2018 (10) TMI 825 - AT - Central Excise

Valuation - clearances of waste materials namely cinders to Dalmia Refractories without payment of duty - Department took the view that clearances of cinders are to be subjected to duty at tariff rate - Held that - The Hon ble Bombay High Court in the case of Hindalco Industries Ltd. Vs UOI relying upon the judgment of the Hon ble Supreme Court in the case of Grasim Industries Ltd. Vs UOI 2011 (10) TMI 16 - SUPREME COURT OF INDIA , held that the order of the Tribunal holding that dross and skimming of Aluminium, Zinc and other non-ferrous metal arising as by-products during manufacture and sold by assessee, was manufactured goods after 10-5-2008 was contrary to the aforesaid judgment of the Apex Court. The impugned order upholding the view of original authority that cinder is a dutiable product and exigible to Central Excise duty cannot be sustained - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether cinders cleared by the appellants are subject to duty at tariff rate.
- Whether cinders can be considered excisable goods and be subjected to Central Excise duty.
- Impact of the judgment of the Hon'ble Supreme Court in the case of UOI Vs Ahmedabad Electricity Co. Ltd.
- Applicability of the Explanation to Section 2(d) of the Central Excise Act,1944.
- Interpretation of Board's circulars regarding excisability of waste materials.

Analysis:
1. Dutiability of Cinders:
The appellants were engaged in job work for Dalmia Refractories, clearing refractory bricks and waste materials like cinders. The Department issued a show cause notice proposing duty on cinders. The original authority and Commissioner (Appeals) upheld the duty demand. The appellant argued citing the Supreme Court judgment in UOI Vs Ahmedabad Electricity Co. Ltd. and subsequent circulars withdrawing the classification of cinders as excisable goods.

2. Interpretation of Circulars and Legal Provisions:
The appellant relied on the Supreme Court's ruling that cinder is not excisable, supported by Board's circulars. However, the Department argued that the Explanation to Section 2(d) of the Central Excise Act,1944 broadened the definition of goods subject to duty. The Department referred to Circular No.904/24/2009-CX confirming excisability of waste products sold for consideration.

3. Analysis of Legal Precedents:
The Tribunal analyzed the impact of legal precedents, including the Supreme Court's judgment in the case of Grasim Industries Ltd. Vs UOI, which emphasized the conditions for imposition of excise duty. The Tribunal highlighted the binding nature of Supreme Court judgments and the requirement for goods to satisfy specific criteria for excisability.

4. Decision and Conclusion:
After considering arguments and legal precedents, the Tribunal concluded that cinder is not an excisable commodity based on the Supreme Court's ruling and Board's circulars. The Tribunal emphasized that the Explanation to Section 2(d) does not apply to non-excisable goods like cinders. The Tribunal set aside the duty demand, allowing the appeal with consequential relief as per law.

In summary, the judgment clarified the excisability of cinders, emphasizing the significance of legal precedents and statutory provisions in determining the liability for Central Excise duty on specific goods. The Tribunal's decision was based on a thorough analysis of relevant legal principles and interpretations of circulars, ultimately leading to the setting aside of the duty demand on cinders.