By TIOL News Service

MUMBAI, NOV 18, 2013: THE appellant manufactures various aluminium products and during the process of manufacture, aluminium dross and skimmings arise, which they cleared without payment of duty. The department was of the view that aluminium dross and skimming are classifiable under CETH 26204010 of the CETA, 1985 and the appellant is liable to discharge the duty liability thereon for the period after 10.05.2008 and accordingly, the demands were confirmed vide the aforesaid orders along with interest thereon and equivalent amount of penalties were also imposed on the appellant.

Aggrieved, the appellant is before the CESTAT.

It is submitted that an identical issue arose before the Tribunal in the case of Bhushan Steel Ltd.- (2012-TIOL-2042-CESTAT-MUM) in respect of Zinc Dross, which arose as a by-product during the galvanization of CR coils and the period involved was also post 10.05.2008. The Bench after considering the amendment to Section 2(d) of the CEA, 1944 effective from 10.05.2008, wherein an Explanation was added to state that “'goods' includes 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”, held that Zinc Dross is not a manufactured product and hence, the same is not liable to excise duty. In view of the above decision, the appellant pleaded that their appeals be allowed.

The Revenue representative submitted that a Co-ordinate Bench of the Tribunal at New Delhi in the case of KEC International Ltd.- (2012-TIOL-2043 -CESTAT-DEL) considered the very same issue and held that as per the Explanation to Section 2(d) of the CEA, 1944, Zinc Dross and Ash are deemed to be marketable and even as per the HSN Explanatory Notes, Zinc Dross is specifically mentioned as a tradable item and consequently, it was held that Zinc Dross is an excisable product and liable to excise duty and, therefore, the impugned orders be upheld.

The Bench observed that in view of the conflicting decisions of the two Benches the matter should be placed before a larger Bench for resolution of the conflicting views.

Accordingly, the following points are placed for consideration by the Larger Bench:-

++ Whether Aluminium Dross and Skimmings or similar Non-ferrous Metal Dross and Skimmings, which arise in the process of manufacture of aluminium/Non-ferrous metal products can be considered as a 'manufactured goods' and hence excisable for the period post 10.05.2008 in view of the Explanation added to Section 2(d) of the Central Excise Act, 1944?

OR

++ Notwithstanding the Explanation to Section 2(d), Aluminium Dross and Skimmings or other Non-ferrous metal dross and Skimmings cannot be considered as 'manufactured products' and hence, not liable to excise duty?

The Registry was directed to place the aforesaid reference before the CESTAT President for constitution of and consideration by the Larger Bench.

Here we go round the mulberry bush on a cold and frosty morning!

(See 2013-TIOL-1715-CESTAT-MUM)