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1988 (5) TMI 225 - AT - Central Excise
Issues: Assessment of aluminium dross and skimmings under Central Excise Tariff Item 68.
The judgment involves a dispute regarding the assessment of aluminium dross and skimmings under Item 68 of the Central Excise Tariff. The department contended that the dross and skimmings should be assessed under Item 68 as they believed these products lose their identity with the raw materials during production and emerge as new and distinct goods. On the other hand, the appellant argued that previous tribunal judgments had established that dross and skimmings are not goods and, therefore, not excisable. The department based its argument on a Bombay High Court judgment regarding proforma credit under Rule 56A(2) of the Central Excise Rules. However, the appellant highlighted that the High Court held dross and skimmings were not goods as they were merely scum thrown out during the manufacturing process and did not undergo a transformation resulting in new articles with distinctive characteristics or uses. The court emphasized that the appearance of a market for a product does not automatically classify it as a good for excise duty assessment. Furthermore, the judgment discussed the distinction between waste and scrap, which are considered by-products of the manufacturing process and are capable of yielding prime metals, unlike dross and skimmings. The court rejected the department's argument that dross should be assessed under Item 68 based on the exclusion in Item 27, emphasizing that dross and skimmings do not qualify as goods specified in Item 27 and, therefore, should not be transferred to Item 68 for assessment. The court concluded that the assessment of dross and skimmings under Item 68 was not legally valid as they did not meet the criteria to be classified as goods under the Central Excise laws. The judgment highlighted the importance of distinguishing between genuine goods and waste or refuse materials in excise duty assessments, emphasizing that not all saleable items qualify as goods for excise duty purposes.
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