumer goods etc; the useless by product of a process; (Page 3369 S.B. Sarkar s Words and Phrases of Excise Customs, 3rd Edition). In a number of judicial pronouncements also the term waste has been interpreted to include by-products of a process of manufacture. Relevant abstracts from some of such cases are reproduced below :- In the case of Nahar Industral Enterprises Ltd. reported in 2003 (154) E.L.T. 284 (Tri.-Del.), waste is defined as by-products created in the manufacture of fibers, yarns and fabrics. In the case of Nirma Chemical Works reported in 1993 (63) E.L.T. 251 (T), it has been held that Spent Sulphuric Acid produced as a by-product in the manufacture of Nitrobenzene is in the form of waste/residue. In the case of Bharat Starch Industries reported in 2005 (183) E.L.T. 375 (Tri.-Del.), it has been held that Corn Gluten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Central Excise Rules, 2002 may kindly be dispensed with because it will be an undue hardship to them. They also prayed that the recovery of the above said amount may kindly be stayed till finalization of the appeal. 4. On the stay application filed in Appeal No. 29/08 by the appellant, stay order was passed under Section 35F of the Act on 10-6-2008, directing them for payment of Rs. 10,00,000/- within one month of the receipt of the order and after the payment of above said pre-deposit demand of duly and penalty shall stand waived until the disposal of this appeal. The appellant moved the application for modification and reconsideration of stay order on merit. 5. Personal hearing was held on 23-9-2008. Shri Amit Awasthi, advocate appeared on behalf of the appellant and submitted the copy of the order in appeal No. 186/192 passed by Commissioner (A), Central Excise, Chandigarh and order No. l6/LDH/08 dated 19-5-08 passed by the Commissioner, Central Excise, Ludhiana. He requested for modification of stay order dated 10-6-2008 and for rejection of appeal. On the above referred request of modification/reconsideration of stay order I find that the cases in question are being take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereon by any other notification (not being a notification where exemption from the whole of duty of excise is granted based upon the value or quantity of clearances made in a financial year) issued under sub-rule (1) of rule 8 of the Central Excise Rules, 1944 or sub-section (1) of section 5A of the said Act. From the above text, it is observed that Notification No. 89/1995-C.E., dated 18-5-95 provides exemption to waste, paring and scrap falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) arising in the course of manufacture of exempted goods subject to certain conditions. The very purpose of this notification is to provide exemption to the excisable waste, scrap or paring arising during the manufacture of exempted goods. In the instant case Fatty Acid, Ghad/Soap Stock, Gums, Spent Earth and Waxes are being obtained as waste , therefore exemption to these by-products is available under Notification No. 89/1995-C.E. subject to fulfilment of conditions as specified therein notwithstanding that these have further industrial uses as held by the adjudicating authority. These condition are :- (i) The goods should be waste, pairing or scrap. (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Tariff and not under Heading 35.04 ibid in spite of presence of sufficient quantity of proteins in it, in the absence of any material to support that impugned product is not a waste or residue of food industries. I find that even the criteria of marketability is not applicable in the instant case in view of the principle laid down by the Apex Court in the case of Tata Iron Steel Co. Ltd. - 2004 (l65) E.L.T. 386 (S.C.), wherein it was held that mere selling of a commodity does not mean it is marketable since a commodity can also be sold as rubbish. Marketability means selling of a commodity known to the commerce and which may be worthwhile to trade in. The revenue has discussed the following conditions essential to make any goods become marketable. (i) Goods must be manufactured (ii) Goods must be moveable. (iii) Goods must mentioned in Tariff. (iv) Goods must be marketable. The appellant did not dispute on condition No. II III but with regard to condition No. I IV. They submitted that the futtyacid etc. are not manufactured but separated as impurities through physical processes and the condition of marketability is based on the ground given b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, inter alia, covers industrial monocarboxylic fatty acids and acids oils from refining. Sub-heading 3823.11 covers stearic acid and 3823.12 covers oleic acid. The HSN Explanatory Notes further say that heading 38.23 includes, inter alia commercial stearic acid (stearin) which is a white solid material with a characteristic odour. It is relatively hard and rather brittle and is usually marketed in the form of beads, flakes or powder. It is also marketed in liquid form when transported hot in isothermal tanks. In my opinion the chemical examination of this fatty acid arising out as by-product during the manufacture of vegetable rice bran oil was the best way to ascertain the correct classification in the chapter to resolve this dispute based on mere reading of the theory and then to determine the duty liability. To give the strength to my above opinion I perused that this matter was referred to CRCL, New Delhi for opinion by the Commissioner (Appeals) Chandigarh. The CRCL has advised that Heading 15.11 covers palm oil and its fractions, palm oil is composed mainly of triglycerides of fatty acids such as palmitic, stearin, by fractionation. Composition wise both fractions are ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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