2011 (8) TMI 691 - AT - Central Excise

Excisability - Manufacture of zinc ash arising out of zinc oxide - Held That - In view of Collector vs Tata Iron & Steel Co.Ltd (2004 -TMI - 46909 - SUPREME COURT OF INDIA) and Commissioner vs Indian Aluminium Co.Ltd. (2006 -TMI - 709 - SUPREME COURT OF INDIA), held that process of generation of zinc ash does not involve any manufacturing process and the impugned goods cannot be held to be excisable.

Summary

Issues:
Excisability of zinc ash and liability to pay duty under the Central Excise Tariff Act.

Analysis:
The appeal was filed against the Commissioner(Appeals) order demanding duty on zinc ash cleared without payment. The appellants are engaged in manufacturing zinc oxide and availing Cenvat credit facility. The show-cause notice demanded duty for a specific period, which was confirmed by the Dy. Commissioner along with interest and penalty. The appeal before the Commissioner (Appeals) was rejected, leading to the current appeal before the Tribunal.

The main contention raised by the appellants was whether zinc ash is an excisable commodity liable to duty under the Central Excise Tariff Act, 1985. The process of manufacturing zinc ash during the production of zinc oxide was explained by the appellants' counsel. They cited various decisions, including those by the Supreme Court and Tribunal, to support their claim that zinc ash is not a manufacturing product and not subject to excise duty.

On the other hand, the Revenue argued that since the appellants were availing Cenvat credit on duty-paid zinc ash, they should not object to paying duty on zinc ash, even if its value is lower than zinc dross. The Revenue defended the Order-in-Appeal passed by the Commissioner.

After hearing both sides and reviewing the records, the Tribunal found that the key issue was the excisability of zinc ash produced during the manufacturing process. Relying on previous decisions, including a case involving Vishal Pipes vs Central Excise Act, Noida, and decisions by the Supreme Court, the Tribunal concluded that zinc ash does not undergo a manufacturing process and is not an excisable good. Therefore, the Tribunal allowed the appeal, holding that no duty is leviable on zinc ash.

In conclusion, the Tribunal ruled in favor of the appellants, stating that zinc ash is not an excisable good, and hence, no duty is payable on it.