Court rules 'fly ash' not a manufactured product or waste.

The court determined that 'fly ash' formed during electricity production is not considered a manufactured product under Section 2(f) of the Central Excise Act as it is a by-product and does not involve a manufacturing process. Additionally, the court ruled that 'fly ash' cannot be classified as waste under Notification No. 89/95-CE due to its marketability and use in various industries. The writ appeal was dismissed, affirming 'fly ash' as not falling under the definition of manufactured product and not qualifying for exemption as waste under the mentioned notification.

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Issues Involved:
1. Whether 'fly ash' formed during the production of electricity falls within the meaning of manufacture under Section 2(f) of the Central Excise Act.
2. Whether 'fly ash', a by-product during the production of electricity, could be termed as waste to attract Notification No. 89/95-CE dated 18.5.95.

Detailed Analysis:

Issue 1: Whether 'fly ash' formed during the production of electricity falls within the meaning of manufacture under Section 2(f) of the Central Excise Act.

The court examined Sections 2(d) and 2(f) of the Central Excise Act to determine if 'fly ash' qualifies as a manufactured product. Section 2(d) defines excisable goods as those specified in the First Schedule and capable of being bought and sold. Section 2(f) includes any process incidental or ancillary to the completion of a manufactured product. The court noted that for a commodity to be levied with duty, it must be produced or manufactured in India and undergo a transformation into a new product. The court found that 'fly ash' is a by-product of electricity production and not a manufactured product. The court emphasized that 'fly ash' merely forms during the production of electricity and does not involve a manufacturing process. Therefore, 'fly ash' does not fall within the ambit of manufacture under Section 2(f) of the Act, even though it is marketable.

Issue 2: Whether 'fly ash', a by-product during the production of electricity, could be termed as waste to attract Notification No. 89/95-CE dated 18.5.95.

The court considered the applicability of Notification No. 89/95-CE, which exempts waste or scrap arising during the manufacture of an exempted product. The court noted that 'fly ash' is marketable and used in the production of asbestos, cement, and fly ash bricks. The court held that 'fly ash' cannot be termed as waste or scrap since it has market value and is capable of being bought and sold. Consequently, the court found that Notification No. 89/95-CE does not apply to 'fly ash'.

Conclusion:

The court upheld the learned single judge's finding that 'fly ash' is not a product manufactured under Section 2(f) of the Central Excise Act. However, it overturned the finding that 'fly ash' qualifies as waste under Notification No. 89/95-CE. The writ appeal was dismissed, with no order as to costs.

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