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Issues: (i) Whether untrimmed sheets were excisable and liable to duty, and whether their captive use affected exemption under Notification No. 1/93; (ii) whether unwrought copper and copper slabs were entitled to exemption under Notification No. 42/94; (iii) whether copper slag/dross was excisable and dutiable.
Issue (i): Whether untrimmed sheets were excisable and liable to duty, and whether their captive use affected exemption under Notification No. 1/93.
Analysis: Marketability is a condition for excisability. No evidence had been adduced to show that untrimmed sheets were marketable, despite their mention in exemption notifications. The goods were also used captively in the manufacture of trimmed sheets. Under the explanation governing computation of aggregate clearances, captively consumed inputs are excluded from the value for exemption purposes, so their captive clearances could not be added to deny small scale exemption.
Conclusion: Untrimmed sheets were not liable to duty, and the assessee remained eligible for exemption under Notification No. 1/93.
Issue (ii): Whether unwrought copper and copper slabs were entitled to exemption under Notification No. 42/94.
Analysis: The notification did not confine exemption only to goods directly used in utensils and handicrafts. The inputs were used as basic materials in the manufacture of trimmed sheets, which were ultimately used for the exempt end use. A narrow requirement of direct use was not borne out by the notification.
Conclusion: Unwrought copper and copper slabs were eligible for exemption under Notification No. 42/94.
Issue (iii): Whether copper slag/dross was excisable and dutiable.
Analysis: The controlling principle was that dross and skimmings are not goods. On the same reasoning, copper slag/dross did not amount to excisable goods.
Conclusion: Copper slag/dross was not dutiable.
Final Conclusion: The demand did not survive on any of the disputed items, and the assessee obtained full relief.
Ratio Decidendi: Goods are liable to excise only if they are marketable, captively consumed inputs are excluded from aggregate clearance computation where the exemption notification so provides, and dross/skimmings that do not answer the character of goods are not dutiable.
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