Fly ash not excisable under Central Excise Tariff Act. Manufacturing exemption upheld.

The Tribunal dismissed the department's appeal, holding that 'fly ash' arising during electricity generation is not excisable under the Central Excise Tariff Act, 1995. The Tribunal aligned with the Madras High Court's ruling, stating that 'fly ash' does not undergo manufacturing and therefore is not liable for duty, despite its marketability. The decision emphasized that mere marketability does not establish excisability, and in this case, the lack of manufacturing process exempts 'fly ash' from duty payment.

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Issues:
Classification of 'fly ash' under Central Excise Tariff Act, 1995 and applicability of duty exemption under notification No. 89/95-CE.

Analysis:
1. The respondent-assessee, engaged in electricity generation, cleared 'fly ash' for use in other products without duty payment under exemption benefit. The department contended 'fly ash' is classifiable under a specific entry, thus duty liable. A show cause notice demanding duty of Rs. 48,12,210 was issued, confirmed in Order-in-Original, appealed by the assessee and allowed by the Commissioner (Appeals).

2. The department challenged the order, arguing the Commissioner erred by applying a Supreme Court judgment on Bagasse excisability, stating 'fly ash' arises differently. The assessee defended, citing the Supreme Court's decision on Cinder excisability, claiming 'fly ash' doesn't undergo manufacturing.

3. The High Court in a similar case held 'fly ash' isn't excisable as it doesn't undergo manufacturing during electricity generation. Marketability alone doesn't establish excisability. The department's emphasis on marketability per Section 2(d) was deemed legally unsustainable.

4. The Tribunal referred to the Madras High Court's decision on 'fly ash' excisability, stating electricity, though nil-duty, is excisable. 'Fly ash' not undergoing manufacturing doesn't attract excise duty, aligning with the Madras High Court's ruling. The appeal was dismissed following the precedent.

In conclusion, the Tribunal dismissed the department's appeal, following the Madras High Court's decision, holding 'fly ash' arising during electricity generation isn't excisable due to lack of manufacturing, thus not liable for duty, despite marketability.

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