slag under which chapter heading arising out induction furnace is exciseable or not?

[Saurav Jain Jain]

sir, we are manufacturing ms billets by way of melting several input materials in an induction furnace. In the process ,slag is generated and discarded. We would like to know that if we sell the slag, number 1-is it exciseable ? under which chapter heading will it fall? and what is the rate applicable?

[MADAN RAHEJA]

Dear Sir, Slag generated during manufacture of iron and steel products is classifiable under heading 2618 or 2619 of Central Excise Tariff depending upon as to whether slag is granualized or not. Both headings have a standard rate of duty of 12.5%.

2. However, if you search TMI, you will find catena of decisions where slag arising during course of such manufacture has been held to be non- excisable. One such decision is that of Hariyana Steel and Power reported at 2015 (11) TMI 771 - CESTAT BANGALORE.

3. Notwithstanding that such slag is non-excisable, if you remove this on consideration, you have to follow procedure prescribed under Rule 6 of Cenvat Credit Rules, 2004 because for purpose this Rule, exempted goods now include non-excisable goods.

[KASTURI SETHI]

Comprehensive and perfect reply indeed by Sh.Madan Raheja, an expert.

[Ganeshan Kalyani]

Sir nice reply submitted by expert. It is inferred that paying excise duty on removal of slag should be paid . Thanks.

AI Summary

Exciseability of slag: classification as a merchantable mineral product can attract duty, but precedents often treat furnace slag as non excisable.
Whether slag produced in an induction furnace is excisable depends on tariff classification-granulated or non granulated slag may be classed as a mineral slag product and thus potentially excisable-but precedents have held that furnace slag generated incidentally during manufacture can be non excisable. Removals for consideration require compliance with cenvat and related procedures governing removal of exempt or non excisable goods and applicable credit adjustments.