The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Mumbai bench, while granting relief to Tata Motors, has held that no excise duty shall be imposed on the generation of aluminum dross and skimming in the manufacture of aluminum castings/parts of motor vehicles.
The issue before the bench comprising Judicial Member Mr. Ramesh Nair and Technical Member Mr. CJ Mathew was whether the aluminum dross and skimming arising out of the manufacture of aluminum motor vehicle parts amounts to manufacture and liable to duty or otherwise.
The department raised a contention that the above activity amount to manufacture and therefore, liable for payment of excise duty.
Rejecting the above contention, the bench observed that “the Revenue’s contention is based only on explanation inserted to section 2(d) of Central Excise Act, 1944 whereby it was interpreted that as per this amendment any product arising in the course of manufacture would be liable to duty. We find that there is no dispute prior to the 2008 amendment. In the various judgments even after considering the amendment section 2(d) to Central Excise Act, 1944 it was held that no duty liability arises on the aluminum dross skimming generated unavoidably during the manufacture of aluminum products.”
Referring to the precedents, the bench held in favor of the appellant-Company and held that “in view of above judgments particularly in the case of Hindalco Industries Ltd which was upheld by the Hon’ble Supreme Court, the issue is no longer res Integra. Hence the generation of aluminum dross and skimming in the manufacture of aluminum castings/parts of motor vehicles does not amount to manufacture. Accordingly, it is not liable to duty.”
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