Aluminum dross and aluminum ash that arises during the manufacture of die-casting of aluminum parts, whether excise duty leviable on the same?

PJ/CASE LAW/2015-16/2800

Case-BAJAJ AUTO LTD. VersusCOMMISSIONER OF C. EX. & CUS., AURANGABAD

Citation-2015 (322) E.L.T. 419 (S.C.)

Brief Facts-The issue involved in these appeals is regarding the confirmation of duty on the aluminum dross and aluminum ash that arises during the manufacture of die-casting of aluminum parts. The appellants herein supplied aluminum ingots to job worker and the job worker manufactured the parts, by melting this aluminum and die-casting the same. This factual position is undisputed.

Appelants Contention-It is submitted by the learned counsel for the appellants that the CESTAT has committed grave error in arriving at the aforesaid conclusion. He argues that in order to make a particular product excisable to duty twin conditions are to be satisfied, viz., (1) that the product has come into existence by process which amounts to manufacture within the meaning of Section 2(f) of the Central Excise Act and (2) such product is marketable. In support of this, he has referred to the judgment of this Court in ‘Union of India and Others v. Indian Aluminum Co. Ltd. and Another’ [1995 Supp (2) SCC 465 = 1995 (77)E.L.T.268 (S.C.)]. He submits that aluminum ash and dross were by-products which came into being during the manufacture of die-casting of aluminum parts. He has also pointed out that the CESTAT itself accepted, while deciding the issue for the future period that the aforesaid case of the appellant is covered by the judgment of this Court in Indian Aluminum Co. Ltd.’s case referred to above.

Respondents Contention-It is the contention of the Revenue that such aluminum ash and dross are liable for payment of excise duty. The aforesaid contention of the Revenue has been accepted by the Customs, Excise & Service Tax Appellate Tribunal (hereinafter referred to as ‘CESTAT’) holding that the appellant No. 1 - assessee is liable to pay duty on the aluminum ash and dross as well.

Reasoning Of Judgement-After hearing the counsel for the parties, tribunal are of the opinion that the CESTAT’s later judgment in the appellant’s case itself, which is the decision dated 23-1-2008 rendered in Appeal No. E/3182/2001, etc., clinches the issue. The learned counsel is right that in the aforesaid decision, the CESTAT has held that during the manufacture of die-casting of aluminum parts, dross and ash emerge as by-products and, therefore, insofar as these by-products are concerned, no manufacturing process is involved and on that basis, it has held that no excise duty shall be payable thereupon. It is pertinent to mention that this decision has been accepted by the Revenue. Accordingly, the impugned order of the CESTAT is set aside and the appeals are allowed. No Costs.

Decision-Appeal allowed

Comment-The gist of the case is that for a product to come within the purview of excisable goods it must amount to manufacture u/s 2(f) of Central Excise Tariff Act, 1944 and must be marketable but as in the given case the aluminum dross and aluminum ash emerge as a by-product during the manufacture of die-castings of aluminum parts but no manufacturing process is involved in this. Therefore, no excise duty is payable against it. This was based on the remarkable decision in the case of ‘Union of India and Others v. Indian Aluminum Co. Ltd. and Another’

Prepared By-Neelam Jain

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PJ/CASE LAW/2015-16/2800

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