TMI Blog2006 (9) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal, New Delhi, allowing the appeal filed by Respondent herein. 2. Respondent herein manufactures aluminium sheets, the raw material where for is aluminium oxide. In the melting furnance, the top layer of the molten metal is exposed to atmosphere and gets oxidized. As a result of oxidation, a thin layer/film is formed which is removed by skimming. The second layer so removed is called dross. Indisputably, the percentage of metal in dross will vary and there would be some quantity of aluminium metal therein. 3. Whether excise duty is payable on 'dross' came up for consideration before a Bench of this Court in Respondent's own case i.e. in Union of India and Others v. Indian Aluminium Co. Ltd. and Another [199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a produce in the process of manufacturing but that by itself would not make it a manufactured product. 7. Chapter 26 of Central Excise Tariff deals with ores, slag and ash. Sub heading 2620.00 of Heading 26.20 of the said Chapter reads as under: Heading Sub-Heading Description of Goods Rate of Duty 26.20 2620.00 Ash and residues (other than from the manufacture of iron of steel), containing, metals or metal compounds) 16% 8. Paragraph 3 of the Chapter Note states that the said Heading applies only to ash and residues of a kind used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16% 10. Explanatory Note in respect of 'aluminium waste or scrap' reads, thus: 76.02 - Aluminium Waste or Scrap. The provisions concerning waste and scrap in the Explanatory Note to heading 72.04 apply, mutatis mutandis, to this heading. Aluminium waste and scrap is an important source of raw material for the aluminium industry. It is also used as a de-oxidising or de-carburising agent in metallurgy. The heading does not cover: (a) Slag, dross, etc., from the manufacture of iron or steel containing recoverable aluminium in the form of silicates (heading 26.18 or 26.19). (b)Ash and residues from the manufacture of aluminium (heading 26.20) (c) Ingots and similar unwrought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the requisite quality could be manufactured. This does not mean that the entire quantity of aluminium ingots was not used for the manufacture of aluminium sheets. In the course of manufacture, a 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 finished excisable products. An ex act 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. 13. What is the meaning of dross is the core question. 14. In Indian Aluminium ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Indian Aluminum (supra). Thereafter, the Tribunal after considering Tariff Heading 26.20 held that dross was not dutiable. 17. Tariff Heading 26.20 was introduced with effect from 1-3-1986. It is not waste but it comes under the heading 'ash or residue'. It may be true that the old tariff did not contain a specific entry as regards 'dross' when the decision of this Court was rendered but the question which arises for consideration is whether only because there now exists a specific entry in the Central Excise Tariff by way of 'ash and residue', would the same by itself make 'dross' subject to payment of excise duty .although no manufacturing process is involved. 18. The entry in question do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent article emerges having a distinctive name, character or use. [See Union of India and Another v. Delhi Cloth and General Mills Co. Ltd. - 1 'AIR 1963 S.C. 791]. 20. We have noticed hereinbefore as to how dross comes into being learned Additional Solicitor General submitted that in Indian Aluminium (supra) itself this Court held that 'undoubtedly dross and skimming do arise during process of manufacture', but, it was not held therein that it amounts to manufacture. 21. In Tata Iron and Steel Co. Ltd. (supra), on the other hand, this Court noticed that dross and skimming are capable of being sold. This Court further opined that only because the article may have some saleable value, the same would not render it to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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