P.C. Jain, Member (T)

1. Appeal at Sl. No. 1 was listed for hearing on 11.3.87. Appeal at Sl. No.2 however could not be listed, despite the request from Andhra Pradesh State Electricity Board, due to non-traceability of papers till filed a few days back. After the arguments in the first appeal were concluded, both the sides were asked whether the second appeal namely No. 2015/84-0 could also be disposed of in the light of arguments furnished by them on the first appeal namely 237/84-D. Neither side had any objection to the aforesaid proposal.

2. Since a common question is involved in both the appeals, a common order is being issued.

3. Short question which falls for consideration in these cases is whether 'Fly ash' produced during the course of burning of pulverised coal (Powdered coal) is liable to duty under Tariff Item 68 or not.

4. Contention of the learned advocate from Andhra Pradesh State Electricity Board is that fly ash is not 'goods' and as such cannot be treated as excisable. It is merely a waste product arising out of burning of powdered coal. After combustion ash which is not combustible is collected as residue. Some quantity of ash is collected at the bottom of the furnace while most of the ash is carried away alongwith flue gases. Since it is not desirable to allow the ash particles to go into atmosphere with a view to check pollution, the ash particles are extracted from the flue gases either by Mechanical Dust Collector or Electrostatic Precipitators before allowing the flue gases to escape air through a chimney. The ash settled at the bottom of the furnace is called "Bottom Ash" and the ash collected from the flue gases in the Mechanical Dust Collectors/Electrostatic precipitators is called the "Fly Ash". 'Bottom Ash' and 'Fly Ash' are same in chemical composition while the physical characters vary. Bottom ash is collected as lumps while the fly ash will be in the form of 'very fine' particles. Normally bottom ash is crushed in Grinders, mixed with water and pumped to the ash pond (disposal area) away from the Power House. Fly Ash is collected in the dry form and transported to the storage silo from where it is unloaded in the trucks for transportation to the consumers' factory where it is utilised for manufacture of Pozzolana Cement. If any quantity of fly ash is surplus and not required by any consumer, it is mixed with water and pumped to the disposal area as in the case of Bottom Ash. The learned advocate has, therefore, submitted in the light of the aforesaid process that fly ash like bottom ash is also a residual waste and the burning of coal which leads to fly ash cannot be termed as a process of manufacture. Accordingly, fly ash should not be charged to excise duty. In support of his proposition, the learned advocate relies strongly on a judgement of single Judge of the Bombay High Court in the case of Indian Aluminium Company v. A.K. Bandopadhyaya (1980 ELT 146), it has been held therein as follows :-

"It may well be that dross and skimmings may be capable of fetching some sale price. For that matter any rubbish can be sold. But that is not the criterion. It cannot be said that dross and skimmings are the result of treatment, labour or manipulation whereby the end-product is dross and skimmings. They are merely the scum thrown out in the process of manufacture of aluminium sheets. Therefore, t cannot be said that dross and skimmings are .transformation resulting in a new and different article with a distinctive name, character or use or that they. ordinarily come to the market to be bought and sold and are known to the market."

"Refuse or scum thrown off during the process of manufacture cannot by any stretch of imagination be considered as a by-product and merely because such refuse or scum may fetch some price in the market does not justify it being clothed with the dignity of being called a by-product, much less an end-product or a finished product."

5. Learned SDR on the other hand has pleaded that