Custom, Excise & Service Tax Tribunal
M/S. Slugs India Ltd vs Commissioner Of Central Excise, Mumbai on 18 August, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO.II
APPEAL NO.E/1255/09-Mum
(Arising out of Order-in- Appeal No. SB(62)/Th.II/09 dtd. 15.10.2009 passed by the Commissioner of Central Excise (Appeals), Mumbai.1)
For approval and signature:
Honble Ashok Jindal, Member(Judicial)
Honble Mr.Sahab Singh, Member(Technical)
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1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should 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 : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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M/s. Slugs India Ltd.
:
Appellant
VS
Commissioner of Central Excise, Mumbai.1
Respondent
Appearance
Shri Bharat Raichandani, advocate for Appellant
Shri V. K. Singh, SDR for Respondent
CORAM:
Mr. Ashok Jindal, Member(Judicial)
Mr.Sahab Singh, Member(Technical)
Date of hearing: 18/08/11
Date of decision 18/08/11
ORDER NO.
Per : Sahab Singh
This is an appeal filed by the appellants against the order of the Commissioner(Appeals) dated 15.10.2009.
2. The brief facts of the case are that the appellants are engaged in the manufacture of zinc oxide falling under Chapter 28 of the Central Excise Tariff Act and are also availing Cenvat credit facility under Cenvat Credit Rules, 2004. On scrutiny of the records, it was revealed that the appellants are clearing zinc ash without payment of duty. Accordingly, a show-cause notice dated 7.3.2007 demanding duty of Rs. 3,96,421/- on zinc ash for the period Feb.2006 to January,2007 was issued to the appellants. The show-cause notice was adjudicated by the Dy.Commissioner of Central Excise, Palghar Division vide his Order No. 19/2007 dated 31/07/2007 confirming the demand of Rs. 3,96,421/- alongwith interest and imposing the equal amount of penalty under Sec.11AC. The appellants filed an appeal before the Commissioner (Appeals) who vide the impugned order has rejected the appeal of the appellants. Against the impugned order, the appellants are before the Tribunal.
3. The ld.counsel appearing on behalf of the appellants submitted that the short question involved in this case is whether the zinc ash is excisable commodity leviable to duty under the CETA,1985. He submitted that the process of manufacture of zinc ash during the course of manufacture of zinc oxide is as under:-
(i) Zince metal, dross or metallic waste is charged into the crucibles placed inside a muffle furnace. Zinc solids are first melt into liquid. The oxidized zinc and light impurities float on the liquid bath. Such impurities are removed from both during every charge of fresh metal. The impurities, floating on the top of the surface of liquid metal which are removed from the crucible carry along with them certain zinc metal also. These impurities are disposed of by the appellants as zinc ash.
(ii) After removal of the impurities from the liquid bath, the temperature of liquid zinc is further raised and zinc starts to boil. The vapors of zinc emerge from crucibles through a hole in the tile, which is used to cover crucibles. The aforesaid process continues. Candle like formation which takes place on the edges of hole for vapor exit, is also removed as zinc ash.
(iii) The third place for the generation of zinc ash in the process of manufacture of zinc oxide, is at the bottom of the crucibles where it contains larger amount of impurities like iron, lead and insolubles.
He submitted that the issue was finally settled by the Supreme Court and the Tribunal in various cases holding that zinc ash is not a manufacturing product and not liable to excise duty. He relied on the following decisions in support of his contention:-
(1) Indian Aluminium Co.Ltd. vs A.K.Bandyopadhyay ( 1980 (6) ELT 146 (Bom.) (2) CCE vs Indian Aluminium Co.Ltd. (2006 (203) ELT 3(S.C.), (3) CCE vs Tata Iron & Steel Co.Ltd. (2004 (165) ELT 386 (SC) and (4) Vishal Pipes vs CCE, Noida (2010(255)ELT 532(Tri-Del.).
He submitted that in view of these decisions, zinc ash is not an excisable commodity and the demand is not, therefore, sustainable.
5. The ld.SDR appearing on behalf of the Revenue submitted that the appellants are procuring zinc dross from manufacturers and availing Cenvat credit on the zinc dross. As per the decisions cited by the appellants, zinc dross is also not an excisable commodity. Since the appellants are taking credit on duty paid zinc ash, there should not have any objection in paying duty on zinc ash irrespective of the value of the zinc ash being lower than the zinc dross. He defended the Order-in-Appeal passed by the Commissioner.
6. Heard both sides. After hearing both sides and going through the records, we find that the short question involved in this case is excisability of zinc ash arising out of zinc oxide manufactured by the appellants . The appellants are procuring zinc dross from which zinc oxide is manufactured and during the process of manufacture, zinc ash is obtained. We find that the issue has already been settled by the Supreme Court and Tribunal. The Tribunal in the case of Vishal Pipes vs Central Excise Act, Noida relying on the decision of the Supreme Court in the case of Collector vs Tata Iron & Steel Co.Ltd. and Commissioner vs Indian Aluminium Co.Ltd. (supra) has clearly held that process of generation of zinc ash does not involve any manufacturing process and the impugned goods cannot be held to be excisable. Therefore, in view of the decision of the Tribunal cited supra, we hold that zinc ash is not an excisable goods and no duty is leviabled on the same. Accordingly, we allow the appeal.
(Pronounced in court) Ashok Jindal Member(Judicial) Sahab Singh Member(Technical) pv 5