CESTAT grants relief to Tata Motors by ruling non-liable of ‘Excise Duty’ on aluminium dross and skimming in manufacturing of aluminium parts for motor vehicles

The financial capital of India, Mumbai’s bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) granted relief to Tata Motors by ruling non-imposing of excise duty on the development of aluminium dross and skimming during the production of aluminium castings/parts of motor vehicles.

The issue of the Tata Motors was raised before the bench comprising Judicial Member Mr Ramesh Nair and Technical Member Mr CJ Mathew was whether the aluminium dross and skimming emerging out of the production of aluminium motor vehicle parts amounts to manufacture and liable to duty or otherwise.

The department raised a claim that the above activity aggregate to manufacture and therefore, liable towards payment of excise duty.

However, rejecting the above contention, the CESTAT bench witnessed 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 before 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 aluminium dross skimming generated unavoidably during the manufacture of aluminium products.”

The bench held in favour of the appellant-Company by referring to the precedents: “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 aluminium dross and skimming in the manufacture of aluminium castings/parts of motor vehicles does not amount to manufacture. Accordingly, it is not liable to duty.”