The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that excise duty cannot be levied on the spent solvent Dimethylformamide (DMF) which arose during the manufacture of dutiable Sucralose.
Alkem Laboratories Ltd, the appellant assessee engaged in the manufacture of excisable goods falling under Chapters 21 and 29 of Schedule to the Central Excise Tariff Act, 1985, and also availing CENVAT Credit of duty paid on capital goods, inputs used in or concerning the manufacture of finished goods.
The assesse appealed against the order passed by the Commissioner (Appeals) for confirming the excise duty demand and for the imposition of penalty under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002.
Ishan Bhatt, the counsel for the assessee contended that during the manufacture of the “Sucralose”, a by-product DMF solvent gets generated and repeatedly used after purification within the factory premises and it gets mixed up with various kinds of impurities, and finally, a stage searches when it cannot be used any further. The waste generated from spent solvent was cleared from the factory premises as the residue.
P K Singh, the counsel for the department relied on the decisions made by the lower authorities and contended that the assesse was liable to pay the excise duty demand and the demand raised by the revenue was as per the law and liable to be sustained.
The Bench observed that in the case of CCE Vs. West Coast Industries Gases Ltd had already decided the matter holding that waste in the form of drums/ barrels in which the raw material has been received by the manufacturer could not be treated as waste arising out of the processing of the inputs for which the credit has been taken and therefore no duty can be demanded on the same.
The two-member bench comprising Ramesh Nair (Judicial) and C L Mahar (Technical) quashed the excise duty demand imposed on the assessee while allowing the appeal filed by the assessee.
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