LexCOLLECTOR OF CENTRAL EXCISE, PATNA versus M/S. TATA IRON AND STEEL CO. LTD.
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A COLLECTOR OF CENTRAL EXCISE, PATNA v. M/S. TATA IRON AND STEEL CO. LTD. FEBRUARY 26, 2004 B [S. RAJENDRA BABU, DR. AR. LAKSHMANAN AND G.P. MATHUR, JJ.] Central Excise Act, 1944-Sections 2(d) & 3-Central Excise Tariff Act, 1985-Zinc dross and Flux skimming arising out of galvanisation of steel C sheets-Levy of excise duty by Revenue treating them as excisable goods- Correctness of-Held, Zinc dross and flux skimming are refuse and are not marketable commodities and hence not liable to excise duty. Respondent-assessees are engaged in the manufacture of steel sheets D and galvanisation of steel sheets. During the process of galvanisation, two products-zinc dross and flux skimming - come into existence. The Revenue found that the two products were sold by the assessees without payment of excise duty under the Central Excise Act, 1944. The Revenue issued show cause notices to the assessees demanding excise duty and penalty by treating them as marketable commodities. In reply to the show cause E notices, the assessees contended that the products are not marketable goods and hence are not excisable goods liable to excise duty under Central Excise Tariff Act, 1985. Collector dismissed the appeals of the assessees and ordered confiscation/redemption of goods. In appeal, CEGAT set aside the orders F of the Collector. In appeal to this Court, Revenue contended that zinc dross and flux skimming are 'excisable goods' under the Central Excise Act, 1944 since they are covered under the Heading 79.02 sub-heading 7902.00 of Chapter 79 of the Central Excise Tariff Act, 1985 before amendment on 1.03.1988 G and after amendment under the Heading 2620 Sub-heading 2620 of Chapter 26 of the Tariff Act. H The respondents contended that the zinc dross and flux skimming are waste products in the process of galvanisation of steel sheets and 712 - -- -- C.C.E. v. TATA IRON AND STEEL CO. LTD. 713 hence are not excisable goods under the Central Excise Act, 1944. Dismissing the appeals, the Court HELD: The dross and skimming are merely refuse, scum or rubbish in the process of manufacture of aluminium sheets and, therefore, cannot A be said to be the result of treatment, labour or manipulation whereby a B new and different article emerges with a distinctive name, character or use which can ordinarily come to the market to be brought and sold. Merely because such refuse or scum may fetch some price in the market does not justify it being called~ by-product, much less an end product or a finished product. The dross and skimming are not marketable commodities by merely selling them. Everything which is sold is not C necessarily a marketable commodity as known to commerce and which, it may be worthwhile to trade in. The zinc dross and skimming, arising as refuse during galvanisation process, are not excisable goods. [719-C; 726-F-G} Union of India v. Indian Aluminium Co. Ltd, (1995) 77 ELT 268 SC relied on. Tata Iron & Steel Company Limited v. CCE, Patna (2001) 135 ELT 1142; Union of India v. Delhi Cloth and General Mills Co. Ltd, AIR (1963) D SC 791; Collector of Central Excise, Patna v. Indian Tube Co. Ltd., (1995) E 77 ELT 21 SC; Commr. of Central Excise, Chandigarh-I v. Markfed Vanaspati & Allied Indus., (2003) 153 ELT 491 SC and Union of India v. Ahmedabad Electricity Co. Ltd, (2003) 158 ELT 3 SC, referred to. Indian Alluminium Co. Ltd v. A.K. Bandhopadhyay, (1980) 6'ELT 146 (Born), referred to. F CIVIL APt>ELLA TE JURISDICTION : Civil Appeal Nos. 524-525 of 1998. From the Final Order dated 29.8.97 of the Central Excise Customs and Gold (Control) Appellate Tribunal, New Delhi in F.O No.E/1296-1297 of G 1997-Bl in A.No. E/2966-2967 of 1998-Bl. WITH C.A. Nos. 5664/2002 and 5262 of 2003. H 714 SUPREME COURT REPORTS [2004] 2 S.C.R. A A.K. Ganguli, Dileep Tandon, Hemant Sharma and B. Krishna Prasad B c for the Appellant. J. Vellappally, Ajay Aggarwal, Ms. Shirin Khajuria, Punit Bhardwaj, Rajan Narain, Rajesh Kumar, Alok Yadav, V. Lakshmikumaran and Rajesh Kumar for the Respondent. The Judgment of the Court was delivered by DR. AR. LAKSHMANAN, J. In these appeals, we are concerned with the question of levy of excise duty on zinc dross and flux skimming arising during galvanisation of steel sheets. BRIEF FACTS OF THE CASE: During galvanisation of steel sheets, zinc dross and flux skimming arises which the respondent/assessee has declared as by- product in their pr
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