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TMI Blog2013 (7) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... se impurities are compulsorily required to be removed and the same are removed by as residues in the form of Gums / Waxes and Recovered Oil / Fatty Acids. The Appellant had been clearing these residues without payment of excise duty claiming exemption under Notification No. 89/95-C.E. dated 18.5.1995, issued under Section 5A of the Act which exempts 'waste, parings and scrap' arising in the course of manufacture of exempted goods. Show-cause notices from time to time were issued to the appellants proposing to deny the benefit of said exemption Notification No. 89/95-C.E. The only ground taken by the Department in the Show-cause notices to deny the benefit was that, the said goods are neither waste nor scrap in as much as the said goods have marketability & the said goods have been sold to the manufacturer of washing soap. It was also alleged that the residues in question are generated as 'by-products'. Adjudication took place. The proposals in the show-cause notice were confirmed and duty demand along with interest and penalty were imposed on the appellant. Aggrieved by the said order, the appellants are before us. 3. Heard both sides. 4. The learned Counsel for the appellant fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concept of bringing out new commodity etc. is linked with marketability. An article does not become goods in the common parlance unless by production or manufacture something new and different is brought out which can be bought and sold. In Union of India & Anr. v. Delhi Cloth & General Mills Co. Ltd., 1977 (1) E.L.T. (J 199) (SC) = AIR 1963 SC 791, a Constitution Bench of this Court while construing the word 'goods' held as under :- "These definitions make it clear that to become 'goods" an article must be something which can ordinarily come to the market to be bought and sold". 11. It cannot thus be disputed that even if the resin produced by the appellants are resols as mentioned in Item 15A it could not be subjected to duty. The purpose of specifying the goods in the Schedule is twofold, one, the rate on which the duty would be charged and other that if the goods satisfy the description and are covered in the Entry then they are liable to pay excise duty. But even in respect of specified goods it could be established that it was not marketable or capable of being marketed, therefore, no duty was leviable on it." 6.1 We further find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have effect subject to the condition that the duty of excise chargeable on such goods shall in no case exceed the statutory duty. Explanation.- "Form or method", in relation to a rate of duty of excise means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable. (4) Every notification issued under sub-rule (1), and every order made under sub-rule (2), of rule 8 of the Central Excise Rules, 1944, and in force immediately before the commencement of the Customs and Central Excises Laws (Amendment) Act, 1988 (29 of 1988) shall be deemed to have been issued or made under the provisions of this section and shall continue to have the same force and effect after such commencement until it is amended, varied, rescinded or superseded under the provisions of this section. (5) Every notification issued under sub-section (1) shall,- (a) unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette; (b) also be published and offered f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd binding precedent of the Hon'ble Supreme Court it is clear from the plain reading of the exemption notification that it is exempts only those waste which are not only arising in the course of manufacturing of exempted goods but are also marketable, excisable and otherwise chargeable to Central Excise duty. As the waste has not been defined under the Act, we have rely upon the dictionary meaning and judicial interpretation of the scope of the term 'waste' in the above context of the exemption notification. The dictionary meaning for 'waste' are as given below:- (a) The Merriam Webster Dictionary An unwanted by-product of a manufacturing or chemical process, refuse. (b) Bloomsbury English Dictionary Unwanted Material, unwanted or unusable items, remains or by-products or household rubbish (c) Fairchild's Dictionary of Textiles By-product created in the manufacture of fibers, yarns and fabrics (d) Black's Law Dictionary Refuse or superfluous material, esp. that remaining after a manufacturing or chemical process (e) Oxford Advanced Learner's Dictionary of Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loth passes through other tanks where water is sprinkled over it and in that process some of the sodium hydroxide falls in the tanks. The liquid is a light solution of sodium hydroxide which cannot be used in the process of mercerization, nor for other process as in the factory of the company. This waste material which is called "waste caustic liquor" has still a market amongst other manufacturers or launderers. For reasons which we have already set out in dealing with "kolsi", we are of the view that waste caustic liquor may be regarded as a by-product o a subsidiary product in the course of manufacture and the sale thereof is incidental to the business of the company and the turnover in respect of both "kolsi" and "waste caustic liquor" would be liable to sales tax." 10. From the above it is clear that "waste caustic liquor" despite being a marketable by product, remained "waste" as it could not be used for any other process in the factory of the assessee. This is reasonably the definitive test to understand the concept of waste in the exemption notification No. 89/95 as well. 11. The dictionary meaning and judicial pronouncement of the Apex Court it is clear that waste also in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ie the provision." 14.1 Therefore it is clear that the Hon'ble Apex Court please to dismiss the appeal filed by the Sales Tax department seeking to deny in the form of subject of claim on the basis of taxable sales of acid sludges effected by the assessee and held that acid sludge was a commercial commodity with a market but not an item of waste having no commercial market. Even in this case also we are not concerned with any waste having no commercial market. 14.2 On perusal of the Hon'ble Finance Minister's Budget 1995-96 speech and relevant file noting of department, it reveals that the purpose and policy behind the said exemption notification was to free such units from Central Excise control, if their main product is not liable to duty. "106. There has been a perpetual problem with manufacturers of exempted goods as they may have to pay excise duty on waste and scrap generated during the process of manufacture. It does not seem very logical to bring these units under the excise control only for the purpose of charging duty on such waste and scrap. 14.3 The rationale behind the notification can also be seen from the relevant noting of Department of Revenue (Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eficial notification in favour of assessee and not against it. The same is observed by the Hon'ble Supreme Court in the following cases:- (a) Commissioner of Customs v. Malwa Industries Ltd. - 2009 (235) ELT 214 (SC) wherein it was observed that - "10. An exemption notification should be read literally. A person claiming benefit of an exemption notification must show that he satisfies the eligibility criteria. Once, however, it is found that the exemption notification is applicable to the case of the assessee, the same should be construed liberally. 12. A notification like any other provision of a statute must be construed having regard to the purpose and object it seeks to achieve. For the aforementioned purpose, the statutory scheme in terms whereof such a notification has been issued should also be taken into consideration. 13. It is a well-settled principle of law that where literal meaning leads to an anomaly and absurdity, it should be avoided. 25. We, as noticed hereinbefore, have no quarrel with the proposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reted while some of them insist that exemptions in fiscal statutes are to be liberally interpreted giving an apparent impression that they are contradictory to each other. But this is only apparent. A close scrutiny will reveal that there is no real contradiction amongst the judgments at all. The synthesis of the views is quite clearly that the general rule is strict interpretation while special rule in the case of beneficial and promotional exemption is liberal interpretation. The two go very well with each other because they relate to two different sets of circumstances." 16. Furthermore, this Court in Associated Cement Companies Ltd. v. State of Bihar & Ors., (2004) 7 SCC 642, while explaining the nature of the exemption notification and also the manner in which it should be interpreted has held : "12. Literally "exemption" is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legisla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that impugned goods are admittedly generated during the course of manufacturing of exempted Refind Edible Oil i.e. Rice Bran as unwanted by-products and have necessarily to be get rid of before the refined edible oil can finally come into being fit for human consumption can finally come into existence. 16. The learned Counsel fairly submitted that there are two conflicting decisions by the Tribuna's Division Benches on the same issue one by the Bangalore Bench in the case of CCE Hyderabad vs. Priyanka Refineries Lt. - 2010 (249) ELT 70 (Tri. Bang.) and another by the Delhi Bench in the case of CCE Jalandhar v. A.G. Flats Ltd. - 2012 (277) ELT 96 (Tri.Del). The statutory civil appeals against these decisions were dismissed by the Division Benches of the Apex Court. It appears that even review petition was also dismissed in AG Fats. In the case of A.G. Flats, the main argument of learned Counsel for the appellant that the waste fetched some price, the same cannot be treated as excisable goods. The Tribunal observed that the waste is a by-product which is of no value or very low value. But the notification clearly says excisable waste which means the waste is having the value. 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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