ORDER
S.S. Kang, Member (J)
1. Appellants filed this appeal against the order-in-appeal passed by the Commissioner (Appeals), whereby the Commissioner (Appeals) held that waste high boiler is excisable, confirmed the duty demand and also imposed penalties under Rule 173Q of the Central Excise Rules and under Section 11AC of the Central Excise Act.
2. Ld. Counsel, appearing on behalf of the appellants, submitted that waste high boiler is a waste generated in the reactor where acetylene gas and hydrochloric acid were reacted to form venyl chloride monomer. It is not a commodity, which is known in the market and the revenue has confirmed the demand on the ground that the appellants were selling the same. His submission is that mere sale of the waste cannot be made a ground to hold that waste is excisable goods. He relies upon the decision of the Hon’ble Supreme Court in the case of Union of India v. Indian Aluminium Co. Lid. reported in 1995 (77) E.L.T. 268 (S.C.).
3. Ld. Counsel also submitted that the demand is time-barred, as the show cause notice was issued on 22-11-99 demanding duty for the period from 22-11-94 to 3-4-98. His submission is that the revenue was aware of the fact that the appellants were selling waste high boiler. He relies upon the letter dated 17-7-87. Appellants also relied upon the decision of the Hon’ble Supreme Court in the case of CC.E. v. H.M.M. Ltd. reported in 1995 (76) E.L.T. 497 (S.C.) to submit that the demand for extended period cannot be made merely on the ground that the assessee has not declared waste high boiler in the classification list.
4. Ld. D.R., appearing on behalf of the revenue, submitted that waste high boiler is not a waste, but in fact, is an organic compound. His submission is that a sample of waste high boiler was sent for chemical test which shows that it is a residue product of chemical industry. He also submits that the ratio of the Hon’ble Supreme Court in the case of Indian Aluminium Co. Ltd. (supra), is not applicable in the present case. His submission is also that the appellants never declared clearance of the goods, in question, to the revenue authorities.
5. Heard both sides.
6. In this case, the contention of the appellants is that waste high boiler is not marketable, hence is not excisable. The appellants relied upon the decision of the Hon’ble Supreme Court in the case of Indian Aluminium Co. Ltd. (supra). In this case the Hon’ble Supreme Court, after examining the Tariff Item No. 27 of the erstwhile tariff, held that explanation to the tariff entry provides that sludge, dross, skimmings, ash and other residues are not waste and scrap of aluminium. Hon’ble Supreme Court also had taken note of the arguments of the assessee that dross and skimmings of aluminium are specifically excluded from the scope of waste and scrap of aluminium because they are not even waste or scrap, therefore, these are not goods at all as understood in the commercial parlance.
7. In the present case, we find that though the name of the product is waste high boiler, but the chemical test report shows that it is an organic compound. The residual products of chemical or allied industry are specifically covered under chapter 38 of the Central Excise Tariff.
8. The waste high boiler is not parallel to dross and skimmings of aluminium, which are excluded even from the scope of waste and scrap of aluminium under Tariff Item 27 of the erstwhile tariff. Therefore, the ratio of the decision of the Hon’ble Supreme Court in the case of Indian Aluminium Co. Ltd. (supra) is not applicable in the present case.
9. In respect of marketability, the appellants are not denying the fact that during the relevant period, the appellants sold waste high boiler for Rs. 19,53,126/-. In this situation, we are unable to accept the plea of the appellants that waste high boiler is not marketable. As the waste high boiler is a residual product of chemical industry, it is specifically covered under Central Excise Tariff and it is a marketable commodity, therefore, we find no infirmity in the impugned order in respect of excisability and marketability of the goods.
10. In respect of limitation, the contention of the appellants is that revenue was aware of the fact that they were clearing waste high boiler. The appellants failed to produce any classification list or any other letter to show that they had declared to the revenue regarding clearance of waste high boiler. Appellants relied upon the letter dated 17-7-87 which is their internal correspondence. We find that appellants had not produced any evidence to show that the revenue was aware of the fact that the goods, in question, were cleared by the appellants. The Hon’ble Supreme Court in the case of B.P.L. India Ltd. v. C.C.E. reported in 2002 (143) E.L.T. 3 (S.C.) held that in case the assessee had removed any product without intimation to the revenue department, their intention to evade payment of duty is proved. In view of the above decision of the Hon’ble Supreme Court, we find no merit in the arguments of the appellants that extended period is not invokable in the present case.
11. From the impugned order, we find that the Commissioner (Appeals), while reducing the penalty under Section 11AC of the Central Excise Act enhanced the penalty imposed under Rule 173Q of the Rules from Rs. 15,000/- to Rs. 1,58,535/-. The adjudicating authority imposed a penalty of Rs. 15,000/- under Rule 173Q of the Rules and revenue had not filed any appeal against the adjudication order. Therefore, in absence of any claim by the revenue for enhancement of penalty under Rule 173Q of the rules, the impugned order, enhancing the penalty under Rule 173Q of the rules, is not sustainable, hence set aside.
12. Consequently, the penalty imposed under Rule 173Q of the rules is reduced to Rs. 15,000/-, otherwise the impugned order is upheld. The appeal is disposed of as indicated above.