Supreme Court upheld CEGAT’s order, as Revenue had not discharged its onus

1. Tata Iron and Steel Co. Ltd. (TISCO) was alleged to have sold zinc dross and flux skimming to various customers without making any declaration in the classification list, without paying any duty on clearance and without maintaining any records.
2. A show cause notice was issued to TISCO 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 u/r 9(2).
3. According to the Department, 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.
4. Assistant Commissioner rejected TISCO’s refund claim holding that the ash cleared by the noticee (assessee) contains metals and oxide of zinc and is also used for the extraction of metal as a basis for the manufacture of chemical compounds of metal and they are marketable.
5. Assessee's appeal before the Commissioner was also rejected.
6. CEGAT held that zinc dross and zinc scalling are not goods, hence not excisable.

On appeal, the Supreme Court held as under:

7. 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.

8. The appeals filed by the Revenue have no merits and are liable to be dismissed and we do so Accordingly.

Case Reference - Collector Of Central Excise, ... vs M/S Tata Iron & Steel Company.

Supreme Court of India