But Revenue does not relent :
Recently, this issue came up before the Madras High Court from a Show Cause Notice, praying for quashing of the Show Cause Notice.
What is Fly Ash? Fly Ash' is a fine powder recovered from the gases of burning coal during the production of electricity. Fly ash, also known as flue-ash, is one of the residues generated in combustion, and comprises the fine particles that rise with the flue gases. Ash which does not rise is termed bottom ash. In an industrial context, fly ash usually refers to ash produced during combustion of coal. Fly ash is generally captured by electrostatic precipitators or other particle filtration equipment before the flue gases reach the chimneys of coal-fired power plants, and together with bottom ash removed from the bottom of the furnace is in this case jointly known as coal ash. Depending upon the source and makeup of the coal being burned, the components of fly ash vary considerably, but all fly ash includes substantial amounts of silicon dioxide (SiO2) (both amorphous and crystalline) and calcium oxide (CaO), both being endemic ingredients in many coal-bearing rock strata.
The issue before this Court is, whether the 'fly ash' and 'fly ash bricks' included as items in the entries to the First Schedule to the Central Excise Tariff Act, per se make the same exigible to excise duty?
The Revenue made a plea that electricity is not excisable, even though it finds a place in the tariff.
Why I mentioned above the articles we carried is because the High Court considered these very issues.
The High Court made some important observations:
It is clear that to be subjected to levy of excise duty "excisable goods" must be produced or manufactured in India. For being produced and manufactured in India, the raw material should have gone through the process of transformation into a new product by skillful manipulation. Excise duty is an incidence of manufacture and, therefore, it is essential that the product sought to be subjected to excise duty should have gone through the process of manufacture.
Simply because goods find mention in one of the entries of the First Schedule, does not mean that they become liable for payment of excise duty. It is essential that the goods have to satisfy the test of being produced or manufactured in India. Excise duty is a duty leviable only on the manufactured goods.
Fly ash has not gone under the process of manufacture and it cannot be said to be a manufactured product .
The High Court held that "fly ash" does not involve any manufacturing activity and it does not fall under the purview of excisable good so as to attract levy of excise duty.
The Show Cause Notice was set aside in so far as it concerned to the imposition of excise duty, interest and penalty in respect of 'fly ash' .
At least now the Department should stop this ash flying.
For more details of the case, please see Breaking News.