2026 (8) TMI 515

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....tice dated 05.02.2013 and 06.11.2013 against the respondent. 2. The issue involved is whether the respondent is liable to pay central excise duty on fly ash generated as waste during generation of electricity from coal in their factory of production. 3. The brief fact of the case is that the respondent is engaged in the manufacture of paper and paperboards in their plant, where they are also generating electricity for captive use. Department noticed that they were clearing "sludge" and "fly ash" while generating electricity from coal. The sludge 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 wa....

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....er" was taken up which was emerging in the course of generation of electricity from coal and relying on various judgments on the issue of manufacture, Hon'ble Supreme Court held that the emergence of cinder would not tantamount to manufacture of goods and therefore not leviable to duty. 8. Relevant paras of the judgment, supra, are cited below for ease of reference: "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 purposes, 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 materia....

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....nburnt 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 their is no interpretative note nor there is anything about cinder. When cinder is der....