Non-excisable slag in ferro alloy manufacture was held outside central excise duty, making exemption conditions irrelevant.

Slag generated in the manufacture of ferro alloys was treated as a by-product arising in the course of manufacture, and the Tribunal followed its earlier view that similar slag obtained during manufacture of pig iron was not an excisable product. On that basis, the slag was held not liable to central excise duty. Once non-excisability was found, the exemption notification and the condition relating to Modvat credit did not require examination. The appeal was accordingly allowed.

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Issues: Whether slag generated during the manufacture of ferro alloys was an excisable product liable to central excise duty and, if not, whether the exemption notifications and the condition regarding Modvat credit could be invoked.

Analysis: Slag arose during the manufacture of the assessee's final product, ferro manganese, and the Tribunal followed its earlier decisions holding that slag obtained in the course of manufacture of pig iron was not excisable. Once the product was held to be non-excisable, the question of claiming exemption under the notification, or of testing compliance with the condition relating to availed credit, did not arise.

Conclusion: Slag was held not liable to excise duty and the appeal was allowed.

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