CCEX Vs. UNITED PHOSPHORUS LTD.

JUDGEMENT

(1.) HEARD both sides. The impugned goods "Slag Ash" arises as a by product while manufacturing white phosphorus from rock phosphorus and graphite (on which Modvat credit was taken) as well as Coal and Silica (on which no Modvat credit was availed). The lower appellate authority has held that the by -product is not chargeable to duty and hence he has dropped the duty demand and penalty. The applicant Commissioner has appealed against the same. The main issue before us is as to whether the impugned goods namely slag ash is excisable goods. Various decisions of the Apex Court have laid down the twin criteria of excisability, the product must answer to the test of manufacture of a new and separately identifiable commodity and should also be marketable.

(2.) THE learned SDR appearing for the department has cited the decision of the Apex Court in the case of Commissioner of Sales Tax, Bombay v. Bharat Petroleum Corporation Ltd. , which holds that in the case of by -products, residues and waste and scrap arising in the course of manufacture of main product regularly and continuously, and also sold regularly from time to time, the intention is attributable to manufacture and sell not merely the main product but also the subsidiary products. The learned SDR also brings to our notice that the Apex Court has referred to provisions of Section 2(f) of the Central Excises and Salt Act, 1944 even though the dispute in the said case was under the Sales Tax legislation of Maharashtra. The learned Counsel for the respondents has cited the following decisions, to counter the contention of the department that the impugned goods are excisable product:

(3.) WE find that in the case of Indian Aluminum (supra), the Apex Court has held that everything which is sold is not necessarily a marketable commodity as known to the commerce and that dross and skimmings are not marketable commodity even it they can be sold to recover some metal. The said decision also held that the dross and skimmings of Aluminum are neither "goods" nor "marketable commodity" and hence not liable to excise duty.