ORDER
S.L. Peeran, Member (J)
1. This appeal is directed against the Order-in-Original dated 1.7-5-1989 passed by Collector of Central Excise, Coimbatore confirming the demand of duty of Rs. 525.38 under Section 9(2) read with Section 11A of the Central Excises and Salt Act and has held that ‘sulphur sludge’ is classifiable under Chapter No. 3801.90 of CET Act, 1985 attracting duty at 15% ad velorem.
2. The appellants had filed an application for stay of the operation of the order under section 35F of the Act. Shri K. K. Anand, learned advocate appearing for the appellants submitted that the matter is covered by the rulings of the Delhi High Court as rendered in the case of Modi Rubber Ltd. v. Union of India and Ors. reported 1987 (29) ELT 505; (ii) Asiatic Oxygen Ltd. v. Collector of Central Excise as reported in 1989 (44) ELT 718 (T) and that of 1990 (47) ELT 57 and argued that the same ratio and analogy will hold good for the product ‘sulphur sludge’. The product is not dutiable as it was not manufactured but had arisen as “waste and scrap material” during the course of manufacture of sulphur acid in their factory. Shri S. K. Roy, learned SDR, however, reiterated the findings of the learned Collector but on a query from the bench, conceded the product in question was not manufactured and sold but had arisen as a “waste and scrap” during the course of manufacture of sulphuric acid in the factory of the appellant.
3. As the matter is covered by the rulings referred to above, with the consent of both the sides, the appeal itself was taken up for hearing for final disposal by granting stay.
4. In the case of Modi Rubber Ltd. (Supra), the Delhi High Court took up the matter of dutiability of waste/scrap obtained not by any process of manufacture but in course of manufacturing the end product it held that waste/scrap obtained in course of manufacture process of tyres, tubes etc. being not a subject of any transformation into a new and different article or resulting in process incidental or ancillary is not excisable under Section 2(f) and Section 3 of Central Excises and Salt Act, 1944. It also held that scrap/waste obtained in the course of manufacture of tyre, tube, flaps, etc. cannot be goods as by-product. Court observed that goods produced as to have a distinguished name character of goods waste and scrap is in the nature of rubbish and has no distinguishing name,character or use, therefore, Court held that no duty can be levied on such waste/scrap.
5. In the case of Asiatic Oxygen Ltd. (Supra), the Tribunal considered in great length the excisability of carbide sludge and held that the assessee did not undertake to produce carbide sludge, but it emerged in the process of manufacture of oxygen and acetylene gas. Sludge formation is a continuous process and as such the pits, wherein sludge is gathered have to be vacated. Sludge cannot also be measured, weighed or accounted for. Therefore, the Bench held that carbide sludge is not also marketable commodity but only industrial waste and hence excisable.
6. The Tribunal again took up the matter of spent bleaching earth and held it to be a waste material and hence excisable. In the present case, the sulphur sludge also emerges while melting sulphur for use in the production of sulphuric acid, carbon-di-sulphide and SO2 for bulk production. This sulphur sludge is in the nature of scrap material and did not have any characteristic of sulphur and that this sulphur sludge is also not a manufacturing item. Therefore, it cannot be considered as goods to attract duty under Section 2(f) and Section 3 of Central Excises and Salt Act, 1944. The above said ratio applied to the facts of this case and applying the said ratio the impugned order has to be set aside by allowing the appeal.
