By-product treatment of undersized coal upheld as a non-taxable waste product in smokeless coal manufacture

Undersized coal separated during the manufacture of smokeless coal was treated as a by-product or waste product because it emerged in the course of crushing, filtering and screening, rather than as a separately manufactured commodity. The Tribunal's finding on the record that the material was not independently produced or sold as a separate taxable commodity was treated as a factual finding, and no basis was shown to disturb it. On that footing, the undersized coal was not liable to tax as a separate taxable commodity under section 4A of the U.P. Trade Tax Act, 1948.

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Issues: Whether undersized coal separated during the manufacture of smokeless coal was a waste product or by-product exempt from tax under section 4A of the U.P. Trade Tax Act, 1948.

Analysis: The manufacturing process of smokeless coal involved crushing, filtering and screening, after which undersized and broken coal emerged as a separate product. The Tribunal had accepted, on the basis of material on record and its earlier findings, that such undersized coal arose in the course of manufacture and was not independently manufactured or sold as a separate taxable commodity. The finding that it was a by-product or waste product was treated as a factual finding. No material was shown to warrant a different conclusion.

Conclusion: The undersized coal was rightly treated as a by-product or waste product and was not liable to tax as a separate taxable commodity.

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