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CASE NO.: Appeal (civil)  524-525 of 1998

PETITIONER: Collector of Central Excise, Patna

RESPONDENT: M/s Tata Iron & Steel Company Ltd.

DATE OF JUDGMENT: 26/02/2004

BENCH: S. Rajendra Babu, Dr. AR. Lakshmanan & G.P. Mathur.

JUDGMENT: J U D G M E N T

WITH

Civil Appeal Nos. 5664 of 2002 and 5262 of 2003 Dr. AR. Lakshmanan, J.

       In these appeals, we are concerned with the question of levy of excise duty on  zinc dross and flux skimming arising during galvanisation of steel sheets.   

BRIEF FACTS OF THE CASE: During  galvanisation  of  steel sheets, zinc dross and flux skimming arises which  the respondent/assessee has declared as by- product in their product manual published  by the Marketing Division for information of customers.  It  has  been alleged that zinc   dross and flux skimming are being sold by the assessee   to various  customers  without     making any declaration in the classification list, without paying any duty on clearance of  the above product and without maintaining any records prescribed under the Central  Excise Rules, 1944 besides showing them as non-excisable in their Despatch Advices.   According to the Department, the assessees have cleared the goods without payment  of duty and thus evaded duty in contravention of the Central Excise Rules, 1944 and in  doing so they did not obtain Central Excise licence for manufacture of zinc dross and  flux skimming as required under Rule 174 of the Central Excise Rules, 1944 inasmuch  as they have suppressed the production and removal of the said goods with intent to  evade payment of duty.   

CASE FOR THE DEPARTMENT: A show cause notice was issued to the assessee to show cause why a penalty  should not be imposed on them under the provisions of the Central Excise Rules, 1944  and why the duty be not demanded under Rule 9 (2) of the Central Excise Rules, 1944.

CASE FOR THE PARTY: In response to the show cause notice, the assessee made a written defence  denying all the allegations of contravention of various Central Excise Rules and stated  that flux skimming is a material held as non-excisable by the CEGAT.  In support of  their contention, they have cited various judgments and, in particular, the case of Indian  Aluminium Co. Ltd. vs. A.K. Bandyopadhyay [1980(6) E.L.T. 146 (Bom.)] stating  further that dross and skimming are neither goods nor end products nor finished goods  attracting duty under item 25 of the Central Excise Tariff.  As regards zinc dross, they  have claimed to clear the item as non-excisable as per the decision of the Bombay High  Court.   

It is the contention of the assessee that they do not manufacture zinc and article  thereof but they do galvanise sheets falling under Chapter 72.  Since zinc dross and  flux skimming have already been held to be non-excisable item, the issue of gate  passes for removal of products and submission of quarterly returns etc. and filing  classification list does not arise.  All the assesses have denied violation of the Central  Excise Rules, 1944.  They have further stated that they submitted classification list and  are in the bona fide impression that the goods are non-excisable and are not

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manufactured by them and, therefore, the question of imposing penalty under any rule  is out of question.

In Civil Appeal Nos. 524 and 525 of 1998, the Collector of Central Excise, Patna  ordered for confiscation of the zinc dross.  However, the Collector gave the  manufacturers the option to redeem the goods on payment of redemption fine.  A  penalty was also imposed on the manufacturer.  The assesses preferred an appeal to  the CEGAT, New Delhi which set aside the order of the Collector, Central Excise relying  upon the decision of this Court in the case of Union of India vs. Indian Aluminium Co.  Ltd. [1995 (77) E.L.T. 268 (S.C.)].  Aggrieved by the said decision, the Commissioner of  Central Excise, Patna preferred the above two appeals.

In Civil Appeal No. 5262 of 2003 \026 M/s National Steel Industries Limited now  known as M/s National Steel and Agro Industries Limited filed declaration classifying  the zinc dross under Heading 7902.00 of the Schedule to the Central Excise Tariff Act,  1985.  According to the assessee, they filed declaration claiming the zinc dross as non- excisable commodity and continued to clear zinc dross without payment of duty up to  December, 1997.  Later, they paid duty under protest.  A show cause notice was issued  as to why zinc dross should not be classified under Heading 7902.00 and why excise  duty should not be recovered.  The Deputy Commissioner of Central Excise held the  goods classifiable under Heading 7902 of the Central Excise Tariff Act, 1985 and  confirmed the payment of penalty which was imposed.  The Commissioner (Appeals)  rejected the appeal filed by the assessee.  The Tribunal, on appeal by the assessee,  set aside the order in appeal holding that zinc dross and flux skimming are not  excisable goods following the decision of this Court in Indian Aluminium Co. Ltd.  (supra).  The Tribunal further relied on the decision in the case of Tata Iron and Steel  Company Limited vs. CCE, Patna [2001 (135) E.L.T. 1142] and Siddarth Tubes  Limited vs. CCE, Indore dated 08.04.2002 which referred to the judgment in the case  of Indian Aluminium Co. Ltd. (supra).  Before the Tribunal, it was submitted by the  Department that zinc dross is a distinct commercial commodity and hence liable to  excise duty.

Civil Appeal No. 5664 of 2002 also arises out of similar circumstances.  In this  appeal, according to the assessee, zinc dross and zinc scalling does not constitute to  be excisable goods as defined in Section 2(d) of the Central Excise Salt Act, 1944 and,  therefore, they filed refund claims for amount of duty paid on zinc scalling.

According to the Department, prior to 01.03.1988 as per Chapter Note 3 of  Chapter 26 ash and residue other than dross and ash of zinc containing metals or  metallic compounds applies only to the ash and residue of a kind used in industry either  for the extraction of metals or as a basis for the manufacture of chemical compound of  metal.  This chapter note was subsequently amended w.e.f. 01.03.1988 by omitting the  words "other than dross and ash of zinc containing metals of metallic compounds".   Thus, prior to 01.03.1988 the said dross and ash of zinc containing metals or metallic  compound were classifiable under 7902 and subsequent to 01.03.1988 the said product  got classified under sub- heading 26.20.

Here also a show cause notice was issued and the Assistant Commissioner  rejected the refund claim holding that the ash cleared by the noticee (assessee)  contains metals and oxide of zinc and the same is also used for the extraction of metal  as a basis for the manufacture of chemical compounds of metal and they are  marketable and also answer of the description of chapter heading.  Therefore, they  contended that the same is correctly classifiable under Chapter heading No. 26.20 of  the Central Excise Tariff Act, 1985.  The assessee’s appeal before the Commissioner  was also rejected and the further appeal by the assessee before the CEGAT was  allowed relying on the judgment of this Court in Indian Aluiminium Co. Ltd. (supra).   The Tribunal, following the judgment of this Court, categorically held that zinc dross and  zinc scalling are not goods, hence not excisable.

We have perused the relevant records and the rules i.e. the Central Excise  Rules and of the orders passed by the respective authorities and of the CEGAT and  heard the arguments of Mr. A.K. Ganguli and Mr. J. Vellapally - learned senior counsel  appearing for the respective parties.  Mr. Rajesh Kumar and Mr. Alok Yadav, learned  counsel in other appeals adopted the arguments of learned senior counsel.

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Mr. Ganguli, learned senior counsel, appearing on behalf of the appellant  submitted that sub-heading 7902.00 of the Central Excise Tariff includes waste and  scrap of zinc and waste and scrap of zinc include dross and ash.  According to Mr.  Ganguli, the case of Indian Aluminium Co. Ltd. (supra) relates to aluminium dross  and skimming and the definition of aluminium waste and scrap does not include dross  and skimming and, therefore, zinc dross and skimming are covered under sub-heading  No. 7902.00 of the Central Excise Tariff Act, 1985.  He, therefore, prays that the  appeals filed by the appellant be allowed.  He would further submit that prior to  01.03.1988, as per Chapter Note 3 of Chapter 26 ash and residue other than dross and  ash of zinc containing metals or metallic compounds applies only to the ash and residue  of a kind used in industry either for the extraction of metals or as a basis for the  manufacture of chemical compound of metal.  This chapter note was subsequently  amended w.e.f. 01.03.1988 by omitting the words "other than dross and ash of zinc  containing metals of metallic compounds".  Thus he submits that prior to 01.03.1988,  the said dross and ash of zinc containing metals or metallic compound were classifiable  under 7902 and subsequent to 01.03.1988 the said product got classified under sub- heading 26.20.  It was contended that a close reading of the above chapter note reveals  that the heading 26.20 covers ash and residue which contain metal or metallic  compounds and which are of kind used in industry either for the extraction of metal or  metallic compound or as basis for the manufacture of chemical compound of metals.   

Countering the argument, Mr. J. Vellapally, learned senior counsel for the  respondent, submitted that zinc dross and flux skimming were waste products in the  process of galvanisation of steel sheets and are not goods under the Central Excise  Act, 1944 and that the process of galvanisation merely involves the steel sheets  through a batch of molten zinc whereby the said sheets acquire a coat of zinc on the  surface resulting in galvanisation and that zinc dross is merely the impurity which arises  as a result of the process of galvanisation and settle to the bottom.  During the same  galvanisation process, ammonium chloride is used as a flux for cleaning the impurities  from the sheets.  This ammonium chloride when mixed with molten zinc also creates  some impurities in the form of flux which floats to the surface.  This flux is periodically  skimmed off the surface of the zinc and these are known as ’flux skimming’.  Learned  counsel would further submit that zinc dross and flux skimming are nothing but refuse  products and these are not marketable.  Learned counsel relied on the decision of this  Court being Indian Aluminium Co. Ltd. (supra) and submitted that this Court held that  aluminium dross and skimming are neither goods nor marketable commodity and,  therefore, not liable to excise duty and he, therefore, prays that the appeals filed by the  appellant be dismissed.

On the above pleadings and of the arguments, the following questions of law  may arise for determination of this Court.

The issue which arises for consideration is that whether zinc dross and flux  skimming arising during galvanisation of steel sheets are goods within the meaning of  the Central Excise Act, 1944 and are liable to central excise duty as classified by the  Revenue  OR Whether zinc dross and flux skimming are waste products in the process of  galvanisation of steel sheets and are not goods under the Central Excise Act, 1944 as  claimed by the assessee.

In this case, the respondents are engaged in the manufacture of steel sheets  and are also galvanising steel sheets.  During the process of galvanisation, zinc dross  and flux skimming come into existence.  The contention of the assessee is that these  flux and zinc dross are the waste and are not marketable.  The High Court of Bombay in  the case of Indian Aluminium Co. Ltd. (supra) held that dross and skimming are  neither goods nor en-products.  As seen earlier, dross is nothing but scum thrown off  from metals in something; refuse and rubbish or worthless impure metal and skimming  is that which is removed or obtained from the surface by skimming.  These are, in our  opinion, nothing but ashes resulting in the process of manufacture of aluminium sheets  from aluminium ingots.  In Union of India vs. Delhi Cloth and General Mills Co. Ltd.  [AIR 1963 SC 791] it was held that "goods" must be something which can ordinarily  come to the market and be brought and sold and that the "manufacture" which is liable  to excise duty under the Central Excise and Salt Act, 1944 must, therefore, be the  "bringing into existence of a new substance known to the market".

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The passage runs thus :- "Manufacture" implies a change but every change is not manufacture and yet  every change of an article is the result of treatment, labour and manipulation.   But something more is necessary and there must be transformation; a new and  different article must emerge having a distinctive name, character of use."       

We are of the opinion that the dross and skimming are merely the refuse, scum  or rubbish through out in the process of manufacture of aluminium sheets and,  therefore, cannot be said the result of treatment, labour or manipulation whereby a new  and different article emerges with a distinctive name, character or use which can  ordinarily come to the market to be brought and sold.  Merely because such refuse or  scum may fetch some price in the market does not justify it being called a by-product,  much less an end product or a finished product.

This view of the High Court of Bombay was upheld by this Court in Indian  Aluminium Co. Ltd. (supra).  This Court held as under: " It is also not possible 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 Dictionary as:

Dross:

"Dregs\005(1) Impurities separated from metal by melting the  scum which forms on the surface of molten metal\005\005(2) Foreign  matter mixed with anything\005..(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  metal.  But dross and skimmings are not metal in the same class as  waste or scrap.  It may be possible to recover some metal from such  dross and skimmings.  They can, therefore, be sold.  But this does not  make them a marketable commodity.  As learned Single Judge of the  Bombay High Court has pointed out, even rubbish can be sold.   Everything, however which is sold is not necessarily a marketable  commodity as known to commerce and which, it may be worthwhile to  trade in.  Learned Single Judge of the Bombay High Court, therefore,  rightly came to the conclusion that the proviso to Rule 56A was not  applicable as aluminium dross and skimmings are not excisable goods.

The entire quantity of raw material, namely duty-paid   aluminium ingots procured by the assesses from outside was used in  the manufacture of aluminium sheets.  It is nobody’s case that the  aluminium sheets which were manufactured by the assesses could  have been manufactured out of a lesser quantity of aluminium ingots  than what was actually used.  In the process of manufacture, dross  and skimmings had to be removed in order that aluminium sheets of  the requisite quality could be manufactured.  This does not mean that  the entire quantity of aluminium ingots was not used for the  manufacture of aluminium sheets.  In the course of manufacture, a  certain quantity of raw material may be lost because of the very nature  of the process of manufacture or some small quantity of raw material  may form part of wastage or ashes.  This does not mean that the  entire raw material was not used in the manufacture of finished

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excisable products.  An exact mathematical equation between the  quantity of raw material purchased and the raw material found in the  finished product is not possible, and should not be looked for.   

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 \026 (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;"

  Tariff Item 68 which was introduced for the first  time in 1975 was as follows: "68. All other goods, not elsewhere specified, but excluding- (a)     * * * * * * * * * * * * * * *  (b)     * * * * * * * * * * * * * * *  (c)     * * * * * * * * * * * * * * * Explanation \026 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 description 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."  

The question in all these appeals relates to the exigibility of aluminium  dross and skimmings to excise duty by reason of Item 68 and its  Explanation read with the Explanation to Item 27.  It is contended by  the appellants that the Explanation to Item 27 makes it clear that dross  and skimmings are not included in the item "Waste and Scrap of  Aluminium".  Since these are expressly excluded from Item 27, these  must be included in Item 68 as the Explanation to Item 68 makes it  clear that goods which are referred to in any preceding Item in the  Schedule for the purpose of excluding them from the description of  goods in that Item, will have to be included in Item 68.

The entire argument proceeds on the basis that aluminium dross and  skimmings are excisable goods.  Otherwise the question of their  inclusion in Tariff Item 68 does not arise.  The appellants have  emphasized the fact that aluminium dross and skimmings are capable  of being sold.  Hence they must be considered as marketable goods.   Since they arise in the course of manufacture, the duty of excise can  be levied on such goods.  The foundation of the arguments rests on  the assumption that aluminium dross and skimmings are marketable  goods.  For reasons which we have set out earlier, it is not possible to  consider aluminium dross and skimmings as "goods" or as a  commercial and marketable commodity.  Dross and skimmings are  merely refuse or ashes given out in the course of manufacture, in the  process of removing impurities from the raw material.  This refuse is  quite different from waste and scrap which is prime metal in its own  right.    

The Explanation to Item 27 is not for the purpose of separating  certain types of  wastes and scrap from the main Item of "Waste and  Scrap of aluminium" and thus making it exigible to tax under Item 68.   The Explanation to Item 27 merely excludes from waste and scrap  certain residues or rubbish which cannot be categorised as "goods" at  all.  It is only those goods, which are otherwise liable to be included in  a given Tariff Item, but are expressly excluded from it, which fall under  the residuary Tariff Item 68.  The Customs, Excise and Gold (Control)  Appellate Tribunal in its order, which is the subject-matter of Civil  Appeal No. 1423/87, has given several examples of this kind of  exclusion which is covered by the Explanation to Tariff Item 68.  It has

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given the illustration of a motor specially designed for use in a  gramophone or record player which is expressly excluded from Tariff  Item 30 which covers 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.

In Collector of Central Excise, Patna vs. Indian Tube Co. Ltd. [1995 (77)  E.L.T. 21 (S.C.)], this Court has approved the reasoning of the Tribunal that the diluted  sulphuric acid, i.e., liquid which remains after user, cannot be said to be a manufactured  product and hence not liable to duty and that waste pickle liquor is in the nature of  waste product and has neither marketability nor saleability and, therefore, not liable to  duty.

In Commr. Of C.Ex., Chandigarh-I vs. Markfed Vanaspati & Allied Indus.  [2003 (153) E.L.T. 491 (S.C.)], the question for consideration in this case was whether  "spent earth" is liable to excise duty or not.  Under the Tariff, prior to its amendment in  1985, it had been consistently held that "spent earth" was not liable to duty.  However,  with the enforcement of new Tariff in 1985, a conflict arose between various benches of  the Tribunal.  Some benches held that "spent earth" was still not excisable, whereas  other benches held that, as it now stood included by a specific sub-heading, it became  excisable.  In view of these conflicting decisions, the matter was placed before the  Larger Bench of the CEGAT which held that "spent earth" was still not dutiable.  In the  appeal preferred before this Court, this Court held the burden to prove that there is  manufacture and that what is manufactured is on the Revenue and that merely because  an item falls in a Tariff entry, manufacture must not be deemed.  In para 6, this Court  held as under: "6. However, it appears to us that the observation made in this authority are "per  incuram".  In so observing, the decision of a Larger Bench of this Court in the  case of Collector of Central Excise, Indore v. Universal Cable Ltd. Reported in [  1995 Supp (2) SCC 465], has not been noted or considered.  In this case an  argument that a good become excisable because it is covered by Tariff Entry,  has been negatived.  In the case of B.P.L. Pharmaceuticals Ltd. v. Collector of  Central Excise reported in [ 1995 Supp (3) SCC 1] it has also been held that  merely because there is a change in the Tariff Item the goods does not become  excisable.  Subsequently in a judgment dated 13th February, 2003 in Civil  Appeal No. 6745 of 1999 it has been held that merely because an item falls in a  Tariff Entry, it does not become excisable unless there is manufacture and the  goods is marketable.  In Lal Woollen & Silk Mills’ case (supra) it has not been  held that the twin test of manufacture and marketability is not to apply.  It is not  possible to accept the contention that merely because an item falls in a Tariff  Entry it must be deemed that there is manufacture.  The law still remains that  the burden to prove that there is manufacture and that what is manufactured is  on the revenue.  In this case, no new evidence is placed to show that there is  manufacture.  "Spent earth" was "earth" on which duty has been paid.  It  remains earth even after the processing.  Thus if duty was to be levied on it  again, it would amount to levying double duty on the same product."

In Union of India vs. Ahmedabad Electricity Co. Ltd. [2003 (158) E.L.T. 3  (S.C.)], the question which arose for consideration was regarding exigibilty of ’cinder’ to  excise duty.  The respondent in the said appeals use coal as fuel for producing steam  to run the machines used in their factories to manufacture the end product.  Coal is  burnt in the boilers or furnaces for producing steam.  Normally, coal when it is burnt in  boilers is reduced to ash.  Some part of coal does not get fully burnt because of its low  combustible quality.  This unburnt or half burnt operation of coal is left out in the boiler s.  It is called ’cinder’.  A point was posed for determination by this Court in para 7 of this  judgment which is quoted hereinbelow.

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"7. Whether inclusion of an item in the entries to the First Schedule to the Tariff  Act per se makes the item exigible to excise duty ? It is useful to reproduce the relevant paragraphs of the judgment which read as  under: "We are unable to accept the proposition advanced by the  learned Additional Solicitor General.  A close look at Section 3 of the  Central Excise Act shows that the words ‘excisable goods’ have been  qualified by the words "which are produced or manufactured in India".   Therefore, simply because goods find mention in one of the entries of  the First Schedule does not mean that they become liable for payment  of excise duty.  Goods have to satisfy the test of being produced or  manufactured in India.  It is settled law that excise duty is a duty levied  on manufacture of goods.  Unless goods are manufactured in India,  they cannot be subject to payment of excise duty.  There is no merit in  the argument that simply because a particular item is mentioned in the  First Schedule, it becomes exigible to excise duty.  [See Hyderabad  Industries Ltd. & Anr. Vs. Union of India & Ors., (1995) 5 SCC 338  and Moti Laminates Pvt. Ltd. & Ors. Vs. Collector of Central  Excise, Ahmedabad, (1995) 3 SCC 23].  Therefore both on authority  and on principle, for being exigible to excise duty, excisable goods  must satisfy the test of being produced or manufactured in India.  The  arguments to the contrary is rejected.    Recently this Court had occasion to deal with a case of excise  duty sought to be levied on ‘spent earth’.  This was in Commissioner  of Central Excise, Chandigarh vs. Markfed Vanaspati & Allied  Industries [2003 (153) E.L.T. 491].  Excise duty was being paid on  "earth", ‘spent earth’ is a residue resulting from treatment of fatty  substances.  The ‘spent earth’ remained ‘earth’ even after processing  though its capacity to absorb was reduced.  It was held that no excise  duty was leviable on ‘spent earth’.  The facts in this case are quite  similar to the facts of the case in hand.  In Markfed case ‘earth’ was  reduced to ‘spent earth’ with a reduced potency to absorb.  In the case  in hand, coal was reduced to inferior quality coal which was no longer  of use in the  furnaces in the factories, therefore, it could be  reasonably be said that ‘cinder’ i.e. coal of reduced quality still was  coal and not exigible to excise duty.    

 In Modi Rubber Ltd., Modi Nagar, U.P. & Anr. Vs. Union of  India & Ors. [1987 (29) E.L.T. 502 (Del.)] it was held that waste/scrap  obtained not by any process of manufacture but in the course of  manufacturing the end product was not exigible to excise duty.  This  was a case of manufacture of tyres, tubes etc.  In the course of  manufacturing process to produce the end product i.e. tyres, tubes,  flaps etc. waste was obtained in the shape of cuttings.  It was held that  this was not exigible to tax even though the waste may have some  saleable value.  The essential reason for this was that there was no  transformation in the case of waste/scrap to a new and different article.   No new substance having a distinct name, character and use  was  brought about.  Manufacturing process involved treatment, labour or  manipulation by the manufacturer resulting in a new and different  article.  It requires a deliberate skilful manipulation of the inputs or the  raw materials.  This was not so in case of scrap.  

 It is worth mentioning that in UOI & Ors. Vs. Indian  Aluminium Co. Ltd. & Anr. [1995 Suppl;(2) SCC 465], it was held  that waste or rubbish which is thrown up in the course of manufacture  could not be said to be a produce of manufacture exigible to excise  duty.  In this case the assesses manufactured aluminium products out  of the aluminium ingots.  In the process of manufacture dross and  skimmings arise and accumulate in the furnace in the shape of ashes  as a result of oxidization of metal.  Aluminium dross contain an 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 distinct from scrap which is a metal of good quality.  

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Dross and skimmings though obtained during process of manufacture  were held to be not exigible to excise duty at the relevant time.  Since  the dross and skimmings were sold in the market it was argued that  they were a marketable commodity and should be subject to levy of  excise duty.  The Court observed that these were nothing but waste or  rubbish which is thrown up in the course of manufacture.  This  judgment also answers the argument of the learned counsel for the  appellant based on Khandelwal Metal’s case[(1985) 3 SCC 620]  wherein brass scrap produced during manufacturing of brass goods  were considered to be liable to excise.  In the present case, cinder  though sold for small price cannot be said to be a marketable  commodity in the sense the word " marketable" is understood.  Due to  sheer necessity cinder has to be removed from the place where it  occurs because unless removed it will keep on accumulating which in  turn  lead to loss of precious space.  Facts noted in TISCO’s case by  the lower authorities show that TISCO had been paying substantial  amounts for removing cinder to a dumping ground.  From the dumping  ground, it was picked up by parties to whom it was sold.  As per the  averment, TISCO is spending many times more on removing cinder  than what it realizes from its sale.  These are matters of fact which  have not been gone into by the authorities concerned and therefore it  is too late for us to go into all this.    

Applying the tests laid down in these judgment, it is not  possible to say that cinder satisfied the requirement of being  manufactured in India."

This Court, in conclusion, held that the onus to show that particular goods on  which excise duty is sought to be levied have gone through the process of manufacture  in India is on the Revenue and that the Revenue have done nothing to discharge this  onus.   

In our opinion, this Court in Indian Aluminium Co. Ltd. (supra) has held that  merely selling does not mean dross and skimming are marketable commodity as even  rubbish can be sold and everything, however, which is sold is not necessarily a  marketable commodity as known to commerce and which, it may be worthwhile to trade  in.  The issue involved in this case is governed by the past decisions of the Tribunal and  also of this Court where the Tribunal and this Court held that the zinc dross and  skimming arising as refuse during galvanisation process are not excisable goods.  The  Tribunal, in our opinion, has rightly relied upon the decision of this Court in Indian  Aluminium Co. Ltd. (supra) and in view of the above decision of the Tribunal following  this Court’s opinion in Indian Aluninium Company Limited (supra), we disagree with  the appellant’s that zinc dross, flux skimming and zinc scallings are goods and hence  excisable.   

The appeals filed by the Revenue have no merits and are liable to be dismissed  and we do so accordingly.  The respondent/assessee will be entitled for refund of the  duty and penalty, if any, paid by them.  No costs.