Calcutta High Court
R.K. Refineries And Metal (P) Ltd. And ... vs General Manager, India Government Mint ... on 8 August, 2007
Equivalent citations: 2007(4)CHN18
Author: Debasish Kar Gupta
Bench: Debasish Kar Gupta
JUDGMENT Debasish Kar Gupta, J.
1. The writ application being C.O. No. 21825 (W) of 1995 filed by the petitioners praying for a declaration that C.N. Dross comes under sub-heading No. 2620.00 of Chapter 26 of the Schedule to the Central Excise Tariff Act, 1985 and it comes within the purview of exemption of Central Excise Duty in terms of Notification No. 19/88/CE dated March 1, 1988 as amended by Notification No. 27/91/CE dated July 25, 1991. In the writ application there is a further prayer for a direction upon the respondent authority to refund the excise duty paid by the petitioner towards the Central Excise Duty.
2. The writ application being No. 21826(W) of 1995 filed for a declaration clarifying that the CN Dross comes under sub-heading No. 2620.00 of Chapter 26 of the Schedule to the Central Excise Tariff Act, 1985 and it comes within the purview of exemption of Central Excise Duty in terms of Notification No. 19/88/CE dated March 1, 1988 as amended by Notification No. 27/91/CE dated July 25, 1991. Since same point of law is to be decided in both the writ applications on the basis of almost same facts and circumstances both the writ applications are taken up for analogous hearing.
3. The respondent No. 1 was engaged in manufacturing coins of various denominations in its premises at Alipore Calcutta- 700053. The respondent No. 1 possessed Central Excise Registration Certificate No. 18/IGM/Cal/F/4/92. Most of the articles manufactured by the respondent No. 1 were exempted from levy of Central Excise Duty by virtue of exemption Notifications issued by the Government of India. The respondent No. 1 used to manufacture coins by using copper and nickel alloy as raw materials. In course of such manufacturing, ash and residues known as Dross (hereinafter referred to as the CN Dross) were thrown out by way of removing impurities from the raw materials. The respondent No. 2 was engaged by the respondent No. 1 as their selling agent for the purpose of auction sale of CN Dross.
4. The respondent No. 2 floated a tender through tender notice No. NSTC/ ERO/IGMC/95-96/T-3 dated March 7, 1994 (hereinafter referred to as the said tender notice) where CN Dross and other extraneous materials (excisable @ 15%) lying on the right side of chimney of 500 M.T. were shown against lot No. T-3/14. In the above tender CN Dross lying in bins on the left side of the chimney of 100 MT was shown as lot No. T-3/17. Clause Nos. 9.1, 9.4 and 9.5 of the general terms and conditions of the above tender notice were as follows:
Sales Tax/Excise Duties & Levies:
9.1 All taxes....
9.2 In case the sale....
9.3 Delay in depositing sales tax....
9.4 The materials to be purchased by the buyer shall be subject to all such duties (including excise duty) as may be applicable from time to time and the same shall be borne by the buyer.
9.5 Whatever rate of excise duty/sales tax/other levies, etc. If any, assessed/ applicable on the date of actual removal/lifting of materials shall be paid by the buyer.
5. The petitioners in W.P No. 21825 (W) of 1995 quoted the rates of Rs. 20,091.003 per metric ton in respect of lot No. T-3/14, i.e. CN Dross and other extraneous materials (excisable @ 15%) lying on the right side of chimney of 500 M.T. The tender papers of the tenderers were open on August 7, 1995. The petitioners of the above writ application became the successful bidder in respect of the above lot No. T-3/14 of the said tender notice. Letter of acceptance bearing No. NSTC/ ERO/ IGMC/ 95-96/ T-3/7138/ 307 dated September 21/1995 and delivery order No. NSTC/ ERO/ IGMC/ 5-96/ T-3/DO-9/ 7223 dated November 4, 1995 were issued by the respondent No. 2 in favour of the petitioners. In the acceptance letter as also in the delivery order Central Excise Duty @ 15% was levied. On receipt of the above delivery order, the petitioners as per communication issued under memo No. ED/1/ M/ 95-96/ RK dated October 17, 1995 lodged formal objection to the respondent No. 2 against the levy of 15% Excise Duty on CN Dross. The copy of the above letter of objection was also sent to the respondent No. 1 with the request not to charge Central Excise Duty on CN Dross. In spite of receiving the formal protest, the respondent No. 1 started recovering Central Excise Duty @ 15% in advance on the clearance of the CN Dross. The petitioners further lodged complaint against realisation of Central Excise Duty @ 15% in advance on such clearance of CN Dross as per communication issued under memo No. 2/GM/95-96 dated December 6/1995 addressed to the respondent No. 1. Copies of the above communication were also sent to the respondent Nos. 2 and 4 enclosing copies of the letter of objection dated October 17, 1995 to them as formal protest against such levy of Central Excise Duty @ 15% on CN Dross.
6. Similarly, the petitioners in W.P. No. 21826 submitted their tender papers quoting the rate of Rs. 54,92.00 per MT in respect of lot No. T-3/17 of the said tender lying in the bins on the left side of the chimney of 100 MT. MSTC/ ERO/ IGMC/ 95-96/ T-3/ 7140/ 308 dated September 21, 1995 and delivery order No. NSTC/ ERO/ IGMC/ 95-96/T-C/DO 6/7192 dated October 4, 1995 were issued by the respondent No. 2 in favour of the petitioners of the above writ application. Central Excise Duty @ 15% was levied in respect of the above lot CN Dross. In this case also the petitioners lodged formal protest as per communication dated October 10, 1995 to the respondent No. 2 for charging Central Excise Duty on CN Dross as described in lot No. T-3/17. Copy of the above communication was also sent to the respondent No. 1 with request not to charge Central Excise Duty on CN Dross as described in lot No. T/3/17. In spite of such protest the respondent No. 1 started recovering of Central Excise Duty @ 15% ad valorem on clearance of CN Dross as described in lot No. T-3/17 of the said tender notice. The petitioners further submitted letter of objection dated October 10, 1995 to the respondent No. 1 against levy of Central Excise Duty @ 15% ad valorem on clearance of CN Dross as described in lot No. T-3/17 of the said tender notice dated October 19, 1995. Copy of the above letter of objection was sent to the respondent No. 2 also for taking steps in the matter.
7. These writ applications have been admitted as per order dated December 20, 1995 with the directions that any deposit in respect of Central Excise Duty made by the petitioners in the meantime pursuant to the contract entered into by and between the petitioners and the respondent should be without prejudice to their rights and contentions and should be subject to these writ applications. In the event these writ applications were allowed, the Court at the time of hearing would give direction or directions to refund the amount in question to their buyers together with interest, if any. It was further made clear that in view of the above interim order, the question of taking advantage of Sub-section (2), of Section 11B of the Central Excise and Salt Act, 1944 would not arise.
8. Appearing on behalf of the petitioners Mr. P. K. Dutta submits that in the letter of acceptance dated September 21, 1995, the rate of Central Excise Duty applicable for sale of Cupro-Nickel Dross was shown @ 15% ad valorem. The "copper waste and scrap" is classified under sub-heading 7404.00 of Chapter 74 of the Schedule to the Central Excise Tariff Act, 1985 attracting Central Excise Duty @ 15% ad valorem. Mr. Dutta submits that the "Dross" cannot be classified as "waste and scrap" as understood in common or commercial parlance. "Dross" contains some small percentage of metal as compared to waste and scrap. In the market also "Dross" is not sold as waste and residue. There is wide difference between the price of "Dross" and "waste and scrap". So, the "Dross" cannot be classified as "waste and scrap".
9. Mr. Dutta also submits that in the Schedule to the Central Excise Tariff Act, 1985 "waste and scrap of metal" has been placed under Section, XV which deals with base metal and waste of base metals. Section-note 6(a) of Section XV of the Central Excise Tariff Act, 1985, provides that the "metal waste and scrap" arises from the manufacturing or mechanical working of metals and metal goods which are not useable as such because of breakage, cutting up, wear or other reasons. A reading of this definition makes it clear that Chapter 74 of the Schedule to the Central Excise Tariff Act, 1985 applies to copper and its alloys. The definition of "waste and scrap" also clearly indicates that it arises from the manufacturing or mechanical working of metals and metal goods definitely not useable as such because of breakage, cutting up, wear or other reasons. This waste contains high percentage of metals. But "CN Dross" is not "waste and scrap" and the same does not contain high percentage of copper and nickel and they are not obtained from the manufacturing or mechanical working of metal or metal goods.
10. In view of the above classification of CN Dross under sub-heading No. 7404.00 of Chapter 74 of the Schedule to the Excise Tariff Act, 1985, Central Excise Duty cannot be leviable on CN Dross @ 15%. Mr. Dutta submits and CN Dross comes under sub-heading 2620.00 of Chapter 26 of the Schedule to the above Act treating the same as residue.
11. Mr. Dutta draws the attention of this Court towards the provisions of Section 3 of the Central Excise and Salt Act, 1944 which specifies that the Central Excise Duty is levied and collected on all excisable goods other than salt which are produced and manufactured in India. Sub-section (1) of Section 2 of the above Act includes the term manufactured. It includes any process incidental or ancillary to the completion of manufacturing product. The term "excisable goods" is defined under Clause (d) of Section 2 of the above Act describing the same as goods specified in the First Schedule has been subjected to a duty of excise.
12. Mr. Dutta submits that in view of the provisions of Section 35 of the Central Excise and Salt Act, 1944 any person aggrieved by any decision or order based under this Act by a Central Excise Officer may prefer an appeal. But in this case the respondent No. 1 being the assessee, the petitioner has no right to prefer an appeal. Mr. Dutta also submits that the writ application is maintainable to resolve the dispute in question on basis of the materials available on record.
13. In view of the above Mr. Dutta submits that CN Dross cannot be classified under sub-heading 7404.00 of Chapter 74 of the Schedule to the Central Excise Tariff Act, 1985. CN Dross is not excisable and accordingly it does not attract any Central Excise Duty.
14. Mr. Dutta relies upon the decision of Union of India v. Indian Aluminium Co. Ltd. to show that "Aluminium -Dross and Skimmings" are neither goods nor marketable commodity and as such not liable to excise duty. Mr. Dutta submits that "Aluminium -Dross and Skimmings" are pari materia with CN Dross and Skimmings. Relying upon the decision of Collector of Central Excise, Patna v. Tata Iron & Steel Co. Ltd. , Mr. Dutta submits that "zinc Dross, flux skimming" and "zinc sealing", which come into existence during galvanising steel sheets, are not excisable goods. Mr. Dutta further submits that in the case of Commissioner of Central Excise v. Indian Aluminium Co. Ltd. reported in 2006-TIOL-129-SC CX it has been held that "zinc Dross and flux skimming" are not excisable under the Central Excise Tariff Act.
15. Mr. Dutta relies upon the decision of ABL International Ltd. and Anr. v. Export Credit Guarantee Corporation of India Ltd. submit that this writ application is maintainable in view of the fact that the issue involved in this writ application can be decided on the basis of the materials available on record.
16. Appearing on behalf of the respondents Mr. P.K. Tarafdar learned Advocate submits that payment of excise duty @ 15% was a condition as mentioned in the tender notice dated March 7, 1994. The offers were made by the petitioners on the basis of the above conditions. Those offers were accepted by the respondent authority after accepting the terms and conditions as mentioned in the notice. It was not open to the petitioners to challenge the validity of such condition subsequently. The conditions of the contract were binding in nature upon the parties. So this writ application is not maintainable. Mr. Tarafdar submits that it is a disputed question as to whether the materials purchased by the petitioners were "Dross and Skimming" or "Scrap". So it cannot be decided in a writ proceeding.
17. Mr. Tarafdar also submits that no demand for justice was made to the respondent authority. Therefore, no writ of mandamus can be issued in terms of the prayers made in the writ applications.
18. With regard to the merits of these cases Mr. Tarafdar relies upon the report dated September 9, 1995 of the assay demand report dated August 26, 1995 to show that according to the report of the expert the lot Nos. T-3/14 to T-3/17 contained the following percentage of copper and nickel:
Lot 14 : Copper = 21.0%
Nickel = 7.30%
Lot 15 : Copper = 1.66%
Nickel = 0.44%
Lot 16 : Copper = 11.34%
Nickel = 4.60%
Lot 17 : Copper = 36.57%
Nickel = 12.20%
Lot 18 : Copper = 67.15%
Nickel = 22.38%
Balance : Siliceous, Carbonaceous & Earthy Matters
19. According to Mr. Tarafdar the nature and character of the goods were determined on the basis of the above report which had been obtained before taking decision. Since the goods in question contained high percentage of copper and nickel the same could not be treated as coming within the sub-heading No. 2620.00 of Chapter 26 of the Schedule to the Central Excise Tariff Act, 1985 treating the same as residues. The same should come within the purview of subheading No. 7404.00 of Chapter 74 of the schedule to the Central Excise Tariff Act, 1985 treating the goods in question as copper waste. With regard to the question the marketability of the goods in question, Mr. Tarafder submits that in view of the report dated August 26, 1995 submitted by the expert those goods could not be treated as dross and in view of containing high percentage of copper and nickel in the goods in question those were marketable and, therefore, these same were treated as excisable @ 15% under the provision of the Central Excise Tariff Act, 1985.
20. Mr. P. K. Tarafdar learned Advocate appearing for the respondents relies upon the decisions Biswanath Sinha and Ors. v. Sudhir Kumar Banerjee and Ors. , Saraswari Industrial Syndicate Ltd. v. Union of India reported in 1974(2) SCC 630, to submit that in absence of a demand for justice at the instance of the petitioners, a writ of mandamus cannot be issued. Mr. Tarafdar also submits that refusal to perform its duty by the respondent authority is a pre-condition to consider the case for issuing a writ of mandamus. Since no prayer is made to the appropriate authority for exemption of excise duty, the writ application is not maintainable. Relying upon the decision of Quinn India Ltd. v. Commissioner of Central Excise, Hyderabad , Mr. Tarafdar submits that to ascertain the nature and character of the goods report of the expert is to be relied upon and the dictionary meaning cannot be taken into consideration. Relying upon the decision Chemical Rai India Ltd. v. Commissioner of Central Excise, Mumbai reported in 2006(200) ELT 569, Mr. Tarafdar submits that in these cases the Excise Duty was assessed on the basis of the classification of the product in terms of the report of the expert. Since that report is not under challenge this writ applications are liable to be dismissed. Relying upon the decision of R.C. Tobacco (P) Ltd. and Anr. v. Union of India and Anr. , Mr. Tarafdar submits that it was the liability of the manufacturer to pay the Excise Duty. After making such payment the manufacturer was authorised to recover the same and that was done in this case. So, no order can be passed in this writ application for recovery of such Excise Duty. In support of the above submission Mr. Tarafdar relies upon the decision of State of Rajasthan v. J.K. Udaipur Udyog Ltd. . Reliance is placed upon the decision of Commissioner of Sales Tax, Bombay v. Bharat Petroleum Corporation Ltd. reproted in , to submit that products in question were saleable in the market. As a result the central excise could be levied @ 15% of those goods.
21. I have heard the learned Counsels appearing on behalf of the respective parties at length and I have given my anxious consideration to the materials on record. The first question falls for consideration of this Court is maintainability of this writ applications. Before these writ applications relate to some question of fact and secondly on the ground as to whether any writ of mandamus can be issued in absence of any demand for justice to the respondent authorities as alleged by the respondents. With regard to the first question, I find that the point of law involved in this writ applications is to be decided on the basis of the materials available on record. Now, the law is well-settled in this regard. In the event the point of law involved in the writ application are to be decided on the basis of the materials available on record and without any external aid or without any oral evidence, the writ application is maintainable. In this regard the relevant portions of the decision of ABL International Ltd. and Anr. v. Export Credit Guarantee Corporation of India Ltd. and Ors. are quoted below:
19. Therefore, it is clear from the above enunciation of law that merely because one of the parties to the litigation raises a dispute in regard to the facts of the case, the Court entertaining such petition under Article 226 of the Constitution is not always bound to relegate the parties to a suit. In the above case of Gunwant Kaur this Court even went to the extent of holding that a writ petition, if the facts require, even oral evidence can be taken. This clearly shows that in an appropriate case, the Writ Court has the jurisdiction to entertain a writ petition involving disputed questions of fact and there is no absolute bar for entertaining a writ petition even if the same arises out of contractual obligation and/or involves some disputed questions of fact.
22. Since the points of law involved in these writ applications are to be decided on the basis of the materials available on record without any external aid, in my opinion, these writ petitions are maintainable.
23. With regard to the second objection raised by the respondents regarding maintainability of these writ applications in the absence of demand of justice, I find that it is an admitted position that the petitioners in the first writ application being CO. No. 21285 (W) of 1995 submitted representation under memo No. E/D/1/1A/95-96/R. K. dated October 17, 1995 to the respondent No. 2 (the selling agent) with copy to the respondent No. 1. It is also an admitted position that the petitioners in the above writ application submitted representation under memo No. 2/GM/95-96 dated December 6, 1995 to the respondent No. 1 with service of copies to the respondent Nos. 2 and 4 for treating that communication as formal protest against levy of Excise Duty on CN DROSS in question. Similarly the petitioners in the second writ application being W.P. No. 21826 (W) of 1995 submitted their written objection under memo No. E/D/ l/M/95-96 dated October 10, 1995 to the respondent No. 2 (the selling agent) with copy to the respondent No. 2. The petitioners submitted their representation dated October 19, 1995 to the respondent No. 1 with service of copy to the respondent No. 2 as their demand of justice. In view of the above admitted fact it appears that the petitioners in both the writ applications lodged their formal protest before the respondent authorities. Therefore, the objection raised by the respondent cannot be sustained.
24. Since this is an admitted position that letters of protest were submitted before the respondent authorities by the writ petitioners to the respondent in both the writ applications, in my view, the decisions of Biswanath Sinha and Ors. v. Sudhir Kumar Banerjee and Ors. (supra), Saraswati Industrial Syndicate Ltd. v. Union of India (supra), relied upon by Mr. P.K. Tarafder, the learned Advocate appearing on behalf of the respondents, have no manner of application in this cases on the basis of the facts and circumstances involved in these cases.
25. With regard to the merits of these writ applications, the point of law is to be decided by this Court whether goods containing in lot Nos. T-3/14 and T-3/17 of the tender notice dated March 7, 1994 are coming within the purview of sub-heading No. 7404.00 of Chapter 74 of the Schedule to the Central Excise Tariff Act, 1985 or the aforesaid goods come under sub-heading 2820.00 of Chapter 26 of the Schedule to the Central Excise Act, 1985. In doing so this Court is to take into consideration the Notification No. 19/88-CE dated March 1, 1988 as amended by Notification No. 27/91-CE dated July 25, 1991.
26. The legality of realising Excise Duty on the goods in question from the writ petitioners depends upon the above decision.
27. The term "Dross" is defined in Oxford English Dictionary 11th Edition as follows:
dross n. 1. rubbish. 2. Scum on the surface of molten metal.
28. The Asm Metal Refers Book (2nd Edition, 1983) produced by the mechanical authority of metals defined "dross" as follows:
The scum that forms on the surface of molten metals largely because of oxidation but sometimes because of rising of impurities in the surface.
29. Mc. Graw Hill Dictionary of Science and Engineering (1984 edition) defines "dross" as follows:
An impurity, usually an oxide, formed on the surface of the molten metal.
30. For proper adjudication of this case the provisions of sub-heading 7404.00 of Chapter 74 of the schedule to the Central Excise Tariff Act, 1985 are quoted below:
CHAPTER 74 Copper and Articles Thereof Heading No. Sub-heading No. Description of goods Rate of duty 74.04 7404.00 Copper waste and scrap 15%
31. Section note 6(a) of section XV of the Central Excise Tariff Act, 1985 the expression "waste and scrap" have the meaning assigned to them as follows:
SECTION XV Base Metals and Articles of Base Metal
6. In this section, the following expression have the meanings hereby assigned to them:
(a) Waste and Scrap:
Metal waste and scrap from the manufacture or mechanical working of metals and metal goods definitely not unable as such because of breakage, cutting-up or other reasons.
32. In view of the above expression of "Dross", the "Dross and Skimming" may contain some percentage of metal but they cannot be said to be "waste or scrap". Some metal may be recovered from the "Dross and Skimming" and that metal can be sold in the market but it does not make "Dross and Skimming" a marketable commodity. If something is sold, it cannot be said to be necessarily a marketable commodity as known in commercial parlance.
33. Therefore, "Dross" and "Skimming" cannot come within the purview of sub-heading 7404.00 of Chapter 74 of the Schedule to the Central Excise Tariff Act, 1985 because the same are not "Waste and Scrap" as understood in common or commercial parlance.
34. With regard to the applicability of the provisions of Chapter 26 of the Schedule to the Central Excise Tariff Act, 1985, I find that as per Chapter-note 3 of Chapter 26 of the Schedule to the Central Excise Tariff Act, 1985, sub-heading No. 2620 applies to ash and residues of a kind used in industry either for extraction of metals or as a basis for the manufacture of chemical compounds of metals.
35. For proper adjudication of the matter the Chapter-note 3 and the provisions of sub-heading 2620.00 of Chapter 26 of the Schedule to the Central Excise Tariff Act are quoted below:
CHAPTER 26 Ores, Slag and Ash
3. Heading No. 26.20 applies only to ash and residues of a kind used in industry either for the extraction of metals or as a basis for the manufacture of chemical compounds of metals.
Heading No. Sub-heading No. Description of goods Rate of duty
(1) (2) (3) (4)
26.20 2620 Ash and residues (other than 10%
from the manufacture of iron
or steel), containing metals or
metal compounds
36. So, in view of the above provision CN Dross comes under sub-heading 2620.00 of Chapter 26 of the Schedule to the Central Excise Tariff Act, 1985.
37. By virtue of notification No. 19/88- CE dated March 1, 1988 as amended by notification No. 27/91/CE dated July 25, 1991, the goods falling within Chapter 26 of the Schedule to the Central Excise Tariff Act, 1985 are exempted from the whole of the duty of excise leviable thereon which are specified in the Schedule provided that no credit duty paid on the inputs used in manufacture of said goods, has been taken under Rule 56A or Rule 57 of the Central Excise Rules, 1944. The above provision is quoted below:
Exemption to goods falling under Chapter 26.-In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods falling within Chapter 26 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1985), from the whole of the duty of excise leviable thereon which is specified in the said Schedule:
Provided that no credit of duty paid on the inputs, used in the manufacturer of said goods, has been taken under Rule 56A or Rule 57A of the Central Excise Rules, 1944.
[Notification No. 19/88-CE, dated 1.3.1988 as amended by Notification No. 27/91-CE, dated 25.7.1991.]
38. Therefore, C.N. Dross is not excisable goods under the Central Excise Tariff Act, 1985.
39. For the same reasons it has been held in the matter Union of India v. Indian Aluminium Co. Ltd. that aluminium dross and skimming are not even waste or scrap and they are not goods at all as understood in commercial parlance and therefore they are not assessable under the Central Excise Tariff Act, 1985. The relevant portions of the decision are quoted below:
24. The exclusion of aluminium dross and skimming from "Waste and Scrap for Aluminium" in Tariff Item 27 is not of this nature. Dross and skimming are excluded because they are not even waste or scrap. They are not goods at all as understood in commercial parlance. Therefore, they are not assessable under Tariff Item 68.
25. The appellants have drawn our attention to the decision in the case of Khandewal Metal and Engineering Works and Anr. Etc. v. Union of India and Ors. , where this Court has held that brass scrap which comes into being in the process of manufacture, is a dutiable commodity. It has said that brass scrap is a well-known marketable commodity and is a by-product of manufacture. This, however, will not help the appellants in the present appeals because dross and skimming are not waste and scrap as understood in common or commercial parlance. These are ashes and impurities and contain only a small percentage of metal which it may or may not be economical to extract, but its presence results in dross and skimming being sold for a small price.
40. In an almost similar situation it was decided in the matter of Collector of Central Excise, Patna v. Tata Iron & Steel Co. Ltd. that zinc dross, flux skimming and zinc scaling were not excisable goods under the provisions of Central Excise Tariff Act, 1985. The relevant portions of the above decision are quoted below:
24. In our opinion, this Court in Indian Aluminium Co. Ltd. has held that merely selling does not mean dross and skimming are a marketable commodity as even rubbish can be sold and everything, however, which is sold is not necessarily a marketable commodity as known to commerce and which, it may be worthwhile to trade in. The issue involved in this case is the Tribunal and this Court held that the zinc dross and skimming arising as refuse during galvanisation process are not excisable goods. The Tribunal, in our opinion, has rightly relied upon the decision of this Court in Indian Aluminium Co. Ltd. and in view of the above decision of the Tribunal following this Court's opinion in Indian Aluminium Co. Ltd. we disagree with the appellants that zinc dross, flux skimming and zinc scalings are goods and hence excisable.
41. Zinc dross and flux skimming were declared not excisable under the provisions of the Central Excise Tariff Act, 1985 in the decision Commissioner of Central Excise v. Indian Aluminium Co. Ltd. reported in 2006(203) ELT 3 (SC). The relevant portions of the above decision are quoted below:
13. What is the meaning of dross is the core question.
14. In Indian Aluminium (supra), this Court notices the meaning of the term 'dross' in the following terms:
The term dross is defined in The New Shorter Oxford English Dictionary as:
Dross, Dregs...(1) Impurities separated from metal by melting the scum which forms on the surface of molten metal. (2) Foreign matter mixed with anything. (3) Refuse, rubbish, worthless matter especially as contrasted with or separated from something of value.
The ASM Metals Reference Book (2nd Edn., 1983) produced by the American Society for Metals defined 'dross' as follows:
The scum that forms on the surface of molten metals largely because of oxidation but sometimes because of the rising of impurities to the surface.
Mc Graw Hill Dictionary of Science and Engineering (1984 Edn.) defines it as:
An impurity, usually an oxide, formed on the surface of molten metal.
15. The decision of this Court in Indian Aluminium (supra), it is submitted, is no longer good law, as:
(a) There was no specific entry for dross when the decision was rendered by this Court whereas Chapter heading 26.20 covers the same.
(b) Dross and skimming are not thrown out but are preserved for further sale.
16. The contention of respondent, on the other hand, are:
(i) Appellants are not extracting metal from dross.
(ii) The content of metal in dross is immaterial.
(iii) Dross is not comparable to metal or waste.
(iv) The issue as to the dutiability of dross was settled by this Court in Indian Aluminium (supra). Thereafter, the Tribunal after considering Tariff Heading 26.20 held that dross was not dutiable.
17. Tariff Heading 26.20 was introduced with effect from 1.3.1986. It is not waste but it comes under the heading 'ash or residue'. It may be true that the old tariff did not contain a specific entry as regards 'dross' when the decision of this Court was rendered but the question which arises for consideration is whether only because there now exists a specific entry in the Central Excise Tariff by way of 'ash and residue', would the same by itself make 'dross' subject to payment of excise duty although no manufacturing process is involved.
18. The entry in question does not contain any legal fiction. It does not say that any residue having more than a certain percentage of the metal would be deemed to have been manufacture or would be excisable. Records maintained by respondent whereupon the revenue has relied upon may be a relevant factor to identity 'dross' as a marketable commodity but then percentage of the metal in dross may not by itself it excisable, if it is otherwise not. An article is not exigible to tax only because it may have some saleable value.
19. It may be that dross no longer answers the description of "waste and scrap" in view of the changes made in the Tariff. It is, however, almost well-settled that even if some percentage of mental is found in the dross the same in absence of something more in the entry would not be rendered as an excisable article. This Court in Indian Aluminium (supra), in fact notices that some amount of metal is found in dross and skimming. A distinction, however, was made that dross and skimming are not metals in the same class as 'waste or scrap'. Even assuming that dross having a high percentage of metal is a marketable commodity, the question, in our opinion, would arise as to whether the same can be said to be a manufactured product. The term "manufacture" would imply something more. There must be a transformation; a new and different article must emerge having a distinctive name, character or use.
42. I do not agree with the submission of Mr. P. K. Tarafdar that the decisions of Quinn India Ltd. (supra) and Chemetall Rai India Ltd. (supra) are applicable in these cases. Because, in the matters of Union of India Alluminium Co. Ltd. (supra) and Collector of Central Excise, Patna (supra) it was decided that "Aluminium Dross and Skimming" and "Zinc- Dross, flux skimming" are not excisable goods. Those are pari materia with CN Dross. The decisions of Chemetall Rai India Ltd. (supra), R. C. Tobacco (P) Ltd. (supra) and State of Rajasthan (supra) have no manner of application on these cases in view of the distinguishing features of these cases. I am not inclined to accept the submissions of Mr. Tarafdar that the decision of Commissioner of Sales Tax, Bombay (supra) is applicable in these cases. Because, it has been decided in the matter of Indian Aluminium (supra), that records maintained by the respondent whereupon the Revenue had relied upon might be relevant factor to identity "dross" as a marketable commodity but then percentage of metal in dross might not itself made it excisable if it was otherwise not and an article was not excisable to tax only because it might have some saleable value.
43. In view of the above both the writ applications succeed with the declaration that CN Dross comes within purview of sub-heading 2620.00 of Chapter 26 of the Schedule to the Central Excise Tariff Act, 1985. Consequent thereupon, the petitioners in the respective writ applications are entitled to the benefit of full exemption of Central Excise Duty in terms of Notification No. 19/88/CE dated March 1, 1988, as amended by Notification No. 27/91/CE dated July 25, 1991.
44. As observed hereinabove, these writ applications were admitted as per order December 20, 1995 with the direction that any deposit in respect of Central Excise Duty made by the petitioners pursuant to the contract entered into by and between the petitioners and the respondent should be without prejudice to their rights and obligations and should be subject to the results of these writ applications. Therefore, in view of the declaration as aforesaid the respondent authorities are directed to refund the Central Excise Duty realised from the respective petitioners by way of levying Central Excise Duty on CN Dross in terms of the delivery order being Nos. NSTC/ERO/IGMC/596/T-3/D.O.-9/7223 dated November 4, 1995 and No. NSTC/ERO/IGMC/95-96/T-3/DO-6/7192 dated October 4, 1995 together with simple interest @ 6% per annum within a period of six weeks from the date of communication of this order.
45. This writ applications are, thus, disposed of.
46. There will be, however, no order as to costs.
47. Urgent xerox certified copy of this judgment, if applied for, be given to the parties, as expeditiously as possible, upon compliance with the necessary formalities in this regard.