The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that excise duty is not demandable as spent catalyst removed as a by-product from the factory is not a manufactured product.
Glaxo Smith Kline Pharmaceuticals Limited., the appellants herein are engaged in the manufacture of Bulk Drugs. During the course of manufacture of the said goods, the appellants use Palladium Charcoal Catalyst, which are imported by them. The said product is used to increase reaction process during the course of manufacture of the final product. After using the said Catalyst for some time, the said product was not usable as such and thus, the same was sold by the appellants under the nomenclature “Spent Palladium”.
Since, the said byproduct i.e. the Spent Palladium was sold by the appellants for a price having different commercial identity in the market, the department had interpreted that in terms of definition of ‘manufacture’ contained under Section 2 (f) of the Central Excise Act, 1944, the said product should be leviable to Central Excise duty.
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Based on such understanding, show-cause proceedings were initiated against the appellants, which were culminated into the adjudication order dated 13.01.2014, wherein the original authority had confirmed the duty demand along with interest and also imposed penalty on the appellants. On appeal against the said adjudication order, the learned Commissioner (Appeals), vide impugned order dated 25.06.2015 has upheld the adjudged demand confirmed on the appellants and rejected the appeal filed by them. Feeling aggrieved with the impugned order dated 25.06.2015, the appellants have preferred this appeal before the Tribunal.
The period of dispute involved in the present appeal is December 2011. For the earlier period i.e. November 2003 to January 2007, similar proceedings were initiated by the department for confirmation of the duty demand on Spent Catalyst, by considering the same as a manufactured product. The order passed by the department in confirming the demands against the appellants were appealed against before the Tribunal and the Tribunal vide order No. A/85355/2018 dated 28.02.2018 has set aside the demands confirmed on the appellants, by holding that Spent Catalyst removed as a by-product from the factory, cannot be considered as a manufactured product, in order to attract payment of Central Excise duty.
Since the identical issue involved in the case of self-same appellants for the earlier period was decided by the Tribunal in favour of the appellants, A two member bench of Mr. S.K. Mohanty, Member (Judicial) and Mr. M.M. Parthiban, Member (Technical) held that the present demands confirmed against the appellants on the similar set of facts cannot be decided differently.
The bench set aside the impugned order confirming the adjudged demands on the appellants and allowed the appeal.
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