Holding

Aluminium dross and skimmings are not "excisable goods" and are not liable to excise duty; the appeals are dismissed.

Summary

The Union of India challenged the clearance of aluminium dross and skimmings by Indian Aluminium Co. Ltd. without payment of excise duty. The company claimed credit for duty paid on aluminium ingots under Rule 56A while clearing aluminium sheets, and argued that the dross and skimmings, being waste, were not excisable goods. The Court examined the definition of "excisable goods" under Section 2(d) of the Central Excise Act, 1944, and the relevant tariff items (27 and 68) along with their explanations. It held that aluminium dross and skimmings are not listed in the First Schedule, are not goods in commercial parlance, and therefore are not liable to excise duty. Consequently, the proviso to Rule 56A does not apply, and the credit for duty on ingots remains unaffected. The appeals filed by the Union of India were dismissed with costs.

Issues considered

Whether aluminium dross and skimmings qualify as "excisable goods" under Section 2(d) of the Central Excise Act, 1944.
Whether the dross and skimmings fall within Tariff Item 27 or the residuary Tariff Item 68 based on the explanations to those items.
Whether the proviso to Rule 56A of the Central Excise Rules bars credit of duty on the portion of ingots that gave rise to dross and skimmings.
Whether credit for duty paid on aluminium ingots can be reduced due to the generation of dross and skimmings.

Legislation cited

Central Excise Rules, 1944s. Rule 56A
Finance Act, 1981

Subjects

excisable goodscentral excise dutyaluminium drossskimmingstariff classificationRule 56Amarketabilitywaste and scrapcredit of duty

Judgment

~\

UNION OF INDIA AND ORS. A
v.
__..(
INDIAN ALUMINIUM CO. LTD. AND ANR.

APRIL 19, 1995

[A.M. AHMADI, C.J .. N.P. SINGH AND B
SUJATA V. MANOHAR, JJ.]

Central Excise Rules 1944-Central Excise Tariff-Tariff Item Nos. 27
& 68--Aluminium dross & Skimmings-Whether eligible to excise duty-No.
c
Words & Phrases : 'F.xcisable Goods' and 'Dross'--Meaning of

The respondents-assessees manufacture aluminium sheets,
aluminium angles, etc. out of aluminium ingots. The assesses deared their
manufactured product aluminum sheets by following the procedure
prescribed under Central Excise Rules, 1944. The assessees claimed credit D
for the duty paid qn aluminium ingots while clearing aluminium sheets
manufactured by them. They also cleared aluminium dross & skimmings
without payment of any excise duty.

By a show cause notice, the assessees were asked to pay excise duty
E
on dross and skimmings removed by them between. September 1972, and
March 1973 and it was confirmed by the Assistant Collector. The Appellate
Collector allowed the appeal preferred to the assessees. A revision
preferred by the excise authorities was allowed by the Government oflndia.
This decision was challenged by the assessees by way of a writ petition
which was allowed by a Single Judge of the High Court. Appeal before the F
Division Bench was dismissed. Against this order, Revenue preferred the
present appeals.

Dismissing the appeals, this Court

HELD : 1. Under Sub-rule (2) of Rule 56-A of the Central Excise G
Rules, the assessees were entitled to a credit for the duty already paid on
-A.
aluminium ingots while paying duty on aluminium sheets. It is not in
dispute that the assessees received duty paid ingots for the manufacture
of aluminium sheets which were excisable goods. Both ingots and sheets
fall under the same Tariff item, namely, item 27. The assessees were H
497
'

498 SUPREME COURT REPORTS [1995] 3 S.C.R.

A entitled to credit for the duty already paid on the ingots for the manufac·
tore of aluminium sheets. The assessees accordingly availed themselves of
this credit while clearing aluminium sheets during the relevant period.
This was done by following the procedure laid down •mder Rule 56-A with
the permission of the Excise authorities. During the same period, the
B assessees also cleared aluminium dross and skimmings without payment
of any duty. (502-D to Fl

2.1. From the definition of excisable goods, it is clear that aluminium
dross, and skimmings were not in the First Schedule to the Central Excises
and Salt Act, 1944 at the relevant time and are not excisable goods, finished
C or otherwise. Undoubtedly, aluminium dross and skimmings do arise
during the process of manufacture. These are nothing but waste or rubbish
which is thrown up in the course of manufacture. (503-D, El

2.2. Dross and Skimmings may contain some small percentage of
metal. But dross and skimmings are not metal in the same class as waste
D or scrap. It may he possible to recover some metal from such dross and
skimmings. They can, therefore, be sold. But this does not make a
marketable commodity. Every thing, however, which is sold is not neces·
sarily a marketable commodity as known to commerce and which, it may
be worthwhile to trade in. The entire quantity of raw material namely, duty
E paid aluminium ingots procured by the assessees from outside was used
in the manufacture of aluminium sheets. In the process of manufacture,
dross and skimmings had to be removed in order that aluminium sheets
of the requisite quality could be manufactured. This does not mean that
the entire lot of aluminium ingots was not used for the manufacture of
aluminium sheets. [504·B, C, El
F
In the course of manufacture, certain quantity of raw material may be
lost because of the very nature of the process of manufacture or some small
quantity of raw material may form part of wastage or ashes. This does not
mean that the entire raw material was not used in the manufacture of
G finished excisable products. An exact mathematical equation between the
quantity of raw material purchased and the raw material found in the
finished product is not possible, and should not be looked for. (504-F, GI

Mis. Multimetals Ltd. v. Assistant Collector, Central Excise Kota &
Ors., [1992) 1 SCC 715 and M/s. Swadeshi Polytex Ltd. v. Collector of Central
H Excise, [19901 2 sec 358, relied on.
U.0.I. v. ALUMINIUM CO. 499

ASM Metals Reference Book 2nd Ed. 1883 by American Society for A
Metals; Megraw l;lill Dictionary of Science & Engineering 1984 Ed.; New
Shorter Oxford English Dictionary, referred. [503-G, E]

5. The Explanation to Item 27 is no_t for the purpose of separating
certain types of wastes and scrap from the main Item of 'Waste and Scrap
of Aluminium" and thus making exigible to tax under Item 68. The Explaua- B
tion to Item 27 merely excludes from wastes and scrap certain residues or
rubbish which cannot be categorised as "goods" at all. It is only those goods,
which are otherwise liable to be included in a given Tariff Item but are
expressly excluded from it, which would fall under the residuary Tariff Item
68. These exclusions are for the purpose of correct assessment of these C
excisable products. Such excluded items, if they are not covered by any other
item, would fall under the residuary Item 68 by virtue of the Explanation to
Tariff Item 68. The exclusion of aluminium dross and skimmings from
'Waste and Scrap" of Aluminium in Tariff Item 27 is not of this nature.
Dross and skimmings are excluded because they are not goods as under- D
stood in commercial parlance. [507-H, 508-A to E, GI
...
Khandelwal Metal and Engineering Works and Anr. Etc. v. Union of
India and Ors., [1985] Supp. 1 SCR 750, distinguished.

Indian Cable Co. Ltd. v. Collector of Central Excise, Calcutta, [1994] E
74 ELT 22 SC and A.P. State Electricity Board v. Collector of Central Excise,
Hyderabad, [1994] 70 ELT 3 SC, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4676 of
1995 Etc. Etc.
F
From the Judgment and Order dated 24.2.1986 of the Bombay High
Court in M.P. No. 1661 of 1975.

M. Chaodrashekharan, Additional Solicitor General, Soli J. Sorabjee,
AB. Divan, N.K. Bajpayee, Vijay Kumar, Ms. Sushma Suri, S.D. Sharma, G
Pramod Dayal, Ravinder Narain, Ms. Amrita Mitra, Rajan Narain, Ms.
Punita Singh, Ms. Sonu Bhatnagar, Ashok Sagar, P.H. Parekh, Sunil Dogra,
Ms. Bina Madhavan, Aruneshwar Gupta and S. Ganesh for the appearing
parties.

The Judgment of the Court was delivered by H
500 SUPREME COURT REPORTS (1995) 3 S.C.R.

A MRS. SUJATA V. MANOHAR, J. All these appeals have been filed
at the instance of the Union of India and the Collector of Central Excise.
The respondents in all these appeals manufacture aluminium products such
as aluminium sheets, aluminium shapes, aluminium angles etc. out of
aluminium ingots. In the process of manufacture, at the stage of processing,
B dross and skimmings arise and accumulate in the furnace in the shape of
ashes as a result of oxidisation of metal. These ashes are formed mainly
during the melting down of aluminium ingots and, to some extent, during
subsequent treatment and holdin.; operation of molten baths in the furnace.
Dross consists mostly of oxides, non-metallic material and other foreign
material which separates or forms during melting and holding operations,
C and finally accumulates on the surface of the molten bath. It has to be
removed. Skimmings are mostly thin oxide layers obtained by skimming a
molten bath prior to metal transfer on casting. The skimming operation is
essential to the manufacturing process. Dross and skimmings, according to
the assessees, represent a process-loss or a melt- loss. Al:uninium dross
D and skimmings contain a certain amount of metal from which they come.
l!ut they lack not only metal body but also metal strength, formability and
character. Such dross and skimmings are, therefore, distinct from scrap
which is a metal of as good a quality as the prime metal form· which it
arises. In all these appeals, we are concerned with the question of exigibility
of such aluminium dross and skimmings to excise duty.
E
CIVIL APPEAL NO. 4676 OF 1995
(Arising out of S.L.P. (C) No. 11315 of 1987)

Delay condoned.

F Special leave granted.

In this appeal, we are concerned with the question of levy of excise
duty on aluminium dross and skimmings removed by the' assessees between
September 1972 and March 1973.

G The aluminium ingots, which were the raw material obtained from
outside and used by the assessees, and the aluminium sheets which were
manufactured by the assessees out of these ingots, were both liable to
payment of excise duty under Tariff Item 27 as it stood at the relevant time.
It is an accepted position that Tariff Item 27 as it stood at the relevant time
H made no mention of aluminium dross and skimmings. The Excise Tariff
U.0.1. v. ALUMINIUM CO. (SUJATA V. MANOHAR,J.] 501

also did not have, at the relevant time, Tariff Item 68 which is a residuary A
item covering goods not elsewhere specified (but excluding certain goods
set out therein). Item 68 was introduced in the Central E.<cise Tariff only
in 1975. Aluminium dross and skimmings were, therefore, not excisable at
the relevant time.

The assessee,, cleared their manufactured product viz. aluminium B
sheets by following 01e prncedure under Rule 56A of the Central Excise
Rules, 1944. This Rule provides for a special procedure for movement of
duty-paid material and component p_arts fo1 use in the manufacture of
finished excisable goods. The assessees claimed credit for the duty paid on
aluminium ingots while clearing a \uminium sheets manufactured by them C
They also cleared aluminium dross and skimmings without payment of any
excise duty.

By a show-cause notice dated 7.2.1974 the assessees were, however,
asked to pay excise duty on dross and ,,kimmings removed by them bel\Veen
September 1972 and March 1973. This show-cause notice was confirmed D
by the Assistant Collector. However, the Appellate Collector of Central
Excise allowed the appeals preferred by the assessees. A revision preferred
by the excise authorities was, however, :•llowed by the Government of India.
This decision was challenged by the assessees by filing a writ petition which
was allowed by a learned Single Judge of the High Court. An appeal before E
the Division Bench of the High Court was summarily dismissed. The
present appeal is filed by the department frum the decision of the Division
Bench of the Bombay High Court upholdi11g the decision of a learned
Single Judge of that Court.

Under Section 3 of the Central Excises and Sai; Act, 1944, there shall F
be levied and collected, in such manner, as may be prescribed, duties of
excise on excisable goods other than salt which are produced or manufac-
tured in India.

"Excisable goods" are defined under Section 2( d) as meaning "goods G
specified in the First Schedule as being subject to a duty of excise .... " Since
aluminium dross and skimmings were not covered by Itel!' 27 of the First
Schedule, they were not excisable goods as defined in Section 2(d).

Both aluminium ingots and aluminium sheets manufactured out of
ingots are, however, excisable under Tariff Item 27 in the First Schedule. H
502 SUPREME COURT REPORTS (1995] 3 S.C.R.

A Under the Central Excise Rules of 1944 framed under the Central
Excises and Salt Act, 1944, Rnle 56A prescribes a special procedure for
movement of duty-paid materials or component parts for use in the
manufacture of finished excisable goods. In the exercise of powers con-
ferred by sub-rule (1) of Rule 56A, the Central Government has specified
B several excisable goods in respect of which the procedure laid down in
sub-rule (2) of Rule 56A shall apply. The excisable goods so specified
includes aluminium. The relevant provisions of sub-rule (2) as it stood at
the material time provided as follows :

"The Collector may ..........permit a manufacturer of any excisable
c goods specified under sub-rule (1) to receive material or com-
ponent parts of finished product... .... on which the duty of ex-
cise ......... has been paid in his factory for the manufacture of these
goods ............ and allow a credit of the duty already paid on snch
material or component parts or finished product, as the case may
be:
D
Therefore, under sub-rule (2), the assessees were entitled to a credit for
the duty already paid on aluminium ingots, while paying duty on aluminium
sheets. It is not in dispute that the assessees received duty-paid ingots for
the manufacture of aluminium sheets which were excisable goods. Both
E ingots and sheets fall under the same Tariff Item, namely, Item 27. The
assessees were entitled to credit for the duty already paid on the ingots
while clearing the sheets. The assessees accordingly availed themselves of
this credit while clearing aluminium sheets during the relevant period. This
was done by following the procedure laid down under Rule 56A with the
permission of the Excise authorities. During the same period, the assessees
F also cleared aluminium dross and skimmings arising from the process of
manufacture with the permission of the Excise authorities without payment
of any duty.

The show-cause notice of 7.2.1994 was, however, issued by the
G department relying upon the proviso to sub-rule (2) of Rule 56A which is.
to the following effect :

"56A(2):

Provided that no credit of duty shall be allowed in respect of
H any material or component parts used in the manufacture of
U.0.1. v. ALUMINIUM CO. [SUJATA V. MANOHAR,J.] 503
finished excisable goods- A
(1) If such finished excisable goods produced by the manufac-
turer are exempted from the whole of the duty of excise leviable
thereon or are chargeable to nil rate of duty...... "

In other words, the contention of the department appears to be: (1) that B
· aluminium dross and skimmings are finished excisable goods produced by
the assessees which are exempted from the whole of the duty of excise
Jeviable thereon or are chargeable to nil rate of duty, and (2) A propor·
tionate credit should not be allowed to the assessees in respect of the excise
duty paid on that portion of aluminium ingots which "result in the mannfac· C
ture" of aluminium dross and skimmings. This argument proceeds on the
assumption that aluminium dross and skimmings are finished excisable
goods. If one looks at the definition of excisable goods, it is clear that
aluminium dross and skimmings were not in the First Schedule to the
Central Excises and Salt Act, 1944 at the relevant time and are not
excisable goods, finished or otherwise. D

It is also not possible to accept the contention of the appellants that
aluminium dross and skimmings are "goods' or marketable commodity
which can be snbjected to the levy of excise. Undoubtedly, aluminum dross
and skimmings do arise during the process of manufacture. But these are E
nothing but waste or rubbish which is thrown up in the course of manufac-
• ture. The term 'dross' is defmed in The New Shorter Oxford English
Dictionary as :

Dross:
F
"Dregs..... (1) Impurities separated from metal by melting the scum
which forms on the, surface of molten metal.... (2) Foreign matter
mixed with anything..... (3) Refuse, rubbish, worthless matter espe·
cially as contrasted with or separated from something of value."

The ASM Metals Reference Book (2nd Edition, 1983) produced by the G
American Society for Metals defines "dross" as follows :

"The scum that forms on the surface of molten metals largely
because of oxidation but some times because of the rising of
impurities to the surface." H
504 SUPREME COURT REPORTS (1995) 3 S.C.R.

A Mcgraw Hill Dictionary of Science and Engineering (1984 Edition) defines
it as:

"An impurity, usually an oxide, formed on the surface of molten
metal. 11

B Dross and skimmings may contain some small percentage of metal. But
dross and skimmings are not metal in the same class as waste or scrap. It
may be p9ssible to recover some metal from such dross and <kimmings.
They can, therefore, be sold. But this does not make them a marketable
commodity. As learned Single Judge of the Bombay High Court has
C pointed out, even rubbish can be sold. Everything, however, which is sold
is not necessarily a marketable commodity as known to commerce and
which, it may be worthwhile to trade in. Learned Single Judge of the
Bombay High Court, therefore, rightly came to the conclusion that the
proviso to rule 56A was not applicable as aluminiuU:. dross and skimmings
are not excisable goods.
D
The entire quantity of raw material, namely, duty-paid aluminium
ingots procured by the assessees from outside was used in the manufacture
of aluminium sheets. It is nobody's case that the aluminium sheets which
were manufactured by the assessees could have been manufactured out of
E a lesser quantity of aluminium ingots than what was actually used. In the
process of manufacture, dross and skimmings had to be removed in order
that aluminium sheets of the requisite quality could be manufactured. This
does not mean that the entire quantity of aluminium ingots was not used
for the manufacture of aluminium sheets. In the course of manufacture, a
certain quantity of raw material may be lost because of the very nature of
F the process of manufacture or some small quantity of raw material may
form part of wastage or ashes. This does not mean that the entire raw
material was not used in the manufacture of finished ~xcisable products.
An exact mathematical equation between the quantity of raw material
purchased and the raw material found in the finished product is not
G possible, and should not be looked for.

This Court, in the case of Mis. Multimeta/s Ltd. v. Assistant Collector
of Central Excise, Kota and Ors., (1992) 1 SCC 715 has considered an Excise
Notification dated 28th of December, 1963 bearing No. GSR 1957 which
gives a credit, in respect of duty paid on copper and copper alloys in any
H crude form used in the manufacture of copper products. This Court
I
... U.0.1. v. ALUMINIUM CO. [SUJATA V. MANOHAR, J.) 505

observed that in the process of manufacture, a portion of the copper and A
copper alloys in crude form was lost. The Court negatived the contention
of the Revenue that the rebate granted should relate only to the copper
and copper alloys content of the final product and, therefore, only that
quantity that was found in the finished product would get relief, and not
the entire quantity which was put in the process of manufacture. This Court B

... held that it was the duty paid on the input material that was relevant and
not the duty referable lo the ultimate component of the final product. It
said:

"So far as the manufacturer is concerned he has used copper and
ccpper alloys of a particular quantity in the manufacture of pipes C
and tubes. The 'manufacturing loss' forms part of the raw material
'used' in the manufacture though not reflected in the final product.
The relief, as we understand the notification, that has to be given
to the manufacturer was in respect of the duty already paid on the
raw material used in the manufacture of the final product. That is, D
the relief has to be given to the extent of the duty paid on the input
material and not with reference to the quantity which ultimately
forms part of the final product."

· The Court also relied, in this connection, on the ratio of the judgment of
this Court in M/s. Swadeshi Po/ytex Ltd. v. Collector of Central Excise, [1990] E
2 sec 358.

In the case of M/s. Swadeshi Polytex Ltd. (supra) this Court was
ccncerned with Notification no. 201 of 1979. Prior to April 11, 1981, it
provided for set off of duty on all excisable goods which required for their F
/ · manufacture the use of duty-paid goods falling under Tariff Item 68. This
Notification also was similar in terms to the provision of Rule 56A. This
Court ccmpared the provisions of Rule 56A with the provisions of the
above Notification and held that the two provisions were similar. The
assessee in that case used duty-paid ethylene glycol in the manufacture of
polyester fibre. As a result of chemical reaction, a non-excisable by-product G
methanol emerged in the course of manufacture which used up a part of
ethylene glycol. This Court said that although a part of the ethylene glycol
was contained in the by-product methanol, yet the credit of duty paid on
ethylene glycol could not be reduced to the extent of the ethylene glycol
contained in methanol. It further said that .it was clear that ethylene glycol H
506 SUPREME COURT REPORTS [1995) 3 S.C.R.
A was used in the manufacture of polyester fibre, that methanol arises as a
part and parcel of the chemical reaction during the process of manufacture
and that it is not possible to use a lesser quantum of ethylene glycol for
producing a given quantity of polyester fibre. The appellants had not used
excess ethylene glycol want only to produce methanol. They were entitled
B to full credit for the duty paid on ethylene glycol. This Cour~ also approved
of the decision of the Bombay High Court in the case of Indian Aluminium
Co. Ltd. andAnr. v.A.K Bandyopadhyay and Ors., [1980) 6 ELT 146 Born.
from which judglltent the present appeal is filed.

In the premises, we agree with the reasoning and conclusion of the
C learned Single Judge of the Bombay High Court from whose judgment an
appeal was dismissed by a Division Bench of the Bombay High Court and
which judgment is under challenge before us. The appeal is, therefore,
dismissed with costs.

CIVIL APPEAL NOS. 1423, 2759 AND 3982 OF 1987
D
The manufacturers in all these appeals were also engaged, at the
material time, in the manufacture of aluminium goods out of aluminium
ingots. Their cases, however, are a little different from the case of Indian
Aluminium Co. Ud. because we are concerned with the manufacture of
E these aluminium goods during a subsequent period when there were some
changes in the Excise Tariff.

Under Tariff Item 27 "Waste and Scrap of Aluminium' is one of the
items exigiblc to excise duty. An Explanation was added to Tariff Item 27
by the Finance Act, 1981 to the following effect :
F
'27 : Explanation: (1) 'waste and scrap' means waste and scrap
metal fit only for the recovery of metal by remelting or for use in
the manufacture of chemicals, but docs not include sludge, dross,
scalings, skimmings, ash and other residues;'
G Tariff Item 68 which was introduced for the first time in 1975 was as
follows:

"68: All other goods, not elsewhere specified, but excluding - .

H (a) xx xx
U.0.1. v. ALUMINIUM CO. (SUJATA V. MANOHAR, J.] 507

(b)xxxx A
(c) xx xx

Explanation :- For the purposes of this Item, goods which are
referred to in any preceding Item in this Schedule for the purpose
of excluding such goods from the description of goods in that item B
(whether such exclusion is by means of an Explanation to such
Item or by words of exclusion in the description itself or io any
other manner) shall be deemed to be goods not specified io that
Item."

The question in all these appeals /e1ates to the exigibility of C
alumioium dross and skimmings to excise duty by reason of Item 68 and
its Explanation read with the Explanation to Item 27. It is contended by
the appellants that the Explanation to Item 27 makes it clear that dross
and skimmings are not included in the Item "Waste and Scrap of
Aluminium". Since these are expressly excluded from Item 27, these must D
be included in Item 68 as the Explanation to Item 68 makes it clear that
goods which are referred to io any preceding Item in th~ Schedule for the
purpose of excluding them from the description of goods in that Item, will
have to be iocluded in Item 68.

The entire argument proceeds on the basis that aluminium dross and E
skimmings are excisable goods. Otherwise the question of their ioclusion
in Tariff Item 68 does not arise. The appellants have emphasised the fact
that aluminium dross and skimmings are capable of being sold. Hence they
must be considered as marketable goods. Sioce they arise in the course of
manufacture, the duty of excise can be levied on such goods. The founda- F
tion of the argument rests on the assumption that aluminium dross and
skimmiogs are marketable goods. For reasons which we have set out
earlier, it is not possible to consider aluminium dross and skimmiogs as
"goods" or as a commercial and marketable commodity. Dross and skim- .
mings are merely. refuse or ashes ·given out io the course of manufacture, G
io the process of removing impurities from the raw material. This refuse is
quite different from wasie and scrap which is prime metal io its own right.

The Explanation to Item 27 is not for the purpose of separating
certaio types of wastes and. scrap from the maio Item of "Waste and Scrap
of Aluminium" and thus makiog it exigible to tax under Item 68. The H

'
508 SUPREME COURT REPORTS [1995) 3 S.C.R.
A Explanation to lttm 27 merely excludes from waste and scrap certain
residues or rubbish which cannot be categorised as "goods" at all. It is only
those goods, which are otherwise liable to be included in a given Tariff ,
Item, but are expressly excluded from it, which fall under the residuary .
Tariff Item 68. The Customs, Excise and Gold (Control) Appellate
B Tribunal in its order, which is the subject-matter of Civil Appeal No.
1423/87, has given several examples of this kind of exclusion which is
covered by the Explanation to Tariff Item 68. It has given the illustration
of a motor specially designed for use in a gramophone or record player
which is expressly excluded from Tariff Item 30 which covers electric
motors. These excluded motors are also motors, but because of some
C peculiar characteristics imparted to them in their manufacture, they are
excluded for assessment under Tariff Item 30. Similarly, slotted angles and
channels made of steel which can be used as part of steel furniture, are
expressly excluded from Tariff Item 40 which covers steel furniture and
•
parts. These exclasions are for the purpose of correct assessment of these
D excisable products. These excluded articles are "goods' in theU. own r;ght,
and are openly bought and sold in the market. Such excluded items, if they
are not covered by any other item, would fall in the residuary Item 68 by
virtue of the Explanation to Tariff Item 68.

E The exclusion of aluminium dross and skimmings from "Waste and
Scrap of Aluminium" in Tariff Item 27 is not of this nature. Dross and
skimmings are excluded because they are not even waste or scrap. They
are not goods at all as understood in commercial parlance. Therefore, they
are not assessable under Tariff Item 68.

F T.he appellants have drawn our attention to the decision in the case
of Khandelwa/ Metal and Engineering Works & Anr. Etc. v. Union of India
& Ors., (1985) Suppl. 2 SCR 750 where this Court has held that brass scrap
which comes into being in the process of manufacture, is a dutiable
commodity. It has said that brass scrap is a well-known marketable com-
G modity and is a by-product of manufacture. This, however, will not help
the appellants in the present appeals because dross and ~kimmings are not
waste and scrap as understood in common or commercial parlance. These
are ashes and impurities and contain only a small percentage of metal
which it may or may not be economical to extract, but its presence results
H in dross and skimmings being sold for a small price.
\

U.0.1. v. ALUMINIUM CO. (SUJATA V. MANOHAR, J.] 509

Reliance was also placed on decisions of this Court in the cases of A
~ Indian Cable Co. Ltd. v. Collector of Central Excise, Calcutta, (1994] 74 ELT
22 SC and A.P. State Electricity Board v. Collector of Central Excise,
Hyderabad, [1994] 70 ELT 3 SC. In the case of Indian Cable Co. Ltd.
(supra), this Court has referred to a number of decisions holding that
marketability is an essential ingredient for holding that an article is dutiable B
or exigible to duty of excise. The article should be capable of being sold
to consumers in the market as it is, without any change. Observations to a
similar effect are made in the case of A.P. State Electricity Board (supra)
where the Court has said that marketability is a question of fact to be
decided in the facts of each case.
c
In our view, it is difficult fo dignify dross and skimmings with the
appellation of a marketable commodity, for reasons which we have set out
above.
In the premises, the appeals fail and are dismissed with costs.
D
K.S.D. Appeals dismissed.