Manufacture requirement controls excise liability for aluminium dross and skimmings; marketability alone cannot attract duty.

Aluminium dross and skimmings, generated as waste during manufacture of aluminium products, were treated as non-excisable because they did not arise from a manufacturing process within section 2(f) of the Central Excise Act, 1944. The presence of marketability or tariff classification was held insufficient to create excise liability where the statutory requirement of manufacture was not met. A binding precedent and a later departmental circular withdrawing the contrary view supported that position, so the demand, confiscation and penalties could not be sustained.

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Issues: Whether aluminium dross and skimmings, being waste generated during manufacture of aluminium products, were liable to central excise duty as excisable goods.

Analysis: The dispute turned on whether the impugned material amounted to goods manufactured within the meaning of section 2(f) of the Central Excise Act, 1944, and whether the deeming explanation to section 2(d) could bring a waste product within the charge of duty. The issue had already been settled by binding precedent holding that aluminium dross and skimmings are not the result of any manufacturing process and therefore do not satisfy the statutory requirement of manufacture. In light of that position, and the subsequent departmental circular rescinding the contrary view, the waste could not be treated as excisable merely because it was capable of sale or had a tariff classification.

Conclusion: Aluminium dross and skimmings were not liable to excise duty and the demand, confiscation and penalties could not stand.

Final Conclusion: The impugned orders were set aside and all the appeals succeeded with consequential relief.

Ratio Decidendi: A waste or residue is not excisable unless it is the result of manufacture within the meaning of section 2(f) of the Central Excise Act, 1944; mere marketability or tariff classification does not create duty liability.

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