Zinc waste and residue are not excisable goods, so duty demand and penalty based on tariff classification failed.

Zinc waste or zinc residue is not the result of manufacture and is therefore not excisable to central excise duty. Applying that principle, the duty demand and penalty raised on classification under Chapter Heading 79.02 could not be sustained. The assessee's earlier self-classification under Heading 26.02 did not bar it from disputing the departmental classification, because the adjudicating authorities had rejected its classification and confirmed the demand on a different basis. The impugned order was set aside and the demand confirmation annulled.

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Issues: Whether zinc waste and zinc residue were excisable goods liable to duty, and whether the duty demand and penalty based on classification under Chapter Heading 79.02 of the Schedule to the Central Excise Tariff Act, 1985 could be sustained.

Analysis: The product in dispute was held, on the authority of the Supreme Court, to be zinc residue or zinc waste which is not the result of manufacture and therefore not chargeable to central excise duty. The fact that the assessee had itself earlier classified the goods under Heading 26.02 did not prevent it from challenging the departmental classification under Heading 79.02, since the adjudicating authorities had rejected the assessee's classification and adopted a different one for confirming the demand.

Conclusion: The duty demand and penalty were unsustainable, and the appeal succeeded in favour of the assessee.

Final Conclusion: The impugned order was set aside and the demand confirmation was annulled because the goods were not excisable.

Ratio Decidendi: Zinc waste or zinc residue is not the result of manufacture and is therefore not excisable to central excise duty.

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