Full Judgment
2. The learned SDR appearing for the department has cited the decision of the Apex Court in the case of Commissioner of Sales Tax, Bombay v.Bharat Petroleum Corporation Ltd. , which holds that in the case of by-products, residues and waste and scrap arising in the course of manufacture of main product regularly and continuously, and also sold regularly from time to time, the intention is attributable to manufacture and sell not merely the main product but also the subsidiary products. The learned SDR also brings to our notice that the Apex Court has referred to provisions of Section 2(f) of the Central Excises and Salt Act, 1944 even though the dispute in the said case was under the Sales Tax legislation of Maharashtra.
3. The learned Counsel for the respondents has cited the following decisions, to counter the contention of the department that the impugned goods are excisable product:Union of India v. Ahmedabad Electricity C. Ltd.CCE, Patna v. Tata Iron & 4. We find that in the case of Indian Aluminum (supra), the Apex Court has held that everything which is sold is not necessarily a marketable commodity as known to the commerce and that dross and skimmings are not marketable commodity even it they can be sold to recover some metal.
The said decision also held that the dross and skimmings of Aluminum are neither "goods" nor "marketable commodity" and hence not liable to excise duty.
5. In the case of Ahmedabad Electricity (supra), the Apex Court has held that cinder arising in boilers and furnaces would not be excisable as they do not meet the test of manufacture. The decision also holds that transformation by skillful manipulation of raw material bringing into existence new substance can only result in manufacture and not merely some changes in a substance.
6. In the case of Tata Iron & Steel (supra), the Apex Court has relied on the earlier cited decision in the case of Indian Aluminium (supra) as well as Ahmedabad Electricity (supra) and has come to the conclusion that Zinc dross and skimmings arising as by-product during galvanization of steel sheets are not excisable. The decision also holds that these are not marketable commodity as even rubbish can be sold and further holds that everything which is sold is not necessarily a marketable commodity known to commerce or worthwhile to trade in.
7. After considering arguments from both sides as well the ease records and the cited decisions, we find that as regards the test of marketability is concerned, as held by the Larger Bench of the Tribunal in the case of Mahindra & Mahindra Ltd. v. CCE, Aurangabad, Chandigarh, Kanpur 85 Chennai , in view of the fact that the impugned goods in question find mention in the International Harmonized System Nomenclature, the same can be said to be internationally traded and would meet the test of marketability.
However, in the light of the aforecited decisions of the Apex Court in the cases of Indian Aluminum (supra), Ahmedabad Electricity (supra) and Tata Iron & Steel (supra), holding that similar products do not meet the test of manufacture by a process of skillful manipulation to bring out a new product, we are of the view that the slag ash arising as a by-product cannot be considered to be manufactured. Since the product does not meet the tests of manufacture for bringing into existence a new product, its marketability alone is not sufficient to make it excisable. Hence, we are of the view that the impugned order passed by the lower appellate authority does not require any interference.