Excisability depends on manufacture first; red mud in a tariff entry was not liable to central excise.

Red mud arising as a residue during aluminium manufacture from bauxite was treated as non-excisable because excisability depends first on proof that the item is the result of manufacture. Its presence in tariff Heading 26.21 did not, by itself, make it liable to central excise. As the material was not a manufactured product, the question of marketability did not arise. The stated legal consequence was that the duty demand on red mud was not sustainable.

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Issues: Whether red mud emerging during manufacture of aluminium from bauxite was excisable.

Analysis: Red mud emerged as a residue in the manufacturing process and was dried before clearance. The mere fact that it found a place in tariff Heading 26.21 did not make it excisable, because excisability depends first on satisfaction of the test of manufacture. Since red mud was not a manufactured product, the question of marketability did not arise for determination.

Conclusion: Red mud was not excisable and the duty demand was not sustainable.

Ratio Decidendi: A commodity is not exigible to central excise merely because it is mentioned in a tariff entry unless it is first shown to be the result of manufacture.

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