2017 (5) TMI 385 - AT - Central Excise

Zinc Ash - cleared from factory for consideration - whether excisable product or not? - Held that - Board circular F.No.96/115/2015-CX.1, dt.25.04.2016, clarifies that bagasse, Dross and Skimming of non-ferrous metals or any such by-product or waste which are non-excisable goods when cleared from the factory for a consideration, are to be treated as exempted goods - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether Zinc Ash and Aluminum Dross generated during the manufacture of finished products are excisable goods subject to duty.
2. Appeal against demand of duty on Zinc Ash by M/s Nav Bharat Metallic Oxide Industries Pvt. Ltd.
3. Appeal against demand of duty on Aluminum Dross by M/s Hindalco Industries Ltd.
4. Interpretation of the definition of 'excisable goods' and 'manufacture' in light of relevant case law.
5. Application of the judgment of the Hon'ble Bombay High Court in Hindalco Industries Ltd Vs UoI - 2015 (315) ELT (Bom.) to the present case.

Analysis:

1. The central issue in this case revolves around determining whether Zinc Ash and Aluminum Dross, generated as waste/byproduct during the manufacturing process, qualify as excisable goods subject to duty. The Advocate argued that even though these byproducts are sold in the market, they should not be considered excisable goods. Reference was made to the judgment of the Hon'ble Bombay High Court, emphasizing that waste and scrap emerging as by-products do not automatically attract excise duty unless they meet specific criteria outlined by the Supreme Court.

2. M/s Nav Bharat Metallic Oxide Industries Pvt. Ltd. challenged the demand of duty on Zinc Ash, a byproduct of Zinc Oxide manufacturing. The Appellate Tribunal found no merit in the order of the Commissioner (Appeals) and set it aside, allowing the appeal of the Appellant. This decision was influenced by the interpretation of relevant legal provisions and the application of the Hon'ble Bombay High Court's judgment.

3. In the case of M/s Hindalco Industries Ltd., the Revenue had demanded duty on Aluminum Dross, a byproduct of Aluminum Alloyed Foil manufacturing. The Commissioner (Appeals) had initially set aside the demand, ruling in favor of the Respondent. However, the Appellate Tribunal upheld the impugned order, dismissing the Revenue's appeal as lacking merit. This decision was based on the same legal principles applied in the previous case.

4. The judgment of the Hon'ble Bombay High Court in Hindalco Industries Ltd Vs UoI - 2015 was crucial in shaping the outcome of both appeals. The Tribunal referenced a circular issued by the Board, which clarified the treatment of certain by-products or waste as excisable goods when cleared from the factory for consideration. This circular aligned with the interpretation of the law provided by the High Court judgment.

5. Ultimately, the Appellate Tribunal concluded that Zinc Ash and Aluminum Dross, being waste/byproducts of manufacturing processes, did not meet the criteria to be classified as excisable goods subject to duty. The Tribunal set aside the order in the case of M/s Nav Bharat Metallic Oxide Industries Pvt. Ltd. and upheld the decision in the case of M/s Hindalco Industries Ltd., emphasizing the legal principles established by the Hon'ble Bombay High Court and the Board's circular.

This detailed analysis of the judgment highlights the key issues, arguments presented, relevant case law, and the Tribunal's decision in each appeal, providing a comprehensive understanding of the legal reasoning behind the outcome.