2015 (8) TMI 833 - CESTAT NEW DELHI

Jai Balaji Industries Ltd. Vs CCE, Raipur

Duty demand - Duty on fly ash - whether fly ash obtained by burning of coal in the boiler the course
of manufacture of sponge iron is dutiable - Held that:- Fly ash is not containing metal or metal oxide.
Though the ash obtained by the incineration of municipal waste and other type of ash is covered
under heading 2621, the Tribunal in series of judgements mentioned above, as held that such fly
ash is not excisable - Tribunal in the case of Shaw Wallace Gelatines Ltd. [2001 (3) TMI 379 - CEGAT,
NEW DELHI] has been held that coal ash is obtained from burning of coal as fuel for production of
steam, is not an excisable product and not leviable to duty under heading 26.21 of Central Excise
Tariff. The same view has been taken by the Apex Court in the case of Union of India vs. Ahmedabad
Electricity Co.Ltd. (2003 (10) TMI 47 - SUPREME COURT OF INDIA). It is settled law that just because
an item is covered some heading/sub-heading of the tariff, it would not become excisable, unless
there is evidence on record to prove that the same is marketable in the sense that it is worthwhile
to trade in that product and there is existence of market for the same. It is also well settled law that
the burden of proving the marketability is on the department. In this case, the appellant is not selling
the fly ash and the appellant offered the same free to any person who was ready to lift the same.
The department has not been able to prove with tangible evidence that there is existence of market
for the ash. - appellant have made a strong prima facile case in their favour.- Decided in favour of
assessee.
No.- E/Stay/54606/14 in Appeal No. E/54058/14
Order No.- Stay Order No.52023/2015
Dated.- June 2, 2015
Honble Mr. Rakesh Kumar, Member (Technical) And Hon ble Smt.Sulekha Beevi C.S., Member
(Judicial),JJ.
For the Appellant : Ms. Priyanka Goel, Advocate
For the Respondent : Shri M.S.Negi, DR
Cases Cited
1. M/s ITC Ltd Paperboards & Specially Papers Division Versus Commissioner of Central Excise,
Customs And Service Tax, HYDERABAD-III - 2014 (12) TMI 449 - CESTAT BANGALORE
2. COMMISSIONER OF CENTRAL EXCISE, NAGPUR Versus CHANDRAPUR SUPER THERMAL
POWER - 2014 (7) TMI 29 - CESTAT MUMBAI
3. SHRI VITHAL SSK LTD. Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-III - 2014 (6) TMI
161 - CESTAT MUMBAI
4. UNION OF INDIA Versus AHMEDABAD ELECTRICITY CO. LTD. - 2003 (10) TMI 47 - SUPREME
COURT OF INDIA
5. SHAW WALLACE GELATINES LTD. Versus COMMISSIONER OF C. EX., INDORE - 2001 (3) TMI
379 - CEGAT, NEW DELHI
ORDER
Per: Rakesh Kumar
The appellant are manufacturer of sponge iron from iron ore. In the course of manufacture of
sponge iron while burning coal in the boiler, fly ash arises. For dispose of fly ash, the appellant
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offered it to any person who was ready to lift the same. The department was of the view that fly
ash is excisable goods falling under chapter 26 and the same would attract duty @ 5% under
Notification No.02/11-CE dt.1.3.11 (Serial nO.14) as credit in respect of various inputs service
including GTA service has availed. It is on this basis that the demand of duty on the clearance of fly
ash during the period March, 2011 to February, 2012 have been made. A show cause notice was
issued to the appellant for demand of duty amounting to 2,02,057/- from them in respect of
clearance of fly ash alongwith interest and also for imposition of penalty. The show cause notice
was adjudicated by the Assistant Commissioner vide Order-in-Original dated 22.1.14 by which the
above mentioned duty was confirmed against the appellant and penalty of equal amount was
imposed on them. The Assistant Commissioner held that fly ash obtained while burning coal in the
boiler is covered under chapter 26 and since Cenvat credit has been taken in respect of input
services, the same would attract duty @ 5% Adv. under Notification No.02/11-CE. The above order
of the Assistant Commissioner was upheld by the Commissioner (Appeals) vide Order-in-Appeal
dt.30.4.14. Against this order of the Commissioner (Appeals), this appeal has been filed alongwith
stay application.
2. Heard both sides in respect of stay application.
3. Ms.Priyanka Goel, Advocate, the learned Counsel for the Appellant pleaded that neither show
cause notice nor adjudication order nor the appellate order specifically mention as to under which
heading of chapter 26 the fly ash obtained by burning of coal in the boiler, will fall, that fly ash, in
question, which was cleared by the appellant is residue which remains in the boiler, that fly ash is
not marketable and the appellant in order to get rid of fly ash, had offered it free to any person who
was ready to lift the same, that the burden is on the department to provide the evidence to proves
that the fly ash is marketable, that no evidence has been produced by the department in support
its claim that fly ash is marketable, that the Tribunal in the case of ITC Ltd. vs. CCE, Hyderabad-III2014 (12) TMI 449 CESTAT- Bangalore has held that fly ash arising in the course of manufacture of
paper/paper board is not excisable, that the same view has been taken by the Tribunal in the case
of CCE, Nagpur vs. Chandrapur Super Thermal Power-2014 (7) TMI 29 CESTAT Mumbai, that the
Tribunal in the case of Shaw Wallace Gelatines Ltd. vs.CCE, Indore-2011 (131) ELT 397 (Tri.-Del.) has
held that coal ash is obtained from burning of coal as fuel for production of steam, is not an excisable
product and not leviable to duty under heading 26.21, and that the same view has been taken by
the Apex Court in the case of Union of India vs. Ahmedabad Electricity Co.Ltd.-2003 (158) ELT 3 (SC).
She accordingly submitted that the impugned order is not correct, that the appellant have a strong
prima facie in their favour and hence the requirement of pre-deposit of duty demand, interest and
penalty may be waived for hearing of their appeal and recovery thereof may be stayed.
4. Shri M.S.Negi, learned DR opposed the stay application by reiterating the findings of the
Commissioner (Appeals) and pleaded that fly ash, in question, obtained by burning of coal in the
boiler is specifically covered under heading 26.21 of Central Excise Tariff Act which cover 4 other
slag and he submit that since fly ash obtained by burning coal is an excisable goods under heading
2621 and Cenvat credit in respect of various inputs including GTA service availed for transportation
of the coal etc has been taken, the ash would attract 5% duty under Notification No.02/11-CE. He,
therefore, pleaded that this is not the case for waiver from the requirement of pre-deposit.
5. We have considered the submissions from both sides and perused the records. The point of
dispute is whether fly ash obtained by burning of coal in the boiler the course of manufacture of
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sponge iron is dutiable. There is no dispute that fly ash is not containing metal or metal oxide.
Though the ash obtained by the incineration of municipal waste and other type of ash is covered
under heading 2621, the Tribunal in series of judgements mentioned above, as held that such fly
ash is not excisable. In particular, the Tribunal in the case of Shri Vithal SSK Ltd. vs. CCE, Pune-III2014 (300) ELT 516 (Tri.Mumbai) has held that boiler ash arising in the course of manufacture of
sugar, is not excisable. Similar view has been taken by the Tribunal in the case of Shaw Wallace
Gelatines Ltd. has been held that coal ash is obtained from burning of coal as fuel for production of
steam, is not an excisable product and not leviable to duty under heading 26.21 of Central Excise
Tariff. The same view has been taken by the Apex Court in the case of Union of India vs. Ahmedabad
Electricity Co.Ltd. (supra). It is settled law that just because an item is covered some heading/subheading of the tariff, it would not become excisable, unless there is evidence on record to prove
that the same is marketable in the sense that it is worthwhile to trade in that product and there is
existence of market for the same. It is also well settled law that the burden of proving the
marketability is on the department. In this case, the appellant is not selling the fly ash and the
appellant offered the same free to any person who was ready to lift the same. The department has
not been able to prove with tangible evidence that there is existence of market for the ash. In view
of this, we hold that the appellant have made a strong prima facile case in their favour.
7. In view of above discussion, the requirement of pre-deposit of duty demand, interest and penalty
is waived for hearing of the appeal and recovery thereof is stayed.
(Pronounced in the open court)
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