2023 (8) TMI 698

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....ke is manufactured through waste recovery method by carbonizing of coking coal at 1100 degree Celsius to 1250 degree Celsius in heat recovery type coke oven battery by following steps: a) The seized coal is fed into Heat Recovery type coke oven betteries consisting of wide and low chambers with arched roof suing shaped refractories. b) Carbonization takes place at 1100 degree Celsius - 1250 degree Celsius wherein heat is supplied by combustion of volatile matter evolved from coal by admitting air into the chamber. c) Primary air is maintained at below stoichiometric level to control burning of coal. d) During such carbonization process lean gas is generated inevitably in the oven chamber due to partial combustion of volatile matters. e) Since the lean gas cannot be emitted into the atmosphere as per environmental norms, the same is directed below the oven side walls for further combustion by admitting secondary air. f) Resultantly, hot flue gas is generated from the oven at a temperature ranging from 1100 degree Celsius - 1150 degree Celsius which is free from volatile and toxic matter. 3. Revenue is of the view that the flue gas generated and cleared to TPCL by....

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....so relied on the CBEC Circular No.35/88 dated 22.12.1988 which clarifies that mixture of crude gases consisting of Nitrogen, Oxygen, Carbon Dioxide and some other inert gases which is referred to as 'lean gas' yielded during manufacture of carbon black are not excisable. Therefore, it is his submission that lean gas is not excisable on account of non-fulfillment of the test of the manufacture. To support his contention he relied on the decision of this Tribunal in the case of Himadri Speciality Chemical Ltd. v. CGST & Excise, Howrah [2020- TIOL-214-CESTAT-KOL], which has been affirmed by the Hon'ble High Court [2022-TIOL-1034-HC-KOL-CX], Vanati Organics Ltd. v. CCE, Raigad [2007 (209) ELT 145 (Tri.-Mumbai)] and Philips Carbon Black Ltd. v. CCE, Bolpur [1999 (111) ELT 835 (CEGAT-Kolkata)]. 6. He further submits that flue gas is not marketable. It is his submission that every item bought and sold does not become marketable. Test of marketability implies regular market for a product. He relied on the decision of the Hon'ble Supreme Court in the case of Hindustan Zinc Ltd. v. CCE, Jaipur [2005 (181) ELT 170 (SC)]. 7. It is his submission that the revenue has merely relied upon the Fl....

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....e flue gas which is generated in the process of manufacturing coke is a manufactured product and is marketable as evident from the facts and circumstances of the case and having more 80% contents of Nitrogen, therefore, the adjudicating authority has rightly demanded duty from the appellant. 13. Heard the parties. Considered the submissions. 14. On careful consideration of the submissions made by both the sides, we find that in this case it is fact that the flue gas is generated during the course of manufacturing of coke. It is not manufactured by the appellant, but it is a waste gas which arises inevitably without beyond the control of the appellant. In that circumstances it is to be seen that the flue gas which was not intended to be produced by the appellant can fulfill the test of manufacture or not. 15. The issue has been examined by the Hon'ble Bombay High Court in the case of Hindalco Industries Ltd. (supra), wherein the Hon'ble High Court observed as under:- "22. ............................ Waste and scrap emerge as a by-product in the course of manufacture of other products. The whole purpose of making these observations is to justify the conclusion that because ther....

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....ces are as under:- "The respondents in all the appeals use coal as fuel for producing steam to run the machines used in their factories to manufacture the end product. Coal is burnt in the boilers or furnaces for producing steam. Normally coal when it is burnt in boilers is reduced to ash. Some part of coal does not get fully burnt because of its low combustible quality. This unburnt or half burnt portion of coal is left out in the boilers. It is called 'cinder'. Though the respondents are engaged in manufacturing different end products, one thing is common between them and that is that they all use coal as a fuel." In these set of facts, the Hon'ble Apex Court observed as under:- "23 In the case in hand also . coal which leads to production of cinder is not used as a raw material for the end product. It is being used only for ancillary purpose that is as a fuel. Therefore, irrespective of the fact whether any manufacture is involved in production of cinder it should be held to be out of the tax net for the reason that it is not a raw material for the end product. 24 In producing 'cinder', there . is no manufacturing process involved. Coal is simply burnt as fuel to produc....