LexUNION OF INDIA versus AHMEDABAD ELECTRICITY CO. LTD. AND ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
UNION OF INDIA v. AHMEDABAD ELECTRICITY CO. LTD. AND ORS. OCTOBER 29, 2003 [RUMA PAL AND ARUN KUMAR, JJ.] Central Excise Tariff Act, 1985; Tariff Heading 26.1/Central Excise and Salt Act, 1944; Sections 2(d), 2(/), 3, Exemption Notification and Trade Notice issued thereunder. Cinder-Exigibility of-Held : Coal is not used as raw material for getting the 'Cinder' as end-product-Burning of coal is for producing steam and not for manufacturing ofCinder~ince, Cinder is unburnt part of coal and not ash, it could not be equated to ash just for the purpose A B c of bringing it with in Entry 26.21 of the Act to make it exigible- Withdrawal of Exemption Notification by the Revenue was without any D justification and thus, contrary to law-Cinder though being sold for small price, but it cannot be said to be marketable commodity in the sense the word 'marketable' is understood-Cinder derived from coal, could have at best been treated as coal which is also exempted from levy of excise duty-Hence, excise duty could not be levied on it. E The question which arose for determination in these appeals filed by the Revenue is regarding exigibility of the Cinder under Tariff Heading 26.21 of the Central Excise Tariff Act, though 'Cinder' is not listed as excisable goods in the First Schedule to the Act. · F It was contended by the Revenue that in view of the Entry No. 26.21 in the Central ExciseTariff Act, 'cinder' is per se exigible to excise duty as it is covered under the entry in the First Schedule to the Tariff Act; that 'cinder' is a by-product of coal which emerges in the course of manufacture of the end product and it is being sol1 by the G various assessees from their factories, therefore, it is marketable, thus liable to exercise duty; and that the question involved in the presEnt appeals ins more a question of fact which the High Court should not have entertained in a petition under Article 226 of the Constitution of ~~ H 1117 A B 1118 SUPREME COURT REPORTS (2003] SUPP. 4 S.C.R. Assessees submitted that the show cause notice issued by the departmental authorities was beyond time; and that 'cinder' is a waste emerging from coal and they have been spending much more on its removal from the site as compared to what they are getting from its sale. Dismissing the appeals, the Court HELD : 1.1. Cinder is obtained as a result of burning of coal in the boilers and furnances in factories. Coal is used in the assessees' factories as fuel and not as raw material for the purpose of C manufacturing the end product. Even if it is assumed that cinder is a by-product of coal, it cannot be said that it is a by-product of the raw material used in a factory for manufacturing the end product. It is a by-product of an item of fuel. Coal which leads to production of cinder is not used as a raw material for the end product but for ancillary D purpose that is as a fuel. Therefore, irrespective of the fact whether any manufacture is involved in production of cinder it should be held to be out of the tax net for the reason that it is not a raw material for the end product. [1124-G-H, 1125-D, 1132-F) E 'Dictionary of Scientific and Technical Terms' by Mc Grow-Hill, referred to. 1.2. 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 F mention in one of the entries of the First Schedule of the Central Excise Tariff act 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. The requirement of goods being manufactured G in India is a sine qua non for levy of excise duty. Excise duty in fact is an incidence of manufacture. [1128-C-D, G) Hyderabad Industries Ltd and Anr. v. Union of India & Ors., [1995) 5 SCC 338 and Moti laminates Pvt. ltd and Ors. v. Callector of Central H Excise, Ahmedabad, relied on. U.0.1. v. AHMEDABAD ELECTRICITY CQ LTD. 1119 Mls.Khandelwal Metal and Engineering Works and Another, v. A Union of India and Ors., (1985] 3 SCC 620 and 4ssociated Cement Company Ltd. v. Commissioner of Custom, (20011 4 SCC 593, distinguished. 1.3. Manufacture includes any process incidental or ancillary to the B completion ofa manufactured product. The word 'manufacture' used a
Excerpt shown. Read the full judgment & AI analysis in Lexace.