Coal-ash classification failed where residue from fuel use was not treated as manufactured excisable goods under the tariff entry.

Cinder or coal-ash arising as residue from coal used as boiler fuel was held not to be excisable goods classifiable under Heading 26.21 of the Central Excise Tariff. The Court reasoned that the inclusive definition of manufacture does not convert every manufacturing residue into a manufactured commodity, and that marketability alone does not make refuse or ash excisable. It further held that cinder was not "other ash" under the tariff entry, and prior treatment under an old residuary entry could not justify the impugned classification. The circular, trade notice, and consequential show-cause notices were therefore held illegal and unsustainable.

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Issues: Whether coal-ash or cinder arising from the use of coal as fuel in boilers for generation of electricity and manufacture of starch and other maize products is excisable goods classifiable under Heading 26.21 of the Central Excise Tariff Act, 1985, and whether the circular and trade notice treating it as such were valid.

Analysis: Cinder was found to be only the residual waste of burnt coal used as fuel in the petitioners' manufacturing activity and not a product manufactured or produced in the course of making electricity or maize products. The inclusive definition of manufacture under Section 2(f) of the Central Excise Act, 1944 does not convert every residue arising during a process into a manufactured commodity. The Court held that mere marketability does not by itself make a substance excisable goods, and that refuse or ash arising in the course of manufacture cannot be treated as goods merely because it may be capable of sale. Heading 26.21 was held inapplicable because cinder is not 'other ash' within that entry, and the earlier treatment of cinder under the old residuary tariff entry did not justify its classification under the specific tariff heading now invoked.

Conclusion: Cinder was not liable to be classified under Heading 26.21 as excisable goods, and the impugned circular, trade notice, and consequential show cause notices were illegal and unsustainable.

Final Conclusion: The petitioners succeeded and the departmental attempt to levy duty on cinder under the impugned tariff classification was set aside.

Ratio Decidendi: A residue or waste arising from the use of coal as fuel is not, merely by reason of its marketability or presence in the tariff schedule, excisable goods unless it is shown to be a manufactured product falling within the relevant tariff entry.

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