17 December 2014

Dross & skimmings not liable to excise duty – Bombay HC

Bombay High Court has quashed CESTAT Larger Bench Order which had held that aluminium dross and skimmings are excisable goods in view of the Explanation to Section 2(d) of the Central Excise Act, 1944 which was inserted with effect from 10-5-2008. The court in this regard also set aside two CBEC Circulars dated 28-10-2009 and 14-2-2011. The petitioner had contended that such goods were not manufactured goods and hence not liable to excise duty.

The court, in its decision dated 8-12-2014 in the case of Hindalco Industries Limited, while setting aside the LB Order, placed its reliance on number of Judgements by the Supreme Court. It was of the view that binding effect of said judgments is not lost merely because the Tribunal had another occasion to consider the issue or another shade of the same controversy.

It was observed that when the Supreme Court in case of Grasim Industries Ltd. had held that the conditions contemplated under Section 2(d) and Section 2(f) of the Central Excise Act, have to be satisfied conjunctively in order to levy excise duty under Section 3, then, decision of the Tribunal cannot be agreed with. It was also held that Tribunal’s attempt in proceeding to analyse the process and concluding that nobody deliberately manufactures waste, dross and scrap, was in direct conflict with the findings of the Supreme Court requiring fulfillment of twin tests for the purpose of excisability.

Finally, noting that Tribunal had failed to spell out facts which called for taking a different view, the court termed the impugned order as perverse and vitiated by an error of law apparent on the face of the record.


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