2018 (1) TMI 622 - AT - Central Excise

Demand of duty - bottom ash/ flying ash - Held that - the Coal was used only for generating the heat, and is not related to manufacturing activity - demand set aside - appeal allowed.

Summary

Issues:
1. Excisability of bottom ash generated during manufacturing process.
2. Applicability of Excise Duty on fly ash emerging during generation of electricity.
3. Dispute regarding the classification of fly ash under Central Excise Tariff.

Analysis:

Issue 1: Excisability of bottom ash generated during manufacturing process
The appellant, engaged in the manufacture of Sponge Iron, faced a demand for duty on the bottom ash and wet scraper waste generated during the manufacturing process. The Tribunal noted that a similar issue had been addressed in a previous case, and after considering submissions from both sides, it was observed that the disputed bottom ash did not qualify as a manufactured product liable for Central Excise Duty. Consequently, the Tribunal set aside the impugned orders and allowed the appeal.

Issue 2: Applicability of Excise Duty on fly ash emerging during generation of electricity
In a separate appeal, the dispute revolved around the excisability of bottom ash, a residual waste generated during the burning of coal for electricity generation in a captive thermal power plant. The Department demanded duty from the appellant, which was contested. The Tribunal referred to a previous case and highlighted that the fly ash emerging during electricity generation could not be considered a manufactured product subject to Central Excise Duty. Citing relevant observations from the Hon'ble Madras High Court, the Tribunal concluded that the fly ash, being a by-product during electricity production, did not meet the criteria for excise duty. Consequently, the impugned order was set aside, and the appeal was allowed.

Issue 3: Dispute regarding the classification of fly ash under Central Excise Tariff
The Department argued that coal, being actively involved in the manufacturing process, was subject to Excise Duty. Conversely, the appellant contended that coal was solely used for heat generation. The Tribunal, in line with its previous decision, set aside all impugned orders and allowed the appeals, emphasizing that the fly ash generated during electricity production did not meet the criteria for excise duty. The Tribunal's decision was based on the principles outlined by the Hon'ble High Court regarding the manufacture and marketability of products to determine excisability.

In conclusion, the Tribunal's judgments in these cases clarified the non-leviability of Central Excise Duty on bottom ash and fly ash generated during manufacturing processes and electricity generation, respectively. The decisions were based on the interpretation of relevant legal principles and precedents, ultimately setting aside the impugned orders and allowing the appeals.