2019 (8) TMI 1504 - AT - Central Excise

Chargeability to Excise Duty - by-product - Zinc Dross and Zinc Ash emerged during the process of galvanisation - HELD THAT - The issue is no more res integra and is covered by the judgment of Hon'ble Supreme Court in the case of BAJAJ AUTO LIMITED ANR. VERSUS THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS, AURANGABAD 2015 (8) TMI 197 - SUPREME COURT and UNION OF INDIA VERSUS DSCL SUGAR LTD. 2015 (10) TMI 566 - SUPREME COURT . Also, Hon ble Bombay High Court in HINDALCO INDUSTRIES LIMITED VERSUS THE UNION OF INDIA, CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, THE COMMISSIONER OF CENTRAL EXCISE 2014 (12) TMI 657 - BOMBAY HIGH COURT , held that Dross and skimming of Aluminum arising as a by-product during the course of manufacture of aluminium/non-ferrous sheets/foils etc are not leviable to Excise duty. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Chargeability of excise duty on Zinc Dross and Zinc Ash generated during galvanisation process.

Analysis:
The appeal was filed against an Order-in-Appeal passed by the CCE (Appeals), Mumbai, regarding the chargeability of excise duty on Zinc Dross and Zinc Ash generated during the galvanisation process of manufacturing excisable goods falling under Chapter 73 of the Central Excise Tariff Act, 1985. The Appellants had availed CENVAT Credit on duty paid for Zinc Dross used in the manufacturing process. However, they cleared the by-products, including Zinc Dross and Zinc Ash, without paying Central Excise duty, leading to demand notices for recovery of short-paid duty amounting to &8377;36,48,510/- for the period March 2005 to March 2008. The demand was confirmed with interest and penalty, which was appealed by the Appellants.

The Appellant's Advocate argued that the issue of duty chargeability on Zinc Dross and Zinc Ash had been settled by previous judgments, citing cases such as Hindalco Industries Limited Vs UoI, Bajaj Auto Ltd Vs CCE Aurangabad, and UoI Vs DSCL Sugar Ltd. These judgments established that waste and residue emerging during the manufacturing process, such as Zinc Dross and Zinc Ash, are not subject to duty as they do not result from the process of manufacture.

The Revenue's representative reiterated the findings of the learned Commissioner (Appeals) regarding the duty chargeability issue. After considering the arguments from both sides, the Tribunal found that the issue was no longer res integra and was settled by previous judgments, including those of the Hon'ble Supreme Court and the Hon'ble Bombay High Court. The Tribunal referenced the judgments in Bajaj Auto Ltd, DSCL Sugar Ltd, and Hindalco Industries Ltd, which concluded that by-products like Dross and skimming of Aluminum generated during manufacturing processes are not leviable to excise duty.

Based on the precedents and legal principles established in the mentioned judgments, the Tribunal concluded that the Zinc Dross and Zinc Ash generated during the galvanisation process should not be subjected to duty. Therefore, the impugned Order-in-Appeal was set aside, and the appeal was allowed with any consequential relief as per law.