Aluminium dross not liable to excise duty where treated as invisible loss; consequential penalty also fails.

Duty could not be demanded on aluminium dross alleged to have arisen in the job worker's factory because the quantity was treated as invisible loss that could not be physically returned to the principal manufacturer. The material was also treated as non-excisable, which independently defeated excise duty on the dross itself. Since the penalty was only consequential to the unsustainable duty demand, it likewise could not survive.

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Issues: Whether duty could be demanded on aluminium dross said to have arisen at the job worker's factory, and whether the connected penalty could survive.

Analysis: The duty demand related to a small quantity said to have arisen over a long period and was accepted as representing invisible loss at the job worker's factory. Such loss could not be physically returned to the principal manufacturer. Even otherwise, aluminium dross had already been held to be non-excisable, so no duty could be levied on it. The penalty was only consequential to the duty demand.

Conclusion: The duty demand on aluminium dross was unsustainable and the connected penalty could not survive.

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