ORDER
Archana Wadhwa, Member (J)
1. Being aggrieved with the order passed by Commissioner (Appeals) the Revenue has filed the present appeal. We have heard Shri J.R. Madhiam, ld. JDR for the Revenue and Shri P. Kejriwal, ld. Director, appearing for the respondent. The issue involved is the excisability of coal ash. The Asstt. Commr. had confirmed the classification of coal ash under sub-heading No. 2621.00 and accordingly confirmed the demand of duty of Rs. 2,27,120/- for the period July, 1996 to March, 2000 along with imposition of personal penalty of Rs. 2,27,120/- under the provisions of Section 11AC of the Central Excise Act, 1944 read with Rule 173Q of Central Excise Rules, 1944. On an appeal against the above order Commissioner (Appeals) set aside the same by relying upon the decision of the Hon’ble High Court of Gujarat in the case of Ahmedabad Electricity Ltd. v. UOI – 2001 (131) E.L.T. 535 (Guj.) vide which it was held that cinder remaining from the coal ash i.e. burnt of being used as fuel may be a marketable commodity, but would not be excisable goods produced or manufactured by the petitioners within the meaning of ‘other ash’ under sub-heading 26.21 of the Schedule to the Tariff Act. Accordingly, the court held that the circulars and trade notices issued by the Board classifying the same under heading No. 26.21 are arbitrary, illegal and not warranted by the provisions of Central Excise Act and Excise Tariff Act. The same were therefore set aside. By applying the ratio of the above decision the Commissioner (Appeals) has held that the ‘burnt coal remains’ or the ‘half burnt coal’ cannot be held to be excisable.
2. The Revenue in their memo of appeal has contended that iron ore, coal and dolomite are used as inputs in a rotary kiln for manufacture of sponge iron. In this process coal is used as an input for reduction of iron ore and after the carbon contained in the coal is burnt, the residue with high ash and low carbon content is despatched from the kiln and apply the principles of interpretation, it has been contended that the same merit classification as ‘coal ash’ under sub-heading No. 2621.00 of the First Schedule to the Central Excise Tariff Act, 1985. They have submitted that Gujarat High Court’s decision is not applicable in the facts of the instant case inasmuch as before the Hon’ble High Court boilers were used and they were fired by coal as a primary fuel in the boiler whereas in the instant case coal is not used as a fuel but as an active input in the rotary kiln along with other raw materials. They have also relied upon the Board’s Circular No. 386/19/98-CX-3, dated 7-4-98 and has also held that the Hon’ble High Court’s decision in the case of M/s. Ahmedabad Electricity Co. Ltd. has not been accepted by the Department and SLP has been filed before the Hon’ble Supreme Court of India.
3. After hearing both the sides, we do not find any merits in the Revenue’s contention that coal ash has to be classified under heading 2621.00. The effort made on the part of the Revenue to distinguish the decision of the Gujarat High Court in the case of M/s. Ahmedabad Electricity Co. Ltd. is also not appreciable inasmuch as whether the coal is burnt as a primary fuel in the boiler or as an active input in the rotary kiln, the fact remains that it is the residue of the burnt coal i.e. coal ash, which is sought to be levied to duty of excise by the Revenue. It has been clearly held by the Hon’ble High Court of Gujarat that such coal ash cannot be held to be excisable merely because the same may fetch some price in the market. It has been clarified by the representative of the respondents that earlier such half burnt coal was being sold by them for the filling purposes but now a days they are disposing it of free of cost.
4. Inasmuch as the issue stands decided by the Hon’ble decision of the Gujarat High Court, we do not find any infirmity in the view taken by the Commissioner (Appeals). Accordingly we reject the appeal filed by the Revenue.
