+ From a reading of the statutory provision, it is unambiguously clear that for a commodity to be levied with duty, the same must be produced or manufactured in India and that the raw material should have gone through the process of transformation into a new product. Further, it is also clear that the product, which is to be levied with duty, should have gone through a process of manufacture from the raw materials, which were used in the manufacture of the said product. Further the particular product should be capable of being bought and sold for a consideration and such goods shall be deemed to be marketable.
+ In the case on hand, there is no quarrel that the product 'fly ash' falls within the definition of 'excisable goods' under Section 2 (d) of the Act. In that, the product 'fly ash' is capable of being bought and sold. The said issue is not in dispute, as the 'fly ash' is utilised in the production of cement, asbestos, fly ash bricks, etc. and, therefore, its capability of being bought and sold is unquestionable. So there is no quarrel that the product 'fly ash' is a marketable product.
+ As propounded by the Supreme Court in a catena of decisions, the twin tests of manufacture and marketability should be satisfied in order to bring the goods within the ambit of excise duty and failure of even one of the test would render the product not liable for excise duty. In the case on hand, it is clear from the averments of either party and is also not in dispute that 'fly ash' is a by-product during the production of electricity and is not the main manufactured item. Further, the 'fly ash' is not a commodity which can be used as such in the market, but it is usable only as one of the materials in the production of other products. Therefore, there being no manufacture of 'fly ash', but 'fly ash' gets formed as a by-product during the production of electricity, merely because the goods 'fly ash' finds a place in the specific or residuary entry in the schedule it cannot be termed as an excisable commodity, since it satisfies the test of marketability. The twin tests have to be satisfied in order to bring a product within the ambit of excise duty and satisfaction of solitary test alone would not be sufficient to levy excise duty on the commodity. Therefore, mere marketability of the product alone would not be suffice to levy duty on the 'fly ash', there being no manufacturing process involved.
+ It is not in dispute that 'fly ash', a by-product during the production of electricity, which is an exempted excisable commodity, is being sold in the market and that it is used for the purpose of production of asbestos, cement, fly ash bricks, etc. The product is capable of being bought and sold, whereby marketability of the product is such that it has a value in the market. Once a product is said to have a value in the market to enable it to be sold for the purpose of manufacture of various commodities, it cannot be termed as 'waste' or 'scrap'. Such being the case, learned single Judge has misled himself into giving a finding that the by-product 'fly ash', which is generated during the production of electricity is a 'waste' or 'scrap' and, thereby, Notification No.89/95-CE dated 18.5.95 would stand attracted. The said finding of the single Judge is per se erroneous and is liable to be interfered with.
+ Accordingly, for the reasons stated above, while the finding of the learned single Judge with regard to the applicability of Notification No.89/95-CE dated 18.5.95 to the case of the respondent herein is liable to be interfered with, however, insofar as the finding of the learned single Judge that the by-product 'fly ash', which is formed during the production of electricity is not a product produced or manufactured falling within the ambit of Section 2 (f) of the Central Excise Act, though the same is marketable, is liable to be sustained. Accordingly, while the primary issue is answered in favour of the respondent and against the appellants, the incidental issue is answered in favour of the appellants and against the respondent.
(See 2017-TIOL-237-HC-MAD-CX)
