2019 (2) TMI 554 - AT - Central Excise

Levy of duty - residual waste namely, fly ash - process of manufacture not taking place - benefit of N/N. 89/95-CE dated 18.5.95 denied - Held that - The matter is no longer res integra as it has already been decided by Hon ble High Court of Madras in the case of Mettur Thermal Power Station vs. CBE & C New Delhi 2015 (9) TMI 152 - MADRAS HIGH COURT , where it was held that the commodity fly ash cannot be subjected to levy of excise duty because it is not an item of goods which has been subjected to process of manufacture, it may not be necessary for this Court to delve upon any other related issues - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of 'fly ash' under Central Excise Tariff Act, 1995 and applicability of duty exemption under notification No. 89/95-CE.

Analysis:
1. The respondent-assessee, engaged in electricity generation, cleared 'fly ash' for use in other products without duty payment under exemption benefit. The department contended 'fly ash' is classifiable under a specific entry, thus duty liable. A show cause notice demanding duty of ?48,12,210 was issued, confirmed in Order-in-Original, appealed by the assessee and allowed by the Commissioner (Appeals).

2. The department challenged the order, arguing the Commissioner erred by applying a Supreme Court judgment on Bagasse excisability, stating 'fly ash' arises differently. The assessee defended, citing the Supreme Court's decision on Cinder excisability, claiming 'fly ash' doesn't undergo manufacturing.

3. The High Court in a similar case held 'fly ash' isn't excisable as it doesn't undergo manufacturing during electricity generation. Marketability alone doesn't establish excisability. The department's emphasis on marketability per Section 2(d) was deemed legally unsustainable.

4. The Tribunal referred to the Madras High Court's decision on 'fly ash' excisability, stating electricity, though nil-duty, is excisable. 'Fly ash' not undergoing manufacturing doesn't attract excise duty, aligning with the Madras High Court's ruling. The appeal was dismissed following the precedent.

In conclusion, the Tribunal dismissed the department's appeal, following the Madras High Court's decision, holding 'fly ash' arising during electricity generation isn't excisable due to lack of manufacturing, thus not liable for duty, despite marketability.