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2010 (4) TMI 314 - AT - Central ExciseWaste and scrap- The Department has demanded duty for the period March, 2005 to October 2008 in respect of Zinc Ash, Dross and other Residue on the ground that the same is excisable. In respect of the other three appellants, there is no duty demand on Zinc Ash, Dross and other Residue but there a demand has been made under Rule 6(3) of Cenvat Credit Rules on the ground that the appellants have not paid duty on the same and therefore, they should pay 8-l0% of the value of Zinc Ash, Dross and Other Residue. Held that- The cited decisions of the Hon ble Supreme Court are in the context of excisability of Dross, Residue etc. which make it very clear that these goods are nothing but in the nature of waste. Hence, we are of the view that the ratio of the decision in the case Shakumbari Sugar & Allied Industries apply to the facts of these cases. Demand is not sustainable.
Issues:
Manufacture of Galvanised pipes involving Zinc Ash, Dross, and Other Residue; Excisability of Zinc Ash, Dross, and Other Residue; Demand under Rule 6(3) of Cenvat Credit Rules; Legal fiction for excisability of impugned goods; Demand of 8-10% on impugned goods; Applicability of Zonal Commissioner's decision in Shakumbari Sugar & Allied Industries case. Manufacture of Galvanised Pipes Involving Zinc Ash, Dross, and Other Residue: The cases involved the manufacture of Galvanised pipes resulting in the emergence of Zinc Ash, Dross, and Other Residue. The Department demanded duty for a specific period in relation to these materials, with a separate demand made under Rule 6(3) of Cenvat Credit Rules for not paying duty on them. Excisability of Zinc Ash, Dross, and Other Residue: The appellant argued that these materials are not excisable based on Supreme Court decisions, emphasizing that they are not marketable and do not involve a manufacturing process. The Tribunal referred to the Supreme Court's decision in CCL v. Indian Aluminium Co. Ltd., highlighting that the presence of a specific entry in the Central Excise Tariff does not automatically make 'dross' subject to excise duty if no manufacturing process is involved. Legal Fiction for Excisability of Impugned Goods: The Tribunal noted that the Supreme Court concluded that the process of generating Zinc Ash, Dross, and Other Residue does not constitute a manufacturing process, leading to the impugned goods not being considered excisable. The absence of a legal fiction to treat these goods as manufactured items, even after an amendment in 2005, further supported this conclusion. Demand of 8-10% on Impugned Goods: Regarding the demand of 8-10% on the impugned goods for the first three appellants, the Tribunal referenced the decision in Zonal Commissioner of Central Excise, Meerut v. Shakumbari Sugar & Allied Industries. This decision, supported by a Supreme Court dismissal of the Department's appeal, held that raising a demand based on inputs contained in waste, refuse, or by-products is not tenable. The Tribunal applied the principles from this case to the current scenario, considering the nature of Dross and Residue as waste. Applicability of Zonal Commissioner's Decision in Shakumbari Sugar & Allied Industries Case: The Tribunal found that the cited decisions of the Supreme Court regarding the excisability of Dross and Residue align with the facts of the current cases, emphasizing that these goods are akin to waste. Consequently, the Tribunal waived the pre-deposit requirement, set aside the impugned orders, and allowed all four appeals based on the principles established in the Shakumbari Sugar & Allied Industries case.
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