ORDER
N.K. Bajpai, Member (T)
1. These two appeals arise out of the same order of the Collector of Central Excise (Appeals), Chandigarh and were heard together. They involve consideration of the question of excisability of ‘Spent Earth’ under the Central Excise Tariff Act, 1985. Collector (Appeals) has held that, following the decision of the Tribunal in the case of Hindustan Lever Ltd. v. Collector of Central Excise, [1985 (22) E.L.T. 232] spent earth which is a baser material than activated earth, is not excisable, because the process of manufacture does not, in this case, transform the baser material into a superior product.
2. In its appeal, the Department has referred to the decision of the Tribunal in the case of Hindustan Lever Ltd. v. Collector of Central Excise, Calcutta, [1985 (22) E.L.T. 232] which, according to them, has not been approved as correct law in Order No. 793-794/C, dated 16-12-1985 (an unreported judgment) in the case of HMT v. CCE, Hyderabad in which Spent Earth obtained from activated bleaching earth used in VNE Oils was held to be excisable under Item 68 of the erstwhile Central Excise Tariff for which the corresponding sub-heading is 1507.00 of Central Excise Tariff Act, 1985. It is stated in the appeal that in arriving at its decision, the CEGAT relied on the Supreme Court judgment dated 11-6-1985 in the case of Khandelwal Metal Engineering Works v. Union of India [1985 (20) E.L.T. 222].
3. Arguing on the appeal Smt. Ananya Ray, the learned Senior Departmental Representative, submitted that the decision cited in the impugned order relates to the erstwhile Central Excise Tariff and the position under the new tariff had undergone a change inasmuch as there was a specific mention under sub-heading No. 1507.00 of “residues resulting from the treatment of fatty substances….” and this entry fully covers items like “Spent Earth”. There was no dispute that the test of marketability prescribed by the Supreme Court for excisability was also complied with in this case. The view that ‘Spent Earth’ being in the nature of ‘degraded material’ or waste was therefore not excisable taken by Collector (Appeals) in her order, can be rebutted on the basis of the Supreme Court judgment in the case of Khandelwal Metal & Engineering Works v. Union of India [1985 (20) E.L.T. 222), in which the Court has held that where there was a specific entry in the tariff for what may otherwise be considered waste material, such material would be excisable. She also referred to the Supreme Court decision in the case of vBhor Industries v. Collector of Central Excise [1989 (40) E.L.T. 280] according to which the criteria of marketability was also satisfied in the present case.
4. Shri N.D. Jain, the learned Secretary of the respondent company, handed over written submissions according to which ‘Spent Earth’ is not a residue of the fatty substances in terms of the language of sub-heading No. 1507.00 but residue of itself, after it had discoloured the vegetable oil in the process of manufacturing vegetable product. It was his contention that in the process only the colouring agents like Chlorophyll Kanthophyll and Carotene were affected by the Sulphuric Acid present in the activated carbon. He submitted that it was not a manufactured item and was also not marketable. Shri Jain cited the decision of the Tribunal in the case of Modi Vanaspati Manufacturing Co. v. Collector of Central Excise, [1990 (47) E.L.T. 57] in which it was held that Spent Bleaching Earth was a waste material arising in the course of manufacture of vegetable product and not ‘goods’ liable to duty under Item 68 of the erstwhile Central Excise Tariff.
5. We have considered the appeal and the submissions of both sides. While it is true that ‘Spent Earth’ was held not to be excisable under the erstwhile Central Excise Tariff by a number of decisions of the Tribunal, the position has undergone a total change with the coming into force of the Central Excise Tariff Act, 1985. The latter has a specific entry for “residues resulting from the treatment of fatty substances …” in sub-heading No. 1505.00, whereas the old tariff did not have any such entry. The Tribunal, in these circumstances, did not accept the plea that even in the absence of a specific entry ‘Spent Earth’ should be classified under the residuary Item 68. In the case of Khandelwal Metal & Engineering Works cited supra, the Supreme Court has held that when there is a specific entry in the tariff for what is otherwise considered to be waste material, and it fulfils the conditions of excisability in the sense that the goods are marketable, such waste material would be liable to duty. We are not impressed with the argument of Shri Jain that Sulphuric Acid present in the activated carbon is merely reacting with colouring agents and, therefore what comes out as residue is residue of itself and does not qualify to be treated as “residue resulting from the treatment of fatty substances . . .”. Whatever be the nature of the reaction and the consequence of it, the fact remains that ‘Spent Earth’ is residue resulting from the treatment of fatty substances and, therefore, qualifies for assessment under sub-heading No. 1507.00 of the tariff, being also excisable. In view of this, the appeals are allowed.