TaxTMI 
TaxTMI 
2025 (6) TMI 1164
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....ge was emerging in their efficient treatment plan whereas, fly ash was generated. The Department felt that both these goods were liable to central excise duty and accordingly show cause notice was issued. However, on adjudication, the demand towards 'sludge' was dropped by extending the benefit of Notification No. 17/2011 dated 01.03.2011 whereas the demand towards 'fly ash' was confirmed holding that it was an incidental product emerging in the course of manufacture of goods. 3. Learned Advocate for the appellant submits that the matter is no longer res-integra in view of the judgment of the Hon'ble Supreme Court in the case of Union of India Vs Ahmedabad Electricity Company Ltd., [2003 (158) ELT 3 (SC)]. His main argument is that the fly ash generated in the course of production of electricity is not a manufactured good and therefore it would not be covered within the provisions of Section 2(f) of the Central Excise Act. He has further submitted that merely because a good is mentioned in the First Schedule to the Central Excise Tariff Act, it does not make it leviable to duty and it must otherwise meet the twin test of manufacture and marketability to attract payment of duty. In....
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....is generated in the course of manufacture/production of electricity which has been further used for manufacture of paper and irrespective of whether it has been sold or otherwise, it is leviable to central excise duty as it is also specifically covered in the tariff. Apart from that, Fly Ash has been specifically covered under the Notification No. 1/2011 so the fly ash is otherwise leviable to tax, which has been given partial exemption. He further submits that in the case of Mettur Thermal Power Station, supra, the Hon'ble High Court of Madras has held that fly ash is marketable. 7. Heard both the sides and perused the records. 8. We find that the short question to be decided is whether the fly ash generated in the course of manufacturing/production of electricity can be considered as excisable goods leviable to central excise duty or otherwise. From the facts, it is apparent that though the fly ash is not being sold by the appellant, we agree with the observation of Adjudicating Authority and the submission of the Learned AR that merely because it has not been sold by the appellant, it cannot be said to be non-marketable. The concept of marketability is whether the product is c....
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.... in the grounds of appeal in C.A. Nos. 2168-2169 of 2001 in the Ahmedabad Electricity Supply Company case 'Cinder' is not a new product. After correctly describing cinder as unburnt part of coal, the Revenue cannot equate it to ash simply to somehow bring it within Entry 26.21 of the Tariff Act. In the First Schedule to the tariff, cinder does not find any place anywhere. It appears that it is because of this that the Revenue had to fall back upon Entry 26.21 in the First Schedule in order to cover cinder within the excise net. The new Tariff that is Tariff Act, 1985 does not have a residuary entry like Entry 68 in the old Tariff. Instead the new Tariff has interpretative notes. Whenever some by-product of a product is sought to be included for taxability it has been so said in the interpretative notes. However, regarding coal there is no interpretative note nor there is anything about cinder. When cinder is derived from coal it could have at best been treated as coal for purposes of entries in the First Schedule to the Tariff Act. But that would not suit the department because coal is exempt from excise duty. The department now describes cinder as "coal ash". But coal ash also fal....
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....point to be determined is whether 'fly ash' that is formed during the production of electricity would fall within the ambit of "manufacture" as defined under Section 2(f) of the Act. 18. "Manufacture", as defined under Section 2(f) of the Act takes within its fold any process incidental or ancillary to the completion of a manufactured product. Section 2(f) uses the term any process "incidental or ancillary to the completion". The broader meaning that can be attributed to the term "incidental" or "ancillary" is that it is happening which is subsidiary or subordinate to something more important. (See Webster's Dictionary). From the usage of the terms associated with manufacture, it would be evident that it considers any happening towards the achievement of a manufactured product as incidental or ancillary, which is an event in the manufacturing activity. There is no dispute that the respondent herein is engaged in the production/generation of electricity by burning pulverized coal. Therefore, the completed manufactured product in the present case is electricity and 'fly ash' is only a by-product, which gets formed during the said manufacturing activity. Such being the case, by no s....