2008 (1) TMI 869 - AT - Central Excise

Job-work - aluminium dross and aluminium ash - Held that - the law is settled that dross and skimming which arises during the course of manufacture would not amount to manufactured Product and hence not eligible to tax - appeal allowed - decided in favor of appellant.

Summary

Issues: Confirmation of duty on aluminium dross and ash arising during die-casting of aluminum parts; Non-imposition of penalty by the adjudicating authority.

Confirmation of Duty on Aluminium Dross and Ash:
The judgment involves appeals against the confirmation of duty on aluminium dross and ash arising during the manufacturing process of die-casting aluminum parts. The appellant supplied aluminium ingots to a job worker who then manufactured parts by melting the aluminium. The revenue contended that the ash and dross arising during this process are liable for excise duty. The adjudicating authority confirmed the demand based on the premise that the ash and residue contained more than 50% of aluminium as metal. However, the Tribunal referred to a Supreme Court case involving a similar issue and highlighted that the mere presence of metal in the dross does not automatically make it excisable. The Supreme Court emphasized that for an article to be excisable, it must undergo a transformation resulting in a new and distinct product. Therefore, the Tribunal concluded that dross and skimming, in this case, do not amount to a manufactured product eligible for taxation, aligning with the decision in the Indian Aluminium case. Consequently, the Tribunal allowed the appeal filed by the appellant, dismissing the appeal by the revenue and disposing of the cross objection filed by the appellant.

Non-Imposition of Penalty:
Additionally, the issue of non-imposition of penalty by the adjudicating authority was raised in the appeals. While the confirmation of duty was the primary focus of the case, the revenue also appealed against the lack of penalty imposed by the adjudicating authority. However, the Tribunal's decision to set aside the confirmation of duty on the grounds that the dross and skimming were not excisable products also led to the dismissal of the revenue's appeal regarding penalty imposition. The Tribunal's ruling in favor of the appellant on the duty confirmation issue indirectly addressed the penalty aspect as well, resulting in the dismissal of the revenue's appeal on penalty imposition.

In conclusion, the judgment by the Appellate Tribunal CESTAT Mumbai addressed the issue of confirming duty on aluminium dross and ash arising during the manufacturing process of die-casting aluminum parts. By referencing a Supreme Court case, the Tribunal established that dross and skimming do not qualify as manufactured products eligible for taxation solely based on the presence of metal. The decision favored the appellant, leading to the dismissal of the revenue's appeal and the disposal of the appellant's cross objection. The Tribunal's ruling on the duty confirmation issue indirectly resolved the matter of penalty imposition, resulting in the dismissal of the revenue's appeal on penalty.