Custom, Excise & Service Tax Tribunal
Cce, Raipur vs M/S Bharat Aluminium Co. Ltd on 24 April, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 24/04/2015. DATE OF DECISION : 24/04/2015. Excise Appeal No. 1268 of 2006 [Arising out of the Order-in-Appeal No. 05/RPR-I/2006 dated 18/01/2006 passed by The Commissioner (Appeals-I), Customs & Central Excise, Raipur.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? CCE, Raipur Appellant Versus M/s Bharat Aluminium Co. Ltd. Respondent
Appearance Shri Ranjan Khanna, Authorized Representative (DR) for the Appellant.
Shri Udit Jain, Advocate for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) Final Order No. 51561/2015 Dated : 24/04/2015 Per. Rakesh Kumar :-
The respondent are manufacturers of aluminium products chargeable to Central Excise duty under Chapter 76 of the Central Excise Tariff. In course of manufacture of aluminium products, aluminium dross and skimming arises which is covered by sub-heading 2620.00 of the Central Excise Tariff. The respondent were selling the aluminium dross and skimming without payment of duty. The Department was of the view that the aluminium dross and skimming being covered by heading 2620.00 of the Central Excise Tariff is excisable goods as the same are specifically covered by heading 2620.00 and are marketable. It is on this basis that three show cause notices were issued to the respondent for demand of duty of Rs. 1,07,57,673/- from them for the period from June 2003 to March 2005 alongwith interest on it under Section 11AB and also for imposition of penalty. The show cause notices were adjudicated by the Additional Commissioner by a common order-in-original dated 06/9/05 by which the above-mentioned three demands totalling Rs. 1,07,57,673/- were confirmed against the respondent alongwith interest. However, no penalty was imposed. On appeal being filed to Commissioner (Appeals) against this order, the Commissioner (Appeals) vide order-in-appeal dated 18/1/06 following the Apex court decision in the case of Union of India vs. Indian Aluminium Company Ltd. reported in 1995 (77) E.L.T. 268 (S.C.) set aside the Additional Commissioners order holding that the aluminium dross and skimming emerging in process of production of aluminium are not marketable goods. Against this order of the Commissioner (Appeals), the Revenue is in appeal.
2. Shri Ranjan Khanna, the learned DR, assailed the impugned order by reiterating the grounds of appeal and pleaded that the Apex court judgment in the case of Union of India vs. Indian Aluminium Co. Ltd. (supra) relied upon by the Commissioner (Appeals) is not applicable to the facts of this case in as much as the case under consideration by the Apex Court involved the dross and skimming removed during the period from September 1972 to March 1973 and during that period the aluminium dross and skimming were classified under Tariff item 68 of the Central Excise Tariff pertaining to goods not elsewhere specified while during the period of dispute, there is a heading 2620.00 specifically covering the ash and residue (other than, from manufacture of iron and steel) containing metals, that, beside this, during period of dispute, there is Chapter Note 3 to Chapter 26 which mentions that the heading 2620 applies only to, ash and residue of a kind used in the industry either for extraction of metal or as a basis for manufacture of chemical compounds of metals, that per MT price ranging from Rs. 20,000/- to Rs. 22,000/- at which the dross and skimming was being sold indicates that it is covered by Chapter Note 3, that while the Apex courts judgment in the case of Union of India vs. Indian Aluminium Co. Ltd. (supra) relied upon in the Commissioner (Appeals)s order is with regard to dross and skimming arising in course of melting of aluminium ingots, the dispute in the present case is in respect of dross and skimming which arise in course of manufacture of aluminium from alumina by electrolysis process and in the dross and skimming arising in the present case the metal content is much higher, that the dross and skimming arising in this case are marketable which is evident from the fact that the same were being regularly sold by the respondent, at the price ranging from Rs. 20,000/- to Rs. 22,000/- per MT which is close to the price of finished product, that these dross and skimming are arising regularly and, hence, in view of the Apex courts judgment in the case of Commissioner of Sales Tax vs. Bharat Petroleum reported in 1995 (77) E.L.T. 90 (S.C.), an intention to manufacture same has to be presumed and that in view of this, the impugned order holding that the aluminium dross and skimming arising in this case are not marketable and, hence, not excisable, is not correct. He also pleaded that the records of the respondent during the period from June 2003 to March 2005 also indicated that the aluminium dross and skimming were being sold regularly at the prices varying from 20,000 per MT to 22,000 per MT which clearly indicates that the market for this product existed.
3. Shri Udit Jain, Advocate, the learned Counsel for the respondent, pleaded that the point of dispute in this case stands decided by the Apex courts judgment in the case of Union of India vs. Indian Aluminium Co. Ltd. (supra) which has been relied upon by the Commissioner (Appeals) and in which the Apex court has held that dross and skimming of aluminium is neither goods nor a marketable commodity, that the ratio of this judgment is still valid, that it is only w.e.f. 10/5/08 that Section 2 (d) of the Central Excise Act, 1944 was amended by adding an explanation, that for the purpose of Clause (d) of Section 2, the goods include any article material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable, that Larger Bench judgment of the Tribunal in the case of Hindalco Industries Ltd. vs. CCE, Belapur, Mumbai III reported in 2014 (308) E.L.T. 472 (Tri. LB) has held that aluminium dross and skimming arising as by-product in course of manufacture of aluminium products would be excisable goods w.e.f. 10/5/08 in view of explanation added to Section 2 (d) of Central Excise Act, 1944, as they are covered by heading 2620 and are regularly bought and sold for consideration, that this judgment of the Larger Bench has been reversed by Honble Bombay High Court vide judgment reported in 2015 (315) E.L.T. 10 (Bom.), wherein the Honble Bombay High Court held that even w.e.f. 10/5/08, the dross and skimming of aluminium cannot be treated as goods and, hence excisable, that in this judgment, Honble Bombay High Court referred to the judgment of Honble Allahabad High Court in the case of Balrampur Chini Mills Ltd. vs. Union of India reported in 2014 (300) E.L.T. 372 (All.), wherein Honble Allahabad High Court in respect of period w.e.f. 10/5/08 held that bagasse arising as an inevitable by-product in course of crushing of sugarcane in course of manufacture of sugar is not marketable even though it is regularly bought and sold, and that the ratio of this judgment of Honble Bombay High Court is squarely applicable to the facts of this case. Shri Jain pointed out to the observations of Honble Bombay High Court in para 21 and 22 of the judgment in the case of Hindalco Industries Ltd. vs. CCE, Belapur, Mumbai III (supra) and pleaded that it is clear that while during the period w.e.f. 10/5/08 after amendment to Section 2 (d) the dross and skimming can be deemed to be marketable, but still the process does not satisfy the manufacture under Section 2 (f) and, hence, the dross and skimming would not be marketable. He, therefore, pleaded that there is no infirmity in the impugned order.
4. We have considered the submissions of both the sides and perused the records.
5. The only point of dispute in the present case is as to whether the aluminium dross and skimming arising in course of manufacture of aluminium products during the period of dispute would attract Central Excise duty. There is no dispute that heading 2620 covers Slag, ash and resident (other than from manufacture of iron and steel) containing mainly zinc, lead, copper, aluminium and specifically covers aluminium dross. The dispute is only as to whether the same could be treated as marketable and, hence, excisable goods. We find Apex court judgment in the case of Union of India vs. Indian Aluminium Co. Ltd. (supra) has held that the dross and skimming of Aluminium neither goods nor marketable commodities and, hence, are not liable to excise duty. Though Apex courts judgment pertains to the period prior to 1986 when there was no specific entry in the Central Excise Tariff for dross and skimming of non-ferrous metal in the Central Excise Tariff and the such dross and skimming was sought to be taxed under Tariff item 68 of the Central Excise Tariff, and during the period of dispute there was a specific heading 2620 covering the dross and skimming of Aluminium, just because a particular product is covered by a tariff entry, it would not imply that the same is excisable, as for treating the goods as excisable the same must be goods, that is, the same must be marketable and the Apex court in the above-mentioned judgment, which is relied upon by the 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 vs. Tata Iron & Steel Co. Ltd. reported in 2004 (165) E.L.T. 386 (SC) 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 news papers, existence of persons selling this product or e-commence websites for sale of Aluminium dross and skimming etc. has been produced. We also find Honble Bombay High Court in the case of Hindalco Industries Ltd. vs. 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. 10/5/08 the aluminium dross and skimming were excisable. In view of this judgment also the finding of the Commissioner (Appeals) that the goods, in question, are not excisable cannot be assailed.
5. There is one more reason why the impugned order is correct. In terms of Chapter Note 3 to Chapter 26 of the Tariff, heading 26.20 applies only to that ash and residue which are used in the industry for extraction of metal or as starting material for manufacture of metal compounds. Such ash and residues would, obviously, be marketable as there would be demand for the same from metal extraction and chemical industry. But in this regard, no evidence in form of evidence of end use of the dross for extraction of Aluminium or for manufacture of Aluminium compound has been produced. Therefore the dross and residues, in question, is not covered by 2620.
6. In view of the above discussion, we do not find in the merit in the Revenues appeal. The same is dismissed.
(Dictated and pronounced in open court.) (Rakesh Kumar) Member (Technical) (S.K. Mohanty) Member (Judicial) PK ??
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