2017 (3) TMI 638 - AT - Central Excise

Clearance of Aluminium Dross without payment of duty - demand - the appellant claims that the appellant has not manufactured aluminium dross, therefore, no duty of excise is payable by the appellant on the said aluminium dross - Held that - the issue is no more res-integra that no duty is payable on the aluminium dross being by-product emerges during the course of manufacturing of final product - reliance was placed in the case of Hindalco Industries Limited v. UOI 2014 (12) TMI 657 - BOMBAY HIGH COURT , where it was held that Dross and skimmings may be capable of fetching some sale price, for that matter any rubbish can be sold. But that is not the criterion. It cannot be said that dross and skimmings are the result of treatment, labour or manipulation whereby the end product is dross and skimmings. They are merely the scum thrown out in the process of manufacture of aluminium sheets. Therefore it cannot be said that dross and skimmings are transformation resulting in a new and different article with a distinctive name, character or use or that they ordinarily come to the market to be bought and sold and are known to the market, and duty cannot be levied - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand on account of clearance of Aluminium Dross

Analysis:
The appellant, engaged in manufacturing two-wheelers, used Aluminium alloy ingots as inputs to make cast components. During the melting process in a furnace, a layer of molten aluminum oxidizes, forming aluminium dross, which the Revenue demanded duty on. The appellant argued they did not manufacture the dross and cited a Bombay High Court decision. The Tribunal referred to the Bombay High Court's view that certain conditions must be met conjunctively for excise duty imposition. The Tribunal criticized the Revenue for disregarding Supreme Court judgments and quashed the impugned order as perverse and vitiated by an error of law. The Tribunal held that no duty is payable on aluminium dross as it is a by-product emerging during manufacturing, citing a Supreme Court decision in another case.

In another case involving Bajaj Auto Ltd., the Supreme Court observed that during the manufacturing of die-casting of aluminium parts, dross and ash emerge as by-products, leading to no excise duty payable on them. The Tribunal concluded that the issue was no longer res-integra, and no duty is payable on aluminium dross as a by-product of the manufacturing process. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

Therefore, the Tribunal ruled in favor of the appellant, holding that no duty is payable on aluminium dross as it is a by-product of the manufacturing process, as established by relevant court decisions.