CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL HYDERABAD REGIONAL BENCH - COURT NO. – I Excise Appeal No. 27287 of 2013 (Arising out of Order-in-Original No.08/2013-CE-HYD-III-ADJN (COMMNR) dated

25.04.2013 passed by Commissioner of Customs, Central Excise & Service Tax, Hyderabad)

M/s ITC Ltd., .. APPELLANT PaperBoards & Specially Papers Division P.B.No.4, Sarapaka Village, Bhadrachalam, Khammam, Telangana – 507 128.

VERSUS Commissioner of Central Tax .. RESPONDENT Hyderabad – III Kendriya Shulk Bhavan, L.B. Stadium Road, Basheerbagh, Hyderabad, Telangana – 500 004.

APPEARANCE:

Shri Ch. Sumanth, Advocate for the Appellant. Shri V R Pavan Kumar, AR for the Respondent.

CORAM: HON’BLE Mr. A.K. JYOTISHI, MEMBER (TECHNICAL)

HON’BLE Mr. ANGAD PRASAD, MEMBER (JUDICIAL)

FINAL ORDER No. A/30197/2025 Date of Hearing:10.06.2025 Date of Decision:10.06.2025 [ORDER PER: A.K. JYOTISHI]

M/s ITC Ltd., (hereinafter referred to as appellant) are in appeal against the Order-in-Original dated 25.04.2013, whereby the Adjudicating Authority has confirmed a demand of Rs. 30,08,624/- under Section 11A of Central Excise Act (impugned order). The issue involved is whether the appellants were liable to pay central excise duty on fly ash generated as waste during generation of electricity from coal in their factory of production. 2. The brief fact of the case is that the appellants are engaged in the manufacture of paper and paperboards in their plant, where they are also generating electricity for captive use. Department noticed that they were clearing “sludge” and “fly ash” while generating electricity from coal. The sludge was emerging in their efficient treatment plan whereas, fly ash was generated. The Department felt that both these goods were liable to central excise duty and accordingly show cause notice was issued. However, on adjudication, the demand towards ‘sludge’ was dropped by extending the benefit of Notification No. 17/2011 dated 01.03.2011 whereas the demand towards ‘fly ash’ was confirmed holding that it was an incidental product emerging in the course of manufacture of goods.

3. Learned Advocate for the appellant submits that the matter is no longer res-integra in view of the judgment of the Hon’ble Supreme Court in the case of Union of India Vs Ahmedabad Electricity Company Ltd., [2003 (158) ELT 3 (SC)]. His main argument is that the fly ash generated in the course of production of electricity is not a manufactured good and therefore it would not be covered within the provisions of Section 2(f) of the Central Excise Act. He has further submitted that merely because a good is mentioned in the First Schedule to the Central Excise Tariff Act, it does not make it leviable to duty and it must otherwise meet the twin test of manufacture and marketability to attract payment of duty. In any case, the fly ash generated by them was not even sold and infact the duty has been calculated on the basis of the third party price for fly ash which was generated in relation to manufacture of other goods different from electricity. He further submits that even in the case of Mettur Thermal Power Station Vs CBEC, New Delhi [2016 (335) ELT 29 (Mad)], the Hon’ble Madras High Court has also held that fly ash is not emerging out of any manufacturing activity and therefore does not fall under the purview of excisable goods so as to attract levy of excise duty. Against this judgment of Madras High Court, an appeal was filed by the Department before the Hon’ble Supreme Court and the same was dismissed observing “In view of the decision in Union of India Vs DSCL Sugar Ltd., [2015 (322) ELT 769 (SC)], nothing survives for consideration in these Special Leave Petitions and the Civil Appeal. The Special Leave Petitions and the Civil Appeal are dismissed accordingly.”

4. He has also relied on various judgments as under:

a) UOI Vs DSCL Sugar Ltd., [2015 (10) TMI 566 – SC]

b) Board of Trustees Vs Collector of CE, AP [2007 (8) TMI 350 (SC)]

c) Hindalco Industries Ltd., Vs UOI