2026-VIL-1615-CESTAT-HYD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Excisability of waste materials and residues arising incidentally during manufacture, Distinction between manufacture and marketability - During manufacture of sponge iron waste material and iron ore fines emerged and were cleared without duty. Department contended materials were marketable excise goods - Commissioner (Appeals) set aside holding disputed materials did not arise as result of any process of manufacture. Department appealed contending goods have distinct names, commercial utility, sold for consideration and covered by tariff entries - Whether waste materials and residues arising inevitably during manufacture of primary product can be subjected to Central Excise duty merely because they are marketable and specified in tariff - HELD - Manufacture or production is foundational taxable event. For activity to amount to manufacture, it must result in emergence of new and distinct commodity having different name, character or use from original inputs. Explanation to Section 2(d) of CEA, 1944 expands concept of goods and marketability but does not dispense with statutory requirement that goods must be manufactured or produced - Marketability and manufacture are separate conditions and existence of one does not establish other. Dolochar, partially burnt coal remaining in rotary kiln during sponge iron manufacture, emerges inevitably and not result of independent manufacturing process. Fly ash arises from burning coal for heat and burning does not amount to manufacture of residue. Burning coal to generate electricity does not constitute process for manufacture of fly ash. Iron ore fines arise through handling and screening without benefication - Mere reduction or segregation does not amount to manufacture. Subsequent payment of duty by respondent cannot constitute admission against correct legal position as there is no estoppel against law. Even if dolochar treated as excisable, unconditionally exempt under Notification No. 4/2006 and Notification No. 12/2012 as waste from manufacture of iron or steel - No positive fraud or deliberate suppression with intent to evade established. Mere non-payment without deliberate act cannot justify extended period – The impugned Order-in-Appeal upholding that disputed materials not liable to Central Excise duty affirmed – Revenue appeal is dismissed
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