In Excise Appeal No. 1975 of 2012 -CESTAT- CESTAT (Mumbai) rules ‘Waste Pickle Liquor’ not subject to Excise Duty, exempts JSW Steel from adding additional consideration for Ferric Oxide sale to calculate Excise Duty
Members Ajay Sharma (Judicial) & Anil G. Shakkarwar (Technical) [11-07-2023]

Read Order: JSW Steel Ltd v. Commissioner of Central Excise, Thane II

Chahat Varma

New Delhi, July 19, 2023: The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal has held that Waste Pickle Liquor (WPL), a by-product generated during the manufacturing process, was not considered an excisable good. Therefore, no additional consideration received by JSW Steel Ltd. (appellants) from M/s. Indrox Global Pvt. Ltd. for the sale of Ferric Oxide needed to be added to the transaction value for calculating excise duty.

The issue revolved around whether the credit notes received by the appellants from M/s. Indrox Global Pvt. Ltd. for the sale of Ferric Oxide, which was produced through the chemical reaction of WPL supplied by JSW Steel Ltd., should be included in the transaction value under Rule 6 of the Excise Valuation Rules, 2000.

The Tribunal referred to a previous case involving M/s. TATA Steel Ltd. where it was established that WPL was not an excisable good, and therefore Rule 6 of the Valuation Rules did not apply. Consequently, the issue of undervaluation was deemed irrelevant.

The Tribunal concluded that the sale proceeds of the by-product, Ferric/Iron Oxide, should not be considered as consideration for the waste product, WPL. WPL was deemed a waste product without marketability or saleability, and thus not subject to duty. Additionally, the appellants were not involved in the conversion of WPL into Ferric/Iron Oxide, further supporting their exemption from duty liability.

As a result, the Tribunal set aside the demand for differential Central Excise duty, along with interest and penalties, in favour of the appellants.