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2016 (2) TMI 283 - CESTAT MUMBAI

2016 (2) TMI 283 - CESTAT MUMBAI - 2016 (332) E.L.T. 734 (Tri. - Mumbai) - Manufacture - whether the items i.e. impure dowtherm diphyl; old and damaged PTA scrap, wash water - 50% concentration of lactum, old and used sludge oil; old and used all types of oil, spin finish oil and old assorted bearings cleared from the factory premises of the assessee are liable to duty? - Held that:- It is on record that the items on which duty demands are made are arising during the course of manufacture of the .....

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e products are not manufactured nor they are associate product and therefore cannot be said to be distinct products as contended by the learned Departmental Representative. There is nothing on record to indicate that these items, which were sought to be considered as distinct product, were being manufactured in the appellant's factory premises.

Secondly, as find, arising out of the very same audit objection, another show cause notice was issued demanding duty on the used/waste MEG/TE .....

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the process of manufacture, are manufactured products. - Decided in favour of assessee - Appeal Nos. E/1800 & 2059/2010 - Dated:- 29-10-2015 - M V Ravindran, Member (J) For the Appellant : Ms Padmavati Patil, Adv For the Respondent : Shri N N Prabhudesai, Superintendent ( AR ) ORDER Per M V Ravindran When appeal No. E/1800/2010 was called out, it was informed by the learned Departmental Representative that Revenue is also in appeal against the very same impugned order-in-appeal being No. E/2059/ .....

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ch granted relief to them while Revenue has filed the appeal on the ground that the first appellate authority has not quantified the demand, interest thereof and penalty on setting aside the order-in-original. 4. The relevant facts which arise for consideration are during the period 2003-04 and 2004-05 the appellant-assessee under commercial invoices were clearing the items such as impure dowtherm diphyl; old and damaged PTA scrap, wash water - 50% concentration of lactum, old and used sludge oi .....

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authority, after considering the submissions made and relying upon the judgment of the Tribunal in appellant's own case in respect of some other items, dropped the proceedings initiated by the show cause notice. Aggrieved by such an order, Revenue preferred an appeal before the first appellate authority, who has reversed the order-in-original. 5. The learned counsel for the appellant-assessee draw my attention to the show cause notice and the reply filed by them. It is her submission that, .....

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rap. She would rely upon the following judgments for the proposition that waste/scrap even if they are marketable, are not liable to duty unless they are manufactured. (i) Grasim Industries ltd. vs. Union of India 2011 (273) ELT 10 (SC) (ii) Commissioner of Central Excise & Customs vs. Dhakad Metals Pvt. Ltd. 2010 (257) ELT 535 (Guj) (iii) Union of India vs DSCL Sugar Ltd. - 2015-TIOL-240-SC-CX 6. The learned Departmental Representative, on the other hand would draw my attention to the annex .....

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he argument of non-discharge of duty liability was correctly rejected by the first appellate authority against the assessee. It is his further submission that he would rely upon the judgment of the Hon'ble apex Court in the case of Bharat Petroleum Corporation Ltd 1995 (77) ELT 790 for the proposition that if distinct products which has arise during the course of manufacture of final products and has commercial identity and is sold from time-to-time, then duty liability arises. 6.1. As regar .....

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ble to duty. It is on record that the items on which duty demands are made are arising during the course of manufacture of the final products for the period in question. It is also undisputed that the assessee-appellant is clearing the products on commercial invoices and gets some consideration for the said items. At the outset, on perusal of the items which are cleared from the factory premises, description as per the annexure to the show cause notices, it may be seen that they are either used, .....

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ng out of the very same audit objection, another show cause notice was issued demanding duty on the used/waste MEG/TEG that arises during the course of manufacture in the factory premises of the appellant and the said demand was set aside by the first appellate authority; Revenue's appeal before the Tribunal in appeal No. E/1523/2003, was rejected by an order dated 23/07/2008 (wherein I was one of the Member) holding that these items (used MEG) is not a manufactured product for demand of dut .....

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e test of being produced or manufactured in India. It is settled law that excise duty is a duty levied on manufacture of goods. Unless goods are manufactured in India, they cannot be subjected to payment of excise duty. Simply because a particular item is mentioned in the First Schedule, it cannot become exigible to excise duty. [See Hyderabad Industries Ltd. v. Union of India, (1995) 5 SC 338, Moti Laminates (P) Ltd. v. CCE, (1995) 3 SCC 23, CCE v. Wimco Ltd., (2007) 8 SCC 412]. Therefore, both .....

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satisfied conjunctively in order to entail imposition of excise duty under Section 3 of the Act. The manufacture in terms of Section 2(f) includes any process incidental or ancillary to the completion of the manufactured product. This 'any process' can be a process in manufacture or process in relation to manufacture of the end product, which involves bringing some kind of change to the raw material at various stages by different operations. The process in manufacture must have the effe .....

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& General Mills Co. Ltd., AIR 1963 SC 791, South Bihar Sugar Mills Ltd. v. Union of India, AIR 1968 SC 922 and in line of other decisions has explained the meaning of the word 'manufacture' thus: "14. The Act charges duty on manufacture of goods. The word 'manufacture' implies a change but every change in the raw material is not manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name, character or use." .....

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and therefore, such Copper Sludge is a different article and not a waste. The process of manufacture admittedly is of zinc sulphate (Agricultural Grade) and it is not even the department's case that the ultimate aim of manufacture was manufacturing the Copper Sludge, but the manufacture was that of zinc sulphate (Agricultural Grade). It is in the process of such manufacture of zinc sulphate (Agricultural Grade) that the waste like Copper Sludge (Agricultural Grade) would arise and therefore .....

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same was dismissed as reported at 2010 (257) ELT A139(SC). 10. Recently, the Hon'ble Apex Court in the case of DSN Sugar Mills (supra) held that bagasse emerging as residue and waste of sugar because of deeming fiction introduced by explanation to Section 2(e) of Central Excise Act, 1994, is not applicable as such bagasse is not a product manufactured and will not fall under the definition of 'manufacture'. The ratio is in paragraph Nos. 7 to 10 and the same is reproduced. "7. .....

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2(f) of the Act. The relevant portion of amended Section 2(f) reads as under: Section 2(f) - "manufacture" includes any process - (i) incidental or ancillary to be completion of a manufactured product; (ii) which is specified in relation to any goods in the section or Chapter notes of [The First Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to [manufacture; or] (iii) which in relation to the goods specified in the Third Schedule, involves packing or repackin .....

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