Alkem Laboratories Ltd Vs C.C.E. & S.T. (CESTAT Ahmedabad)
CESTAT Ahmedabad held that spent solvent (DMF) arising during the course of manufacture of dutiable ‘Sucralose’ is not dutiable and hence demand of excise duty thereof is not sustainable in law.
Facts- The appellants are engaged in the manufacture of excisable goods falling under Chapter 21 and 29 of Schedule to the Central Excise Tariff Act, 1985. The appellants are also availing CENVAT Credit of duty paid on capital goods, inputs used in or in relation to the manufacture of finished goods.
During the preventive check carried out by the officers of the department at the factory premises of the appellant. The visiting officers recovered (i) a diary containing details of removal of DMF solvent on cash basis from the office of the senior executive, and (ii) a file containing commercial invoices and delivery challans issued for sale of waste and scrap of capital goods and packing materials on which CENVAT Credit was taken by the appellant. After completion of the investigation a SCN was issued to the appellants proposing to demand of excise duty on 3,53,215 kg of DMF spent solvent cleared without payment of duty and excise duty u/r 3(5A) on waste and scrap of various M.S.items and packing materials cleared without payment of duty under commercial invoice.
Conclusion-
Held that the dutiability of the spent solvent is concerned same has already been decided by Hon’ble Apex Court in decision of CCE Hydrabad Vs. Aurobindo Pharma Ltd reported at 2011 (269) ELT A147 (SC). Accordingly, held that waste solvents is not dutiable and therefore the demand of Central Excise duty amounting to Rs. 2,02,242/- is not sustainable.
Similarly for the waste of drums and packaging material which have been cleared without payment of duty. We find that matter is no longer res integra as Hon’ble Supreme Court in case of CCE Vs. West Coast Industries Gases Ltd has already decided the matter holding that waste in form of drums/ barrels in which the raw material has been received by the manufacturer could not be treated as waste arising out of processing of the inputs for which the credit has been taken and therefore no duty can be demanded on the same.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the appellants are engaged in the manufacture of excisable goods falling under Chapter 21 and 29 of Schedule to the Central Excise Tariff Act, 1985. The appellants are also availing CENVAT Credit of duty paid on capital goods, inputs used in or in relation to the manufacture of finished goods. During the preventive check carried out by the officers of the department at the factory premises of the appellant on 20 October 2010. The visiting officers recovered (i) a diary containing details of removal of DMF solvent on cash basis from the office of the senior executive, and (ii) a file containing commercial invoices and delivery challans issued for sale of waste and scrap of capital goods and packing materials on which CENVAT Credit was taken by the appellant. After completion of the investigation a SCN dated 28 February 2011 was issued to the appellants proposing to demand as follows:
“(a) Excise duty of Rs. 2,02,242/- on 3,53,215 Kg of DMF spent solvent cleared without payment of duty and without issuing invoices during August 2007 to October 2010
(b) Excise duty amounting to Rs. 13,84,146/- under Rule 3(5A) of the CENVAT Credit Rules, 2004 on waste and scrap of various M.S. items and packing materials cleared without payment of duty under commercial invoices during April 2008 to September 2010
(c) Interest amounting to Rs.29,886/- and Rs.3,59,016/- on the above duty amounts at (a) and (b) respectively
(d) Penalty under Section 11AC of Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002.
(e) Confiscation of and redemption fine in lieu of confiscation on DMF solvent weighing 4,35,575 Kg seized from the factory during panchnama on 20.10.2010 under Rule 25 of Central Excise Rules, 2002.
(f) Confiscation of and redemption fine in lieu of confiscation on goods already cleared from the factory allegedly without payment of appropriate excise duty as mentioned in clause (a) and (b) above.”
1.1 The matter has been adjudicated vide order dated 2 August 2011, wherein all the charges as mentioned above confirmed by the Adjudicating Authority. The appellants appealed against the order-in-original before Commissioner (Appeals), and the appellant did not succeed at the Commissioner (Appeals) level also and therefore they are before us against the impugned order in appeal dated 27 November, 2012. With regard to the issue of excisability of the “spent solvent” it has been submitted by the learned Advocate appearing on behalf of the appellant that during the course of manufacture of the “Sucralose”, a by product DMF solvent gets generates. The DMF solvents is repeatedly used after purification within the factory premises and it get mixed up with various kind of the impurities and finally a stage searches when it cannot be used any further. The waste so generated of spent solvent is cleared from the factory premises as the residue.
2. The learned Advocate submits that the issue regarding excisability of “Spent Solvent” is no longer res integra in view of the decision of Hon’ble Supreme Court in case of Commissioner Vs. Aurobindo Pharma Ltd., reported under 2011 (269) ELT A147 (SC), wherein the Hon’ble Apex Court has dismissed the petition filed by the Department challenging the decision of Hon’ble Andra pradesh High Court reported under 2010 (259) ELT 673 (AP), wherein the Hon’ble Andra Pradesh High Court has held that “Spent Solvent” is not taxable.
2.1 The Learned Advocate has also placed reliance upon following decision of co-ordinate Benchs of CESTAT, wherein the issue whether the spent solvent undergoing the process of purification and treatment is a marketable commodity, therefore exigible to excise duty has been dealt with on multiple occasions, and it has been held that spent solvent is not excisable dutiable under Central Excise laws. Learned Advocate has relied upon following decisions in this regard:
