Custom, Excise & Service Tax Tribunal
Jamshedpur vs Tata Power Company Ltd on 9 April, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.2
Excise Appeal No.75906 of 2017
(Arising out of Order-in-Original No.20-21/Commr/2017 dated 16.12.2017 passed by
Commissioner of Central Excise & Service Tax, Jamshedpur.)
Commissioner of Central Excise & Service Tax, Jamshedpur
(Outer Circle Road, Bistupur, Jamshedpur, Jharkhand.)
...Appellant
VERSUS
M/s. Tata Power Company Limited
.....Respondent
(Jojobera Power Plant, Rahargora, Jamshedpur, Jharkhand.)
APPEARANCE
Shri P.Das, Authorized Representative for the Revenue
Shri Gopal Mundhra, Advocate for the Respondent
CORAM: HON'BLE SHRI R. MURALIDHAR, MEMBER(JUDICIAL)
HON'BLE SHRI RAJEEV TANDON, MEMBER(TECHNICAL)
FINAL ORDER NO. 75903/2025
DATE OF HEARING : 09.04.2025
DATE OF DECISION : 09.04.2025
Per : R. MURALIDHAR :
The Revenue is in appeal before the Tribunal being aggrieved by
the Order-in-Original No.20-21/Commr/2017 dated 16.12.2017. The
issue in this case pertains to as to whether the fly ash coming into
being in the course of manufacture of electricity by burning coal, would
require payment of Excise Duty or not.
2. The Commissioner(Appeals) has given a detailed finding relying
on the Supreme Court's decision in the case of Moti Laminates vs.
Collector of Central Excise, Ahmedabad [1995 (76) ELT 241
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(SC)], Union of India v. Ahmedabad Electricity Co. Ltd. [2003
(158) ELT 3 (SC)] and Madras High Court's decision in the case of
Mettur Thermal Power Stationv. C.B.E. & C, New Delhi [2016
(335) ELT 29 (Mad.)]. The relevant portions of the Order-in-Original
is extracted below:
"The assessee have cited & relied upon the judgeemnt of Hon‟ble
Apex Court in the matter of Moti Laminates Pvt.Ltd. vs. Collector of
Central Excise, Ahmedabad [1995 (76) E.L.T. 241 (S.C.) wherein it had
been held that & to quote:
"6. The duty of excise is leviable under Entry 84 of List I of the
VIIth Schedule on goods manufactured, or produced. That is
why the charge under Section 3 of the Act is on all, `Excisable
goods‟, `produced or manufactured‟. The expression `excisable
goods‟ has been defined by clause (d) of Section 2 to mean,
`goods‟ specified in the Schedule. The scheme in the Schedule
is to divide the goods in two broad categories - one, for which
rates are mentioned under different entry and other the
residuary. By this method all goods are excisable either under
the specific or the residuary entry. The word `goods‟ has not
been defined in the Act. But it has to be understood in the sense
it has been used in Entry 84 of the Schedule. That is why
Section 3 levies duty on all excisable goods mentioned in the
Schedule provided they are produced and manufactured.
Therefore, where the goods are specified in the Schedule
they are excisable goods but whether such goods can be
subjected to duty would depend on whether they were
produced or manufactured by the person on whom duty is
proposed to be levied. The expression `produced or
manufactured‟ has further been explained by this Court to mean
that the goods so produced must satisfy the test of
marketablity. Consequently it is always open to an assessee to
prove that even though the goods in which he was carrying on
business were excisable goods being mentioned in the Schedule
but they could not be subjected to duty as they were not goods
either because they were not produced or manufactured by it or
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if they had been produced or manufactured they were not
marketed or capable of being marketed. (emphasis supplied)
Further, in a case relating to excisability of cinder that was also
cited by the assessee, the Hon‟ble Apex Court had held in Union of
India Versus Ahmedabad Electricity Co. Ltd. [2003 (158) E.L.T. 3
(S.C.)] as & to quote:
"24 In producing „cinder‟, there . is no manufacturing
process involved. Coal is simply burnt as fuel to produce steam.
Coal is not tampered with, manipulated or transformed into the
end product. For purposes of manufacture the raw material
should ultimately get a new identity by virtue of the
manufactruing process either on its own or in conjuction or
combination with other raw materials. Since coal is not a raw
material for the end product in all the cases before us, the
question of getting a new identity as an end product due to
manufactruring process does not arise.....
26 Can burning of coal be . called manufacturing? The
locomotive steam engines used to run on coal. Coal was being
constantly burnt in the boiler of the engine. The constant
burning of coal produced cinder. Could it be said that the engine
driver was manufacturing cinder? Is any manufactring activity
involved ? Burning of coal for purposes of producidng steam
cannot be said to be a manufacturing activity. Therefore, neither
ash nor cinder can be said to be products of a manufacturing
process. From burning coal when you get either cinder or ash, it
cannot be said that a new product had emerged. Cinder remains
coal, In fact, the Department has itself described it as unburnt
part of coal in the grounds of appeal in C.A. Nos. 2168-2169 of
2001 in the Ahmedabad Electricity Supply Company case
„Cinder‟ is not a new product. After correctly describing cinder as
unburnt part of coal, the Revenue cannot equate it to ash simply
to somehow bring it within Entry 26.21 of the Tariff Act. In the
First Schedule to the tariff, cinder does not find any place
anywhere. It appears that it is because of this that the Revenue
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had to fall back upon Entry 26.21 in the First Schedule in order
to cover cinder within the excise net. The new Tariff that is Tariff
Act, 1985 does not have a residuary entry like Entry 68 in the
old Tariff. Instead the new Tariff has interpretative notes.
Whenever some by-product of a product is sought to be
included for taxability it has been so said in the interpretative
notes. However, regarding coal their is no interpretative note
nor there is anything about cinder. When cinder is derived from
coal it could have at best been treated as coal for purposes of
entries in the First Schedule to the Tariff Act. But that would not
suit the department because coal is exempt from excise duty.
The department now describes cinder as "coal ash". But coal ash
also falls the test of being manufactured in India. It cannot be
subjected to levy of excise duty." End to quote
(emphasis supplied).
Further, in the matter of Mettur Thermal Power Station Versus
C.B.E. & C, New Delhi [2016 (335) E.L.T. 29 (Mad.)], also cited by the
assessee, it has been held that fly ash cannot be said to have gone
through a manufacturing process.
In this judgement, the Hon‟ble Court held & to quote:
"10. In the present case, according to the respondent, "fly
ash" and "fly ash bricks" are included in the items in the entries
to the First Schedule to the Act and thereby, they are subjected
to levy of excise duty in view of Section 3 of the Act. It is to be
noted that simply because goods find mention in one of the
entries of the First Schedule, does not mean that they become
liable for payment of excise duty. It is essential that the goods
have to satisfy the test of being produced or manufactured in
India. Excise duty is a duty leviable only on the manufactured
goods."
"11. It is appropriate to describe the meaning of "fly ash" and
"fly ash bricks" as under :
"Fly ash, also known as flue-ash, is one of the residues
generated in combustion, and comprises the fine particles
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that rise with the flue gases. Ash which does not rise is
termed bottom ash. In an industrial context, fly ash
usually refers to ash produced during combustion of coal.
Fly ash is generally captured by electrostatic precipitators
or other particle filtration equipment before the flue gases
reach the chimneys of coal-fired power plants, and
together with bottom ash removed from the bottom of
the furnace is in this case jointly known as coal ash.
Depending upon the source and makeup of the coal being
burned, the components of fly ash vary considerably, but
all fly ash includes substantial amounts of silicon dioxide
(SiO2) (both amorphous and crystalline) and calcium
oxide (CaO), both being endemic ingredients in many
coal-bearing rock strata.....".
12. First, let us first examine whether the good "fly ash" does
involve any manufacturing activity, falls under the purview of
excisable good so as to attract levy of excise duty?......
"13. ..............Here, we are concerned with 'fly ash',
which is produced during combustion of coal. The
difference between 'cinder' and 'fly ash' is that when coal
is not burnt fully and leaves pieces behind, is called
'cinder' whereas, when it is fully burnt and reduced to
ash, is called 'fly ash'. Therefore, I am of the considered
view that the ratio decided in the above said decision
would squarely apply in the case of 'fly ash' also since the
product 'fly ash' also cannot be said to have gone through
any manufacturing process.
In fact, to attract excise duty under Section 3 of the Central
Excise Act, the article must satisfy the twin attributes of
excisable goods, (i) Mobility and (ii) Marketability or it should
find a place by that name in the Schedule to the Act, as held by
the Apex Court in "Commissioner of Central Excise, Mumbai v.
Josts Engineering Co. Ltd.," reported in 2002 (146) E.L.T. 29
(S.C.)...."
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The Hon‟ble Madras High Court further held that & to quote :
"25. However, as already this Court held that the commodity
„fly ash‟ cannot be subjected to levy of excise duty because it is
not an item of goods which has been subjected to process of
manufacture, it may not be necessary for this Court to delve
upon any other related issues. Accordingly, the issue is
answered, holding that the good "fly ash" does not involve any
manufacturing activity and it does not fall under the purview of
excisable good so as to attract levy of excise duty." End of
quote.
I therefore find that manufacture is still an essential condition
for leviability of excise duty.
.........
I also follow the ratio of the aforesaid judgemnets in the matter of Union of India Versus Ahmedabad Electricity Co. Ltd. [2003 (158) E.L.T. 3 (S.C.)] and Mettur Thermal Power Station Versus C.B.E. & C, New Delhi [2016 (335) E.L.T. 29 (Mad.)] on the grounds of judicial discipline. I hold accordingly.
As I find that there is no duty liability on fly ash so there can be no question of any interest liability or imposition of penalty, either."
3. We find from the above discussed case laws by the Adjudicating authority, that the issue is not more res integra. In order the demand the Excise Duty, manufacture of the goods in term of Section 2 (f) of the CEA 1944, is being consistently held as an essential element. In the present case, the Revenue has not brought in any evidence to the effect that fly ash has been manufactured as a planned activity. It is seen that it is arising out as a by-product in the manufacture of the end product when Electricity is generated by using the coal in the furnace.
7Excise Appeal No.75906 of 2017
4. Therefore, we do not see any reason to interfere with the detailed findings of the Adjudicating authority.
5. Accordingly, we dismiss the Appeal filed by the Revenue.
(Dictated and pronounced in the open Court.) Sd/ (R. MURALIDHAR) MEMBER (JUDICIAL) Sd/ (RAJEEV TANDON) MEMBER (TECHNICAL) sm