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TMI Blog2024 (1) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... refining falling under tariff item 15211090 of the First Schedule of the Central Excise tariff Act, 1985, and clearing gnad /soap stock without payment of Central Excise duty. The exemption available on these products vide Notification No. 115/75-CE dated 30.04.1975 was withdrawn by notification no. 21/2006 CE dated 1.3.2006. Consequent to the withdrawal of the exemption, the appellant was required to obtain Central Excise registration and pay Central Excise duty on clearances of these products during the impugned period. Accordingly, 6 show cause notices were issued to the appellant. The original Adjudicating Authority confirmed the demand of Central Excise duties along with interest denying the exemption under notification no. 89/95 CE dated 18.05.1995 as claimed by the appellant; penalty was also imposed under section 11 AC of the Central Excise Act, and under Rules 25 and 27 of the Central Excise Rules, 2002. Being aggrieved, the appellant filed an appeal before the Commissioner (Appeals). Vide the impugned order, the Commissioner extended the benefit of the Notification No. 89/95 CE dated 18.05.1995 by holding that the waste, paring and scrap i.e., spent earth, sludge as gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kimmings 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 end-product 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 affidavit-in-reply, there has throughout been a repeated emphasis that the dross and skimmings are a by-product and that the aluminium ingots were used by the Company in the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p Stock' was classified read as '1522: Degras Residues resulting from the treatment of Fatty Substances or Animal or Vegetable Waxes'. He contended that the main product manufactured by the process of refining is refined edible oil. While processing, various residues such as soap stock, spent earth and sludge comes into existence. The dictionary meaning of Degras is the 'worst and the most useless part of something; the last drops in a container of liquid, containing small pieces of solid waste'. The meaning of the words used in the chapter note are of the same category of residue which are not of substantial use manufacturer, being the leftover goods having impurities and are intended to be discarded. Considering the principle of a ejusdem generis, the soap stock is in the nature of Degras and, therefore, covered under the notification no. 89/95 CE. He relied on the decision of the Larger Bench of the Tribunal in the case of Ricela Health Foods Ltd. Vs Commissioner [2018 (361) ELT 1049(LB-Tri)] held that unintended products arising during the course of refining edible oils are nothing but waste. This view, contended was affirmed by the Supreme Court in the case of Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er bench held that removal of unwanted material resulting in products like gum, wax, and fatty acid cannot be called as process of manufacture of such items. As such, incidental products are nothing but waste arising during the course of refining of rice bran oil and on applying the ratio of the Apex Court, this cannot be considered as manufactured excisable goods. The relevant para is reproduced:- "9. We have heard both the sides and perused the appeal record to examine the reference made by the Division Bench. Since the appellants submitted on the excisability itself the first point for decision is the excisability of the products, in question. The appellants strongly contended that even before examining the admissibility of exemption under Notification No. 89/95-C.E. the point to be decided is the excisability of the product, in question. It is the case of the appellant that if it can be established that these goods are not manufactured goods then the question of levy itself will not arise. It is contended that the product, in question, are unwanted/inevitable waste. The value realized by the appellants on such unintended waste by sale, itself is not a criteria to decide the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Admittedly, in chemical and metallurgical industry when the raw materials are processed with an intended purpose of manufacturing certain final products by a chemical reaction, refining, melting etc. multiple products will result. These products either emerged in the final stage or any of the intermediating stages also. The point for consideration is whether these are to be considered as manufactured goods for excise levy based on the statutory definition for manufacture or should be considered as manufactured goods based on the likely value they may command while selling. We are clear that the value that a product may or may not fetch cannot be a determinative factor to decide whether the same is a manufactured final product/by-product or a waste/refuse arising during the course of manufacture of final products. This much is clear from the ratio of the Apex Court decision in Indian Aluminium Co. (supra). While no general guidelines can be laid down to decide when a product will be treated as a waste or a by-product, in the present set of facts the products under consideration are clearly not in the nature of by-products emerging during the course of manufacture. The process of m ..... 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