ORDER
V.T. Raghavachari, Member(J)
1. The appellants M/s. Indian Tube Co. Ltd. subject steel pipes and tubes to the process of pickling for removal of the scale formation thereform. The hot rolled strilps were also being subjected to similar process. For the purpose of pickling, sulphuric acid is diluted with water and kept in a tank. The pipes, tubes etc. are kept in cradles and then dipped into the diluted acid so that the removed of the scale is done uniformly on the inner as well as outer surfaces. The steel strips fitted in cages are also similarly rotated inside the tank. After the acid had been used for a while in this manner it loses its effectiveness and is thereafter removed. According to the appellants removal was by way of supply of the same to another concern by name M/s. Cynamides & Pigments. No charge were being collected therefor and in fact the appellants paid the transportation charges themselves. This was done to avoid the cost of neutralisation without which this dangerous effluent could not be sent out of the factory.
2. Show cause notice was issued to them calling upon them to show cause why duty ought not to be demanded on removal of the waste pickle liquor from 1 -3-1975 and why penalty should not be imposed. The appellants denied liability for duty or penalty. On adjudication the Collector of Central Excise, Patna under his order dated 26-12-1984 held that the waste pickle liquor was excisable under Item 68 CET; value was arrived at, under the order, taking into consideration removal of similar goods by M/s. Hindustan Copper Ltd. duty was to be demanded for the period of 6 months preceeding the notice and not the earlier period. This appeal is against the said order.
3. We have heard Shri K.K. Lahiri, advocate for the appellants and Shri V.M. Doiphode for the department
4. Shri Lahiri contended that the goods on which duty is demanded are nothing but waste arising during a part of their manufacturing process and that such waste would not be liable for duty. He relied on the decision of this Tribunal under Order No. 942/86-D, dated 14-11-1986 in Excise appeal No. 82/82-B (in the case of Collector of Central Excise, Patna v. Tata Iron & Steel Co. Ltd.) Order No. 815/86-B1, dated 17-12-1986 in Excise appeal No. 1539/82-B1 (in the case of Tata Iron & Steel Co. Ltd. v. Collector of Central Excise, Patna); Gwalior Rayon Silk Manufacturing and Weaving Co. Ltd. 1985 (21) ELT 832 and Indian Aluminum Co. Ltd. 1987 (31) ELT 158. In the first of above said cases the issue was the liability for payment of duty in respect of Flux Skimmings. These skimmings arose in the course of the galvanization process. The flux in the galvanizing bath became ineffective after use for a while and was then being removed, to be replaced by fresh flux. It was held that such flux skimmings were not excisable. In doing so reliance was placed on the decision of the Bombay High Court in the case of Indian Aluminium Co. Ltd. (1980 ELT 146) and the case of Hindustan Lever Ltd. i i985 (22) ELT 232]. In the case of Hindustan Lever Ltd. the issue was liability for payment of duty on the spent earth arising out of the activated bleaching earth used for removal of colour etc. from oil in the course of manufacturing soap. It had been held that such spent earth being waste would not be liable for duty. In Order No. 815/86-B1 (supra) the issue was liability for payment of duty on slag. It was held that such slag being a waste product was not liable for duty. In 1985 (21) ELT 832 the issue was liability for payment of duty on neutralised Hydrochloric acid. It was held that the same being waste was not liable for duty.
5. We may further note that in the case of Collector of Central Excise v. Captainganj Distillery 1987 (29) ELT 122 the Tribunal held that spent wash arising as waste material in the process of manufacture of alcohol was not liable for duty.
6. Shri Lahiri submitted that in view of the above decisions we should hold that the waste pickle liquor is not dutiable. On the other hand, Shri Doiphode claimed that the Collector was correct in holding the said goods to be dutiable since the same arose in the course of manufacture and it had a distinct name and was also marketable, the person to whom the same was being supplied by the appellantas having a use therefor in his own paint manufacturing business. In this connection, he relied on the decision of the Madras High Court in the case of Seshasyee Paper & Board Ltd. 1987 (28) ELT 258 where the High Court held that caustisizing lime sludge was dutiable as scrap arising in the course of manufacture of paper. He also relied on the decision of this Tribunal in the case of Collector of Central Excise v. Andhra Pradesh Electricity Borad 1987 (29) ELT 324 where the Tribunal held that Fly ash though arising as waste product in the course of generation of electricity was liable for duty. But in this connection we may note that in a later decision in the case of Papyrus Papers (1988 Vol. 14 ECR 435) it was held that Cinder arising as waste product in burning coal for manufacturing purpose was not excisable. The contention of Shri Doiphode is that such waste products which arise during any manufacturing process would be excisable so long as they have a market. He submitted that this would follow from the decision of the Supreme Court in the case of Knandelwal Metal Engg. Works 1985 (22) ELT 222. He submitted that the Madras High Court took this decision into consideration in arriving at its own decision.
7. In assessing the respective contentions we have to keep in mind the fact that the goods in issue (waste pickle liquor) is not in the nature of a valuable by-product arising during the course of manufacture of some other goods. Dilute sulphuric acid used in the pickling process gradually loses its efficacy and at the stage when it becomes unfit for further pickling it has to be discarded by the appellants. Therefore, it is in the nature of a waste product after losing its efficiency in the process for which it had been till then utilised. It does not appear to have even a market or saleability, since it is not in dispute that the appellant not merely gifts it away to another firm, but in fact pays transportation charges also to deliver it free at the door of other firm. In the circumstances, it would not be proper to compare the present goods with reference to the goods under consideration in the case before the Madras High Court. On the other hand, the goods under consideration in the judgments relied on for the appellants appear to be more akin to the present goods.
8. Shri Lahiri further pointed out that the reliance on the observation in the judgment of the Supreme Court cited supra is also not acceptable as was discussed and held by this Tribunal in the case reported in 1987 (31) ELT 158. The two members constituting the original bench having differed in their views the matter was placed before the President who under his order held that the goods were not excisable and in coming to that conclusion rejected the reliance placed by the department on the ratio of the Supreme Court decision.
9. For all the above reasons we hold that the order of the lower authorities were incorrect. We, accordingly, allow this appeal and set aside the orders of the lower authorities with consequential relief, if any.