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TMI Blog2004 (2) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... is governed by the past decisions of the Tribunal and also of this Court where the Tribunal and this Court held that the zinc dross and skimming arising as refuse during galvanisation process are not excisable goods. The Tribunal, in our opinion, has rightly relied upon the decision of this Court in Indian Aluminium Co. Ltd. (supra) and in view of the above decision of the Tribunal following this Courts opinion in Indian Aluminium Company Limited (supra), we disagree with the appellant s that zinc dross, flux skimming and zinc scallings are goods and hence excisable. The appeals filed by the Revenue have no merits and are liable to be dismissed and we do so accordingly. The respondent/assessee will be entitled for refund of the duty and penalty, if any, paid by them. X X X X Extracts X X X X X X X X Extracts X X X X ..... and are in the bona fide impression that the goods are non-excisable and are not manufactured by them and, therefore, the question of imposing penalty under any rule is out of question. 6.In Civil Appeal Nos. 524 and 525 of 1998, the Collector of Central Excise, Patna ordered for confiscation of the zinc dross. However, the Collector gave the manufacturers the option to redeem the goods on payment of redemption fine. A penalty was also imposed on the manufacturer. The assessees preferred an appeal to the CEGAT, New Delhi which set aside the order of the Collector, Central Excise relying upon the decision of this Court in the case of Union of India v. Indian Aluminium Co. Ltd. [1995 (77) E.L.T. 268 (S.C.)] Aggrieved by the said decision, the Commissioner of Central Excise, Patna preferred the above two appeals. 7.In Civil Appeal No. 5262 of 2003 - M/s. National Steel Industries Limited now known as M/s. National Steel and Agro Industries Limited filed declaration classifying the zinc dross under Heading 7902.00 of the Schedule to the Central Excise Tariff Act, 1985. According to the assessee, they filed declaration claiming the zinc dross as non-excisable commodity and continued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of metal as a basis for the manufacture of chemical compounds of metal and they are marketable and also answer of the description of chapter heading. Therefore, they contended that the same is correctly classifiable under Chapter heading No. 26.20 of the Central Excise Tariff Act, 1985. The assessee's appeal before the Commissioner was also rejected and the further appeal by the assessee before the CEGAT was allowed relying on the judgment of this Court in Indian Aluminium Co. Ltd. (supra). The Tribunal, following the judgment of this Court, categorically held that zinc dross and zinc scalling are not goods, hence not excisable. 11.We have perused the relevant records and the rules i.e. the Central Excise Rules and of the orders passed by the respective authorities and of the CEGAT and heard the arguments of Mr. A.K. Ganguli and Mr. J. Vellapally learned Senior Counsel appearing for the respective parties. Mr. Rajesh Kumar and Mr. Alok Yadav, learned Counsel in other appeals adopted the arguments of learned Senior Counsel. 12.Mr. Ganguli, learned Senior Counsel, appearing on behalf of the appellant submitted that sub-heading 7902.00 of the Central Excise Tariff includes wast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 'flux skimming'. Learned Counsel would further submit that zinc dross and flux skimming are nothing but refuse products and these are not marketable. Learned Counsel relied on the decision of this Court being Indian Aluminium Co. Ltd. (supra) and submitted that this Court held that aluminium dross and skimming are neither goods nor marketable commodity and, therefore, not liable to excise duty and he, therefore, prays that the appeals filed by the appellant be dismissed. 14.On the above pleadings and of the arguments, the following questions of law may arise for determination of this Court. The issue which arises for consideration is that whether zinc dross and flux skimming arising during galvanisation of steel sheets are goods within the meaning of the Central Excise Act, 1944 and are liable to central excise duty as classified by the Revenue. OR Whether zinc dross and flux skimming are waste products in the process of galvanisation of steel sheets and are not goods under the Central Excise Act, 1944 as claimed by the assessee. 15.In this case, the respondents are engaged in the manufacture of steel sheets and are also galvanising steel sheets. During the process of galv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of manufacture. The term "dross" is defined in The New Shorter Oxford Dictionary as : Dross : "Dregs... (1) Impurities separated from metal by melting the scum which forms on the surface of molten metal ...... (2) Foreign matter mixed with anything ..... (3) Refuse, rubbish, worthless matter especially as contrasted with or separated from something of value." The ASM Metals Reference Book (2nd Edition, 1983) produced by the American Society for Metals defines "dross" as follows : "The scum that forms on the surface of molten metals largely because of oxidation but sometimes because of the rising of impurities to the surface." McGraw Hill Dictionary of Science and Engineering (1984 Edition) defines it as : "An impurity, usually an oxide, formed on the surface of molten metal." Dross and skimmings may contain some small percentage of metal. But dross and skimmings are not metal in the same class as waste or scrap. It may be possible to recover some metal from such dross and skimmings. They can, therefore, be sold. But this does not make them a marketable commodity. As learned Single Judge of the Bombay High Court has pointed out, even rubbish can be sold. Everything ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in any other manner) shall be deemed to be goods not specified in that Item." "The question in all these appeals relates to the exigibility of aluminium dross and skimmings to excise duty by reason of Item 68 and its Explanation read with the Explanation to Item 27. It is contended by the appellants that the Explanation to Item 27 makes it clear that dross and skimmings are not included in the item "Waste and Scrap of Aluminium". Since these are expressly excluded from Item 27, these must be included in Item 68 as the Explanation to Item 68 makes it clear that goods which are referred to in any preceding Item in the Schedule for the purpose of excluding them from the description of goods in that Item, will have to be included in Item 68. The entire argument proceeds on the basis that aluminium dross and skimmings are excisable goods. Otherwise the question of their inclusion in Tariff Item 68 does not arise. The appellants have emphasized the fact that aluminium dross and skimmings are capable of being sold. Hence they must be considered as marketable goods. Since they arise in the course of manufacture, the duty of excise can be levied on such goods. The foundation of the argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to duty and that waste pickle liquor is in the nature of waste product and has neither marketability nor saleability and, therefore, not liable to duty. 19.In Commr. of C. Ex., Chandigarh-I v. Markfed Vanaspati & Allied Indus. [2003 (153) E.L.T. 491 (S.C.)], the question for consideration in this case was whether "spent earth" is liable to excise duty or not. Under the Tariff, prior to its amendment in 1985, it had been consistently held that "spent earth" was not liable to duty. However, with the enforcement of new Tariff in 1985, a conflict arose between various Benches of the Tribunal. Some Benches held that "spent earth" was still not excisable, whereas other Benches held that, as it now stood included by a specific sub-heading, it became excisable. In view of these conflicting decisions, the matter was placed before the Larger Bench of the CEGAT which held that "spent earth" was still not dutiable. In the appeal preferred before this Court, this Court held the burden to prove that there is manufacture and that what is manufactured is on the Revenue and that merely because an Item falls in a Tariff entry, manufacture must not be deemed. In para 6, this Court held as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the item exigible to excise duty ? It is useful to reproduce the relevant paragraphs of the judgment which read as under : "We are unable to accept the proposition advanced by the learned Additional Solicitor General. A close look at Section 3 of the Central Excise Act shows that the words 'excisable goods' have been qualified by the words "which are produced or manufactured in India". Therefore, simply because goods find mention in one of the entries of the First Schedule does not mean that they become liable for payment of excise duty. Goods have to satisfy the test of being produced or manufactured in India. It is settled law that excise duty is a duty levied on manufacture of goods. Unless goods are manufactured in India, they cannot be subject to payment of excise duty. There is no merit in the argument that simply because a particular item is mentioned in the First Schedule, it becomes exigible to excise duty. [See Hyderabad Industries Ltd. & Anr. v. Union of India & Ors., (1995) 5 SCC 338 and Moti Laminates Pvt. Ltd. & Ors. v. Collector of Central Excise, Ahmedabad, (1995) 3 SCC 23]. Therefore both on authority and on principle, for being exigible to excise duty, excisable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f manufacture dross and skimmings arise and accumulate in the furnace in the shape of ashes as a result of oxidization of metal. Aluminium dross contain an amount of metal from which they come but they lack not only metal body but also metal strength, formability and character. Such dross and skimmings are distinct from scrap which is a metal of good quality. Dross and skimmings though obtained during process of manufacture were held to be not exigible to excise duty at the relevant time. Since the dross and skimmings were sold in the market it was argued that they were a marketable commodity and should be subject to levy of excise duty. The Court observed that these were nothing but waste or rubbish which is thrown up in the course of manufacture. This judgment also answers the argument of the learned Counsel for the appellant based on Khandelwal Metal's case [(1985) 3 SCC 620] wherein brass scrap produced during manufacturing of brass goods were considered to be liable to excise. In the present case, cinder though sold for small price cannot be said to be a marketable commodity in the sense the word "marketable" is understood. Due to sheer necessity cinder has to be removed from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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