By TIOL News Service

MUMBAI, FEB 18, 2019: THE appellant is a manufacturer of toothpaste.

A small amount of base cream used in manufacture of toothpaste was used for R&D purpose (duly accounted) and after a duration of time the same was removed in the form of waste after obtaining due permission from the Municipal authorities. The appellants have informed the above to the department vide letter dated 09/06/2005.

Revenue has demanded Central Excise duty on the waste of base cream so cleared by the appellants.

Lower authorities confirmed the duty demand of Rs.61,196/- and imposed equal amount of penalty, hence an appeal is filed before the CESTAT.

The appellant submits that the waste of base cream was discarded into open container since being unfit for consumption; that it was not marketable. Reliance is placed in support on the decisions in Delhi Cloth & General Mills Co. Ltd. - 2002-TIOL-13-SC-CX-LB & Tata Iron & Steel Co. Ltd. - 2004-TIOL-25-SC-CX. It is also mentioned that the Commissioner (A) had not considered their submissions on the applicability of S.4A and admissibility of CENVAT Credit in the event the goods are held to be excisable.

The AR supported the impugned order.

The Bench observed was unimpressed by the impugned order and observed -

+ Commissioner (Appeals) has taken a stand that the appellants have not contested his earlier order dated 08/07/2010 for a different period on the same set of facts; as such, it is deemed that the appellants have accepted the contention of the department.

+ It is a well-known fact that there is no estoppel in taxation matters and the principle is equally applicable to the Revenue as well as the appellants.

+ It is not the case of the Revenue that the said waste is cleared for a consideration.

+ Base cream is not packed in tubes, as in the case of normal toothpaste tubes sold, it cannot be held that they are marketable as in respect of such products packing is am essential requirement to make it marketable. The waste cleared by the appellants does not even satisfy the test of saleability.

+ Therefore, even when the goods are held to be excisable for the reason that they have been manufactured in the factory, they do not assume the character of being goods which can be marketable and saleable.

+ Dumping of waste cannot be equated to clearance of excisable goods.

+ Moreover, in view of the facts that the appellants have informed about their activity to the department well in 2005 itself and have been regularly filing RT-12/ER-1 returns, imposition of penalty under Section 11AC is not sustainable.

Following the ratio of the cited cases, the impugned order(s) was set aside and the appeal(s) was allowed.

(See 2019-TIOL-514-CESTAT-MUM)