2014 (12) TMI 657 - BOMBAY HIGH COURT

Manufactured goods - Marketability - Aluminium Dross and Skimmings or similar Non-ferrous Metal Dross and Skimmings - Explanation added to Section 2(d) of the Central Excise Act, 1944 - whether the definition having been either amended or an Explanation inserted thereto would result in any change in the legal position - Held that:- Dross and skimmings may be capable of fetching some sale price. for that matter any rubbish can be sold. But that is not the criterion. It cannot be said that dross and skimmings are the result of treatment, labour or manipulation whereby the end product is dross and skimmings. They are merely the scum thrown out in the process of manufacture of aluminium sheets. Therefore it cannot be said that dross and skimmings are transformation resulting in a new and different article with a distinctive name, character or use or that they ordinarily come to the market to be bought and sold and are known to the market. The article or goods manufactured from the aluminium ingots was not dross and skimmings but the aluminium sheets. It was the aluminium sheets therefore that were the endproduct or the finished product and not the dross and skimmings which were merely the refuse or scum or rubbish thrown out in the course of the manufacture of the finished product, namely, the aluminium sheets. As stated earlier, in the affidavitinreply, there has throughout been a repeated emphasis that the dross and skimmings are a byproduct and that the aluminium ingots were used by the company in the manufacture of dross and skimmings.

To be subjected to levy of excise duty 'excisable goods' must be produced or manufactured in India. For being produced and manufactured in India the raw material should have gone through the process of transformation into a new product by skilful manipulation. Excise duty is an incidence of manufacture and, therefore, it is essential that the product sought to be subjected to excise duty should have gone through the process of manufacture. Cinder cannot be said to have gone through any process of manufacture, therefore, it cannot be subjected to levy of excise duty. - Merely because the goods satisfying the test of being marketed and saleable, it does not mean that the test of being manufactured in India has been satisfied.

Merely selling does not mean dross and skimming are marketable commodity as even rubbish can be sold. Everything which is sold is not necessarily a marketable commodity as known to commerce and which it may be worthwhile to trade in. - When the Hon'ble Supreme Court holds and as in Grasim Industries Ltd. (2011 (10) TMI 2 - SUPREME COURT OF INDIA) that the conditions contemplated under Section 2(d) and Section 2(f) have to be satisfied conjunctively in order to entail imposition of excise duty under section 3 of the Act, then, we cannot agree with the Tribunal. The larger Bench decision does not take into account the fact that the authoritative pronouncement by the Supreme Court and repeatedly rendered is binding on it. - Decided in favour of assessee.