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M/s Ricela Health Foods Ltd, M/s JVL Agro Industrial Ltd Versus Commissioner of Central Excise, Chandigarh And Allahabad

2015 (9) TMI 1024 - CESTAT NEW DELHI

Emergence of waste, parings and scrap or by-product - whether the fatty acids, wax and gum are to be treated as waste - Exemption under Notification No. 3/06-CE dated 01/3/06 - the fatty acids, wax and gum are to be treated as waste

Since on the issue involved in this case, there are two conflicting judgments of two coordinate benches, in our view, this matter would merit reference to Larger Bench, In view of this, the Registry is directed to place this matter before Hon'ble President .....

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011 (7) TMI 968 - CESTAT, NEW DELHI) by dismissing the civil appeal filed against the Tribunal's judgment would be a binding precedent ".

Matter referred to larger bench. - Excise Appeal No. 653 of 2012 with Misc. Application No. 51861 of 2014 , Excise Appeal No. 3585 of 2012 - Misc. Order No. MO/51808/2015-EX(DB) - Dated:- 14-5-2015 - Rakesh Kumar, Member (T) And Sulekha Beevi C S, Member (J) ,JJ. For the Appellant : Shri B L Narasimhan, Adv. For the Respondent : Shri R K Gupta, AR ( .....

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ification No. 89/95-CE dated 18/5/95 exempts the "waste, parings and scrap" arising in course of manufacture of exempted goods and falling within the schedule to the Central Excise Tariff Act, from the whole of the duty of excise on leviable thereon as is specified in this schedule. This exemption is subject to condition that this exemption would not apply to waste, parings and scraps cleared from a factory in which any excisable goods other than exempted goods are also manufactured. T .....

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the Central Excise Rules, 1944. Thus, the refined vegetable oil manufactured by the appellants is "exempted goods" for the purpose of this notification. The point of dispute is as to whether the Fatty Acids, wax and gum which arise as by-products, are to be treated as "waste" for the purpose of this exemption notification. According to the Department, Fatty Acids, wax and gum are by-products and cannot be treated as waste and hence the same would not be exempt from duty. It i .....

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-original dated 14/12/11 by which he confirmed the duty demands totalling ₹ 13,21,83,197/- alongwith interest on it under Section 11AB/11AA of the Central Excise Act and beside this, imposed penalty of equal amount on them under Section 11AC. In case of M/s JVL Agro Industrial Ltd., the Commissioner vide order-in-original dated 07/8/12 confirmed duty demand of ₹ 1,53,63,541/- against them for the period from April 2011 to September 2011 alongwith interest on it under Section 11AB/ 11 .....

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rom crude vegetable oil are not waste and not exempted under Notification No. 19/95-CE and this judgment of the Tribunal has been affirmed by the Apex court by the way of dismissal of civil appeal vide order dated 02/1/12 reported in 2014 (300) E.L.T. A74 (S.C.) , the Bombay Bench of the Tribunal in the case of Maheshwari Solvent Extraction Ltd. vs. CCE, Nagpur reported in 2014 (299) E.L.T. 116 (Tri. -Mumbai) has taken a contrary view holding that the fatty acids, wax and gum emerging in course .....

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f the wordings of the notifications readwith the law laid down in the case of Raipur Manufacturing Company Ltd. reported in AIR 1967 SC 1066 , it is clear that the view in the case of CCE, Jalandhar vs. A.G. Fats Ltd. (supra) that waste under this notification refers to the goods of no value or little value cannot be preferred, as the goods of no value would not command any duty at ail in the first place and this would amount to adding words to the notification where they do not exist. Shri Nara .....

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pleaded that the impugned orders are not correct. However, he stated that he has no objection if on account of conflicting decisions on the issue involved in this case, the matter is referred to a Larger Bench. 4. Shri R.K. Gupta, the learned DR, defended the impugned order by reiterating the findings of the Commissioner in it and emphasised that the Tribunal in its decision in the case of CCE, Jalandhar vs. A.G. Fats Ltd. (supra) has considered its earlier decision in the case of CCE, Hyderaba .....

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ion in the case of CCE, Jalandhar vs. A.G. Fats Ltd. (supra) has also taken into account the fact that earlier, the civil appeal against the Tribunal's decision in the case of CCE, Hyderabad vs. Priyanka Refineries Ltd. (supra) where a contrary view had been taken, had been dismissed. He pleaded that in view of these circumstances, it is the Apex court's judgment in the case of CCE, Jalandhar vs. A.G. Fats Ltd. (supra) which would be a binding precedent and therefore, the Tribunal was no .....

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as unavoidable by-products. During the period of dispute, the refined vegetable oil was either fully exempt from duty under same exemption Notification or was chargeable to nil rate of duty in the tariff itself and as such was to be treated as "exempted goods" for the purpose of Notification No. 89/95-CE dated 18/5/95. The only point of dispute is as to whether for the purpose of this exemption notification, which exempt "waste, parings and scrap" arising in course of manufac .....

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and this decision of the Tribunal has been affirmed by the Apex court by the way of dismissal of civil appeal and the review petition has also been dismissed, the Tribunal in the case of Maheshwari Solvent Extraction Ltd. vs. CCE, Nagpur (supra) has taken a contrary view holding that the fatty acids, wax and gum arising in course of manufacture of refined vegetable oil from crude vegetable oils are waste and would be eligible for the exemption. In our view, the Tribunal's decision in case of .....

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CCE, Jalandhar vs. A.G. Fats Ltd. (supra) which had considered the earlier contrary judgment in the case of CCE, Hyderabad vs. Priyanka Refineries Ltd. (supra) has been affirmed by the Apex court by dismissal of civil appeal, even if the civil appeal has been dismissed without giving any reasons, the Apex Court's order in view of its judgments in the cases of Kunhyammed vs. State of Kerala reported in 2001 (129) E.L.T. 11 (S.C.) and Waman Rao vs. Union of India reported in (1981) 2 SCC - 36 .....

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same commercial value, which is worthwhile to be marketed and hence is a marketable product. In the former case, when the by-product being of no or little commercial value is fit to be discarded, would be waste, but in the latter case, when the by-product, even though an unintended product, is of commercial value and is a marketable product, it would be absolutely incorrect to categorize it as a waste just because it is an unintended product emerging in the courses of a product which the manufac .....

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ng the waste arising as by-product from excise duty, the courts and Tribunals are not bound to construe the word 'waste' as including even marketable by-products also, as the Government by issuing an exemption Notification under Section 5A (1) of the Central Excise Act, 1944 in respect of some waste, cannot make the non-excisable product into an excisable product. While construing such exemption notification the principle of avoiding redundancy while interpreting a statutory provision wo .....

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