Relief to JSW Steel Ltd: CESTAT Quashes Demand of Central Excise Duty on ground of Inclusion of WPL as category of Waste Component [Read Order]

The Mumbai bench of the Customs, Excise, and Services Tax Appellate Tribunal (CESTAT) quashed the order of demand of central excise duty on the ground of the inclusion of Waste Pickle Liquid (WPL) as the category of the waste component. 

JSW Steel Ltd, the appellant assessee was engaged in the manufacture of Steel articles and to remove impurities and rust ‘pickling process’ is carried out which resulted in the generation of Waste Pickle Liquor (WPL). 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demands raised in the show cause notice along with interest and penalty and appropriation of the amount deposited. 

Mansi Patil, the counsel for the assessment. contended that WPL was not dutiable being a waste product as it does not satisfy the twin conditions of manufacture and marketable and also submitted that the sale value of by- product arising in the plant of IGPL cannot be said to be a consideration for WPL sent to IGPL as the product had to be assessed in the same form in which it was cleared. 

It was further submitted that the Waste Pickle Liquor (WPL) emerged during the pickling process i.e. process of removing impurities and rust on the wires manufactured by the assessee and it emerged as a waste product after the process of prickling and does not have a market of its own. 

Xavier Mascarenhas, the counsel for the respondent contended that the IGPL had issued various credit notes to the assessee and the same was additional consideration received in terms of Rule 6 of Valuation Rules, 2000, which had to be included in the transaction value. 

The bench observed that the process of manufacture of the steel articles or finished goods and it’s not an end product or finished product and merely because it fetches some price in the market does not bring it out from the category of waste and it had neither any marketability nor saleability and therefore it’s not liable to any duty.

The two-member bench comprising Ajay Sharma (Judicial) and Anil.G. Shakkatvar (Technical) held that the waste or rubbish, which is thrown up in the course of manufacture, cannot be said to be a produce of manufacture and cannot be said to be eligible to excise duty and quashed the order of demand while allowing the appeal filed by the assessee. 

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