INDIAN ALUMINIUM COMPANY LIMITED Vs. A K BANDYOPADHYAY

JUDGEMENT

(1.) The 1st petitioner (referred to hereafter as ''the Company") is a public limited company whereof the 2nd petitioner is a shareholder. The Company owns factories at Belur, Taloja and the places. the Company carries on business of manufacturing aluminium sheets at its taloja factory. The bulk of the raw material required for the manufacture of aluminium sheets is aluminium ingots which the Company procures from various sources. At the first stage of professing,m dross and skimmings arise and accumulate in the furnace in the shape of ''ashes" on the oxidisation of the aluminium ingots. These ''ashes" are formed mainly during the melting down of the solid charge, i.e. aluminium ingots and to some extent during subsequent treatments and holding operation of molten baths in the furnace. Dross consists mostly of oxides, non-metallic and other foreign materials which are formed during the melting and holding operations and finally accumulates on the surface of the molten bath. The dictionary meaning of ''dross" is : ''scum thrown off from metals in smelting; refuse; rubbish or worthless impure metal". The dictionary meaning of skimming is ''that which is removed or obtained from the surface by skimming." Skimmings are mostly thin oxide layers normally obtained by skimming a molten bath prior to metal transfer on casting. The skimming operation is essential to help dissolved gasses escape from molten bath. Re- melting of skimmings along with normal production melts impairs metal quality of the raw material and consequently losses it s original chemical composition and characteristics. According to the petitioner, dross and skimmings represent process loss or melt loss.

(2.) Section 3 of the Central Excise and Salt Act, 1944, provides, inter alia, that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and at the rates set forth in the First Schedule to the Act. It is further provided that Central Government may by Notification in the Official Gazette fix for the purpose of levying the duties, tariff values of any articles enumerated either specially or under general headings in the First Schedule as chargeable with duty ad valorem and may alter any tariff values for the time being in force and the tariff values may be fixed for different classes or description of the same articles. Tariff Item No. 27 in the First Schedule deals with aluminium. Aluminium ingots and aluminium sheets are both excisable Items, the former being dutiable under Tariff Item No. 27 (a)(i) and the latter under Item No. 27(b), the rate of excise duty on both being 40% ad valorem.

(3.) The Central Excise Rules, 1944 have been framed under the Act In the exercise of powers conferred by sub-Rule (1) of Rule 56-A, the Central Government has specified several excisable goods in respect of which the procedure laid down in sub-rule (2) of Rule 56-A shall apply and the said excisable goods so specified, include aluminium. With the permission of the Collector, the Company brought or received duty-paid aluminium ingots for the purpose of manufacturing aluminium sheets under the procedure provided in Rule 56-A. At the time of obtaining the requisite permission prior to 1st March 1975, the Company submitted from time to time to the Collector, a classification list showing excisable and non-excisable items. As aluminium ingots were used in the manufacture of aluminium sheets and since the duty was already paid in respect of the aluminium ingots under the same item as aluminium sheets, namely Item No. 27, the Company was allowed credit of the duty already paid on the aluminium ingots. Accordingly a the time of clearing aluminum sheets prior to 1st March 1975, the Company availed itself of credit of duty already paid by it on the aluminium ingots. As far as the dross and skimmings which arose and accumulated during the manufacturing operation, the Company cleared the same prior to 1st March 1975 with the permission of the Excise authorities without payment of any duty.