UNION OF INDIA AND ORS. versus INDIAN ALUMINIUM CO. LTD. AND ANR.

Citation: [1995] 3 S.C.R. 497 · Decided: 19-04-1995 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Dismissed

Judgment (excerpt)

~\ 
UNION OF INDIA AND ORS. 
A 
v. 
__..( 
INDIAN ALUMINIUM CO. LTD. AND ANR. 
APRIL 19, 1995 
[A.M. AHMADI, C.J .. N.P. SINGH AND 
B 
SUJATA V. MANOHAR, JJ.] 
Central Excise Rules 1944-Central Excise Tariff-Tariff Item Nos. 27 
& 68--Aluminium dross & Skimmings-Whether eligible to excise duty-No. 
c 
Words & Phrases : 'F.xcisable Goods' and 'Dross'--Meaning of 
The respondents-assessees manufacture aluminium sheets, 
aluminium angles, etc. out of aluminium ingots. The assesses deared their 
manufactured product aluminum sheets by following the procedure 
D 
prescribed under Central Excise Rules, 1944. The assessees claimed credit 
for the duty paid qn aluminium ingots while clearing aluminium sheets 
manufactured by them. They also cleared aluminium dross & skimmings 
without payment of any excise duty. 
By a show cause notice, the assessees were asked to pay excise duty 
on dross and skimmings removed by them between. September 1972, and E 
March 1973 and it was confirmed by the Assistant Collector. The Appellate 
Collector allowed the appeal preferred to the assessees. A revision 
preferred by the excise authorities was allowed by the Government oflndia. 
This decision was challenged by the assessees by way of a writ petition 
which was allowed by a Single Judge of the High Court. Appeal before the F 
Division Bench was dismissed. Against this order, Revenue preferred the 
present appeals. 
Dismissing the appeals, this Court 
HELD : 1. Under Sub-rule (2) of Rule 56-A of the Central Excise G 
-A. 
Rules, the assessees were entitled to a credit for the duty already paid on 
aluminium ingots while paying duty on aluminium sheets. It is not in 
dispute that the assessees received duty paid ingots for the manufacture 
of aluminium sheets which were excisable goods. Both ingots and sheets 
fall under the same Tariff item, namely, item 27. The assessees were H 
497 
498 
SUPREME COURT REPORTS 
[1995] 3 S.C.R. 
A entitled to credit for the duty already paid on the ingots for the manufac· 
tore of aluminium sheets. The assessees accordingly availed themselves of 
this credit while clearing aluminium sheets during the relevant period. 
This was done by following the procedure laid down •mder Rule 56-A with 
the permission of the Excise authorities. During the same period, the 
B assessees also cleared aluminium dross and skimmings without payment 
of any duty. (502-D to Fl 
2.1. From the definition of excisable goods, it is clear that aluminium 
dross, and skimmings were not in the First Schedule to the Central Excises 
and Salt Act, 1944 at the relevant time and are not excisable goods, finished 
C or otherwise. Undoubtedly, aluminium dross and skimmings do arise 
during the process of manufacture. These are nothing but waste or rubbish 
which is thrown up in the course of manufacture. (503-D, El 
2.2. Dross and Skimmings may contain some small percentage of 
metal. But dross and skimmings are not metal in the same class as waste 
D or scrap. It may he possible to recover some metal from such dross and 
skimmings. They can, therefore, be sold. But this does not make a 
marketable commodity. Every thing, however, which is sold is not neces· 
sarily a marketable commodity as known to commerce and which, it may 
be worthwhile to trade in. The entire quantity of raw material namely, duty 
E paid aluminium ingots procured by the assessees from outside was used 
in the manufacture of aluminium sheets. In the process of manufacture, 
dross and skimmings had to be removed in order that aluminium sheets 
of the requisite quality could be manufactured. This does not mean that 
the entire lot of aluminium ingots was not used for the manufacture of 
aluminium sheets. [504·B, C, El 
F 
In the course of manufacture, certain quantity of raw material may be 
lost because of the very nature of the process of manufacture or some small 
quantity of raw material may form part of wastage or ashes. This does not 
mean that the entire raw material was not used in the manufacture of 
G finished excisable products. An exact mathematical equation between the 
quantity of raw material purchased and the raw material found in the 
finished product is not possible, and should not be looked for. (504-F, GI 
Mis. Multimetals Ltd. v. Assistant Collector, Central Excise Kota & 
Ors., [1992) 1 SCC 715 and M/s. Swadeshi Polytex Ltd. v. Collector of Central 
H Excise, [19901 2 sec 358, relied on. 
' 
... 
U.0.I. v. ALUMINIUM CO. 
499 
ASM Metals Reference Boo

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