2001 (12) TMI 730 - AT - Central Excise

Summary

Issues Involved:
Whether the activity of production of galvanised plain coil/sheet, galvanised corrugated sheets constitutes excisable goods liable to duty, and if waste and scrap, zinc dross, zinc ash, CR sheets, HR sheets are also liable to excise duty.

Analysis:

Issue 1: Classification and Excisability of Galvanised Plain Coil/Sheet and Galvanised Corrugated Sheets
The appellant contended that galvanisation and corrugation do not amount to manufacture as they do not create a new product with distinct characteristics. They argued that galvanisation is merely a protective coating of zinc and corrugation is a process to increase stiffness for specific applications. The appellant relied on legal precedents and circulars to support their claim. However, the Department argued that the processes of galvanisation and corrugation result in products with different names, characters, and uses, making them excisable goods. They cited case laws to establish that a change in the product's utility signifies manufacturing. The Tribunal observed that galvanisation alone does not amount to manufacture based on Supreme Court rulings. Still, the process of corrugation transforms the product into a new entity with distinct characteristics, making it liable to excise duty.

Issue 2: Excisability of Waste and Scrap, Zinc Dross, Zinc Ash, CR Sheets, HR Sheets
The appellant argued that waste and scrap, zinc dross, zinc ash, CR sheets, and HR sheets generated during manufacturing should be exempt from duty as they are by-products and fall under a specific exemption notification. They contended that these items do not undergo substantial changes to be considered excisable goods. However, the Department asserted that these materials are chargeable to excise duty as they are part of the manufacturing process and do not qualify for exemption. The Tribunal held that waste and scrap are indeed liable to duty, and the Commissioner should reassess the duty amount. The penalty imposed was set aside pending redetermination of the duty amount, leaving room for reconsideration by the Commissioner.

In conclusion, the Tribunal upheld the excisability of galvanised corrugated sheets due to the transformative nature of the corrugation process. It also ruled that waste and scrap, along with other materials, are subject to excise duty, directing a reassessment of the duty amount while setting aside the penalty for reconsideration.