TaxTMI 
TaxTMI 
1995 (4) TMI 62
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....ich separates or forms during melting and holding operations, and finally accumulates on the surface of the molten bath. It has to be removed. Skimmings are mostly thin oxide layers obtained by skimming a molten bath prior to metal transfer on casting. The skimming operation is essential to the manufacturing process. Dross and skimmings, according to the assessees, represent a process-loss or a melt-loss. Aluminium dross and skimmings contain a certain amount of metal from which they come. But they lack not only metal body but also metal strength, formability and character. Such dross and skimmings are, therefore, distinct from scrap which is a metal of as good a quality as the prime metal from which it arises. In all these appeals, we are concerned with the question of exigibility of such aluminium dross and skimmings to excise duty. Civil Appeal No. 4676 of 1995 (Arising out of S.L.P. (C) No. 11315 of 1987) 2.Delay condoned. 3.Special leave granted. 4.In this appeal, we are concerned with the question of levy of excise duty on aluminium dross and skimmings removed by the assessees between September 1972 and March 1973. 5.The aluminium ingots, which were the raw ....
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....o a duty of excise..." Since aluminium dross and skimmings were not covered by Item 27 of the First Schedule, they were not excisable goods as defined in Section 2(d). 10.Both aluminium ingots and aluminium sheets manufactured out of ingots are, however, excisable under Tariff Item 27 in the First Schedule. 11.Under the Central Excise Rules of 1944 framed under the Central Excises and Salt Act, 1944, Rule 56A prescribes a special procedure for movement of duty-paid materials or component parts for use in the manufacture of finished excisable goods. In the exercise of powers conferred by sub-rule (1) of Rule 56A, the Central Government has specified several excisable goods in respect of which the procedure laid down in sub-rule (2) of Rule 56A shall apply. The excisable goods so specified include aluminium. The relevant provisions of sub-rule (2) as it stood at the material time provided as follows : "The Collector may .......permit a manufacturer of any excisable goods specified under sub-rule (1) to receive material or component parts of finished product,.......on which the duty of excise......has been paid in his factory for the manufacture of these goods.......and allow....
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....le to accept the contention of the appellants that aluminium dross and skimmings are "goods" or marketable commodity which can be subjected to the levy of excise. Undoubtedly, aluminium dross and skimmings do arise during the process of manufacture. But these are nothing but waste or rubbish which is thrown up in the course of manufacture. The term "dross" is defined in The New Shorter Oxford English Dictionary as : Dross : "Dregs.......(1) Impurities separated from metal by melting the scum which forms on the surface of molten metal......(2) Foreign matter mixed with anything.....(3) Refuse, rubbish, worthless matter especially as contrasted with or separated from something of value." The ASM Metals Reference Book (2nd Edition, 1983) produced by the American Society for Metals defines "dross" as follows : "The scum that forms on the surface of molten metals largely because of oxidation but sometimes because of the rising of impurities to the surface." Mcgraw Hill Dictionary of Science and Engineering (1984 Edition) defines it as : "An impurity, usually an oxide, formed on the surface of molten metal." Dross and skimmings may contain some small percentage of me....
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.... alloys content of the final product and, therefore, only that quantity that was found in the finished product would get relief, and not the entire quantity which was put in the process of manufacture. This Court held that it was the duty paid on the input material that was relevant and not the duty referable to the ultimate component of the final product. It said : "So far as the manufacturer is concerned he has used copper and copper alloys of a particular quantity in the manufacture of pipes and tubes. The `manufacturing loss' forms part of the raw material `used' in the manufacture though not reflected in the final product. The relief, as we understand the notification, that has to be given to the manufacturer was in respect of the duty already paid on the raw material used in the manufacture of the final product. That is, the relief has to be given to the extent of the duty paid on the input material and not with reference to the quantity which ultimately forms part of the final product." The Court also relied, in this connection, on the ratio of the judgment of this Court in M/s. Swadeshi Polytex Ltd. v. Collector of Central Ex.,[1989 (44) E.L.T. 794 (S.C.)] = [1990 (2)....
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....hanges in the Excise Tariff. 19.Under Tariff Item 27 "Waste and Scrap of Aluminium" is one of the items exigible to excise duty. An Explanation was added to Tariff Item 27 by the Finance Act, 1981 to the following effect : "27: Explanation. - (1) `waste and scrap' means waste and scrap metal fit only for the recovery of metal by remelting or for use in the manufacture of chemicals, but does not include sludge, dross, scalings, skimmings, ash and other residues;" 20.Tariff Item 68 which was introduced for the first time in 1975 was as follows : "68: All other goods, not elsewhere specified, but excluding - ********** ********** ********** Explanation. - For the purposes of this Item, goods which are referred to in any preceding Item in this Schedule for the purpose of excluding such goods from the discription of goods in that item (whether such exclusion is by means of an Explanation to such Item or by words of exclusion in the description itself or in any other manner) shall be deemed to be goods not specified in that Item." 21.The question in all these appeals relates to the exigibility of aluminium dross and skimmings to excise duty by reason of I....
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....s electric motors. These excluded motors are also motors, but because of some peculiar characteristics imparted to them in their manufacture, they are excluded for assessment under Tariff Item 30. Similarly, slotted angles and channels made of steel which can be used as part of steel furniture, are expressly excluded from Tariff Item 40 which covers steel furniture and parts. These exclusions are for the purpose of correct assessment of these excisable products. These excluded articles are "goods" in their own right, and are openly bought and sold in the market. Such excluded items, if they are not covered by any other item, would fall in the residuary Item 68 by virtue of the Explanation to Tariff Item 68. 24.The exclusion of aluminium dross and skimmings from "Waste and Scrap of Aluminium" in Tariff Item 27 is not of this nature. Dross and skimmings are excluded because they are not even waste or scrap. They are not goods at all as understood in commercial parlance. Therefore, they are not assessable under Tariff Item 68. 25.The appellants have drawn our attention to the decision in the case of Khandelwal Metal and Engineering Works & Anr. etc. v. Union of India & Ors. [198....