1. In this appeal, filed by M/s. Jain Carbide & Chemicals Ltd., the issue involved is whether slag obtained by them during the process of manufacture of Ferro Alloys is liable to Excise duty.
2. Shri K.K. Anand, learned Advocate, submitted that the Appellants manufacture Ferro Alloys and avail of Modvat credit of duty paid on Carbon paste which is used as furnace lining material; that during the manufacture of Ferro Alloy a waste material called slag is generated which, according to the Department, is classifiable under Chapter 26 of the Schedule to the Central Excise Tariff Act; that the goods falling under Chapter 26 were exempted unconditionally under Notification No.19/88-C.E., dated 1-3-88; that the said Notification was amended by Notification No. 27/91-C.E., dated 25-7-91 according to which exemption is available provided that no credit of duty paid on the inputs used in the manufacture of the said goods has been taken under Rule 57A of the Central Excise Rules, 1944; that the Commissioner (Appeals) has confirmed the demand of duty against them on the ground that they are manufacturer of slag and also as the slag was manufactured using inputs in respect of which credit had been availed of the benefit of Notification is not available to them. He, further, submitted that the issue is no more res integra as it stands decided by the Tribunal in the case of Tata Metaliks Ltd. v. CCE, Calcutta, 2003 (155) E.L.T. 117 (T) = 2003 (54) RLT 807 (CEGAT) wherein it has been held that slag obtained during the process of manufacture of Pig Iron is not excisable and the question of availing any exemption under Notification No.19/98-C.E. does not arise; that the Tribunal has relied upon the decision in the case of T7SCO ltd. v. CCE, Patna, 1997 (94) E.L.T. 258 (T) = 1997 (21) RLT 707 (CEGAT) and ACC Ltd. v. CCE, 1993 (67) E.L.T.321 (T).
3. Countering the arguments Shri V. Valte, learned SDR, submitted that the process of manufacture as given in the Appellants' reply dated 3-1-92 to the show cause notice reflects that in the furnace Manganese ore, Iron slag, Dolomite and Coke are charged; that the carbon paste is used to make cylindrical electrodes for charging and heat generated by the arch between these cylinders is used for the purpose of melting the above items; thereafter the Ferro Manganese is gathered; thus the process involves generation of slag almost at twice the amount of Ferro Manganese made; the slag is also separated and gathered separately; slag is disposed of by the Appellants and is used by their customers in the manufacture of Silico Manganese. The learned SDR, therefore, contended that in the process of manufacture in which Modvatable input is used slag is generated twice the amount of Ferro and as such is one of the final products manufactured by the Appellants; that the very fact that they are selling the same to their customers who are using the same in the manufacture of Silico Manganese goes to show that the slag is marketable; that, further, slag is specifically mentioned in Chapter 26 of the Central Excise Tariff, and therefore, it is an excisable product. He also relied upon the decision in the case of Commissioner of Sales Tax v. Bharat Petroleum Corporation Ltd., 1995 (77) E.L.T. 790 (S.C.) wherein it has been held that "where subsidiary product is turned out regularly and continuously in the course of a manufacturing business and is also sold regularly from time to time, an intention can be attributed to the manufacturer to manufacture and sell not merely the main item manufactured but also the subsidiary products." 4. We have considered the submissions of both the sides. It has not been disputed by the Revenue that slag is obtained by the Appellants during the process of manufacture of Ferro Manganese which is the final product of the Appellants. The learned Advocate has relied upon the decision in the case of Tata Metaliks Ltd. wherein the Tribunal has held that slag generated during the process of manufacture of Pig Iron is not excisable relying upon the Tribunal's two earlier decisions. "As the product has been held to be not excisable, the question of availing any exemption under Notification No. 19/88 does not arise.
Consequently, there will be no contravention of the condition of the notification and the notification itself is not applicable, impugned goods being non-excisable." We, therefore, following the ratio of the earlier decisions of the Tribunal, allow the appeal filed by the appellants.