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Issues: (i) Whether DTA clearances of tripods by a 100% EOU were eligible for concessional duty under Notification No. 8/97-CE when separate accounts of indigenous and imported raw materials were not maintained; (ii) whether aluminium dust and slag arising in the course of manufacture were excisable goods.
Issue (i): Whether DTA clearances of tripods by a 100% EOU were eligible for concessional duty under Notification No. 8/97-CE when separate accounts of indigenous and imported raw materials were not maintained.
Analysis: The concession under the notification was available where the goods were manufactured wholly from indigenous raw material. Although separate accounts were not maintained, the factual position established was that no imported aluminium ingots were received before 13.01.2004, while the disputed DTA clearances related to goods manufactured earlier. The goods were also shown to be rejected or returned stock. In these circumstances, the absence of separate records did not justify denial of the concession or demand of differential duty.
Conclusion: The demand of differential duty on the tripods was not sustainable and the issue was decided in favour of the assessee.
Issue (ii): Whether aluminium dust and slag arising in the course of manufacture were excisable goods.
Analysis: The residue in question arose as dross and skimmings during manufacture. Applying the settled principle that such by-products are not excisable commodities, the liability to central excise duty could not survive. The prior payment of duty by the assessee did not alter the character of the goods for excisability purposes.
Conclusion: Aluminium dust and slag were not excisable goods and the duty demand on this item was set aside in favour of the assessee.
Final Conclusion: The appeal succeeded and the duty demands were unsustainable, with consequential relief granted.
Ratio Decidendi: Where the factual record shows that disputed clearances were manufactured before any imported raw material was used, exemption linked to indigenous raw material cannot be denied merely for want of separate accounts; and dross or skimmings arising in manufacture are not excisable goods.
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