TMI Blog2021 (11) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal allowed - decided in favor of assessee. - EXCISE APPEAL NO: 819 OF 2012 WITH EXCISE APPEAL NO: 862 OF 2012 AND EXCISE CROSS-OBJECTION NO. 102 OF 2012 - A 87108-87109/2021 - Dated:- 9-11-2021 - MR RAMESH NAIR, MEMBER (JUDICIAL) AND MR C J MATHEW, MEMBER (TECHNICAL) Ms Payal Nahar, Advocate for the assessee-appellant Shri N N Prabhudesai, Superintendent (AR) for the Revenue ORDER The issue involved in the present case is that whether the aluminium dross and skimming arising out of the manufacture of aluminium motor vehicle parts amounts to manufacture and liable to duty or otherwise. By the impugned order, Learned Commissioner (Appeals) dropped the demand for the extended period against which Revenue filed appeal No. E/862/2012 and the assessee filed appeal No. E/819/2012 against confirmation of demand for the normal period. 2. Ms Payal Nahar, Learned Counsel appearing on behalf of the appellant, submits that the demand was confirmed invoking explanation to section 2(d) of Central Excise Act, 1944 which was inserted with effect from 01/05/2008 on the allegation that aluminium dross is excisable goods, therefore, liable to duty. She submits that the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies only to the ash and residue of a kind used in industry either for the extraction of metal or as a basis for the manufacture of chemical compound of metal. This chapter note was subsequently amended w.e.f. 1-3-1988 by omitting the words other than dross and ash of zinc containing metals of metallic compounds . Thus, prior to 1-3-1988 the said dross and ash of zinc containing metals or metallic compound were classifiable under 7902 and subsequent to 1-3-1988 the said product got classified under sub-heading 26.20. 10. Here also a show cause notice was issued and the Assistant Commissioner rejected the refund claim holding that the ash cleared by the notice (assessee) contains metals and oxide of zinc and the same is also used for the extraction of metal as a basis for the manufacture of chemical compounds of metal and they are marketable and also answer of the description of chapter heading. Therefore, they contended that the same is correctly classifiable under Chapter Heading No. 26.20 of the Central Excise Tariff Act, 1985. The assessee s appeal before the Commissioner was also rejected and the further appeal by the assessee before the CEGAT was allowed relying on the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad undertook repair and maintenance work of his worn out old machinery or parts of the cement manufacturing plant for the period between 1995 to 1999. The assessee repaired machinery or capital goods such as damaged roller, shafts and coupling by using welding electrodes, mild steel, cutting tools, M.S. Angles, M.S. Channels, M.S. Beams etc. In this process of repair and maintenance, M.S. Scrap and Iron Scrap were generated in the workshop. It is not in dispute that these M.S. Scrap and Iron Scrap were excisable goods under Section 2(d) of the Act falling under the Chapter Heading 72.04 in the Schedule to the Tariff Act read with Note 8(a) to Section XV of the Tariff Act as metal scrap and waste . We are of the opinion that Section Note has very limited purpose of extending coverage to the particular items to the relevant tariff entry in the Schedule for determining the applicable rate of duty and it cannot be readily construed to have any deeming effect in relation to the process of manufacture as contemplated by Section 2(f) of the Act, unless expressly mentioned in the said Section Note. In Shyam Oil Cake Ltd. v. CCE, (2005) 1 SCC 264 = 2004 (174) ELT 145 (SC), this Court has h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. 3 (S.C.)]. Therefore, both on authority and on principle, for being excisable to excise duty, goods must satisfy the test of being produced or manufactured in India. In our opinion, he charging Section 3 of the Act comes into play only when the goods are excisable goods under Section 2(d) of the Act falling under any of the tariff entry in the Schedule to the Tariff Act and are manufactured goods in the terms of Section 2(f) of the Act. Therefore, the conditions contemplated under Section 2(d) and Section 2(f) has to be satisfied conjunctively in order to entail imposition of excise duty under Section 3 of the Act. The manufacture in terms of Section 2(f) includes any process incidental or ancillary to the completion of the manufactured product. This any process can be a process in manufacture or process in relation to manufacture of the end product, which involves bringing some kind of change to the raw material at various stages by different operations. The process in manufacture must have the effect of bringing change or transformation in the raw material and this should also lead to creation of any new or distinct and excisable product. The process in relation to manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. That is law declared under Articles 141 of the Constitution of India. That it is rendered in the case of identical issues, controversy and the Assessee makes these Judgments of the Supreme Court all the more binding. Their binding effect is not lost merely because the Tribunal has another occasion to consider the issue or another shade of the same controversy. So long as there are Supreme Court Judgments in the field, we do not see how the Revenue could have proceeded to disregard them. 22. That the Revenue does not wish to abide by them would not mean that the Tribunal is justified in not following them. We find that the attempt made by the Tribunal to hold that what is marketable and satisfies the requirement stipulated in the Explanation necessarily means that they are liable for imposition of duty under Section 3 is directly contrary to the binding Judgments of the Hon ble Supreme Court on the same issue. The attempt of the Tribunal in para 6.5 in proceeding to analyse that the process and concluding that nobody del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not take note of the decisions of the Hon ble Supreme Court. It only takes note of one of the decision. In the light of the conclusions reached by us and finding that there are authoritative pronouncements of the Hon ble Supreme Court rendered after the Division Bench of Allahabad High Court, that we are unable to agree with Mr. Sethna. 24. We had called upon Mr. Sethna to take instructions from the Department as to why the Department cannot, in the light of these authoritative pronouncements, enable the Tribunal to deal with the matter afresh. However, Mr. Sethna, on instructions, states that the legal position and which has been consistently applied and followed by the Revenue is analysed in the Circular. That having already been issued, the Board finds it unable to agree to any contrary suggestion. It is only thereafter that we are called upon to decide the matter. It is only to enable Mr. Sethna to take such instructions that the Judgment was not pronounced immediately. However, finding that the matter stands completely covered by the Judgments of the Hon ble Supreme Court and which have been totally disregarded by the Tribunal that we are unable to sustain and uphold it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... field, we do not see how the Revenue could have proceeded to disregard them. 22. That the Revenue does not wish to abide by them would not mean that the Tribunal is justified in not following them. We find that the attempt made by the Tribunal to hold that what is marketable and satisfies the requirement stipulated in the Explanation necessarily means that they are liable for imposition of duty under Section 3 is directly contrary to the binding Judgments of the Hon ble Supreme Court on the same issue. The attempt of the Tribunal in para 6.5 in proceeding to analyse that the process and concluding that nobody deliberately manufactures waste, dross and scrap is in direct conflict with the findings of the Hon ble Supreme Court. Waste and scrap emerge as a by-product in the course of manufacture of other products. The whole purpose of making these observations is to justify the conclusion that because there is a reference to these items in the Tariff Entry or the Tariff Schedule that would change the colour of the controversy. That would enable the Tribunal to then hold that the earlier Judgments and in the case of this very Assessee are no longer good law. However, we do not see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner (Appeals), has held that dross and skimming of aluminium are neither goods nor marketable. In our view this judgment of the Apex Court would be applicable to the present case also. As held by the Apex Court in the case of CCE, Patna v. Tata Iron Steel Co. Ltd. reported in 2004 (165) E.L.T. 386 (S.C.) for treating the product as marketable, what is relevant is as to whether there is existence of market for it and the product is known to commence as marketable commodity and merely that some waste or by-product is sold, this cannot be treated as evidence of marketability. In this case, no such evidence of existence of market for aluminium dross and skimming, like prices of this item being quoted in commercial journals and newspapers, existence of persons selling this product or e-commerce websites for sale of aluminium dross and skimming, etc., has been produced. We also find Hon ble Bombay High Court in the case of Hindalco Industries Ltd. v. CCE, Belapur, Mumbai- III (supra) has reversed the finding of the Larger Bench judgment of the Tribunal in the same case that during the period w.e.f. 10-5-2008 the aluminium dross and skimming were excisable. In view of this ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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