CESTAT Quashes Excise Duty Demand Against Pepsico Scrap-Veg-Refuse Arising From Manufacture Of Exempted Goods

The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has quashed the excise duty demand against Pepsico Scrap-Veg-Refuse arising from the manufacture of exempted goods.The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that waste pairing and scrap arising during the manufacture of exempted goods were exempt from the payment of excise duty.The appellant/assessee is engaged in the manufacturing of potato chips, Kurkure, Namkeens, etc. On gathering the intelligence that the assessee is evading central excise duty in respect of 'potato starch' classifiable under Tariff Item No. 11083100 of the Tariff by manufacturing and clearing the same clandestinely under the garb of scrap-veg-refuse without payment of appropriate duty. After the detailed investigation, show cause notices were issued, and after following the due process, the adjudicating authority confirmed the demand and also imposed penalties. Aggrieved by the order, the appellants filed appeals before the Commissioner (Appeals), who rejected the appeals filed by the appellants.The assessee submitted that the orders are not sustainable in law and are liable to be set aside as they have been passed without properly appreciating the facts, the law, and binding judicial precedents. The goods are not manufactured in terms of the provisions of the Central Excise Act. The product 'scrap-veg-refuse' came into existence pursuant to the process of recycling waste water, which was not undertaken for the manufacturing of 'scrap-veg-refuse'. The process was undertaken only to reuse the reusable water content in the waste water.The assessee contended that the appellant has correctly classified the 'scrap-veg-refuse' under Chapter Heading 23080000 as vegetable waste. The explanatory notes to Chapter 23.08 state that the chapter covers vegetable materials, vegetable products, vegetable waste, residues, and by-products used in animal feeding and generated from the industrial processing of vegetable material in order to extract some of their constituents. The CESTAT held that the mere presence of certain elements of starch in the residue or scrap does not take it out of the purview of waste or residue, and the Department has to bring sufficient evidence to establish that the product is not residue or waste.The CESTAT noted that goods are not manufactured products as per Section 3(1) of the Central Excise Act, 1944, which mandates that excisable goods must come into existence as a result of the manufacturing process so as to attract the levy of excise duty. The 'scrap-veg-refuse' came into existence pursuant to the process of recycling waste water, undertaken only to reuse the reusable water content in the waste water.The CESTAT allows the appeal and quashes the order imposing excise duty on scrap vegetables.Counsel For Appellant: B.L. NarasimhanCounsel For Respondent: Siddharth JaiswalCase Title: M/s Pepsico India Holdings Pvt Ltd Versus Commissioner of Central Excise & Service Tax, Chandigarh-ICase No.: Excise Appeal No. 2819 of 2011Click Here To Read The Order

CESTAT Quashes Excise Duty Demand Against Pepsico Scrap-Veg-Refuse Arising From Manufacture Of Exempted Goods

Mariya Paliwala

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CESTAT Quashes Excise Duty Demand Against Pepsico Scrap-Veg-Refuse Arising From Manufacture Of Exempted Goods

Mariya Paliwala

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INR 1099+GST

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