New Delhi, Nov 06: Giving a major relief to thermal power plants and all coal-based industries, the Supreme Court has ruled that coal cinder or ash produced by them could not be liable to excise duty and severely criticised the Centre for taking an about turn in its policy in this regard. Dismissing a petition filed by the union government, a bench comprising Justice Ruma Pal and Justice Arun Kumar said cinder or unburnt coal in the furnaces or boilers could not be said to be manufactured or produced so as to enable the revenue department to levy excise duty on it.


Writing for the bench, Justice Kumar said that it was essential that the product sought to be subjected to excise duty should have gone through the process of manufacture.

"Cinder cannot be said to have gone through any process of manufacture, therefore, it cannot be subjected to levy of excise duty," he said.

The apex court said the onus was on revenue department to show that a particular good has gone through the process of manufacture to make it liable for excise duty. "They have done nothing to discharge this onus," it added.


The bench noted that department of central excise on June 6, 1975, had issued a notification according to which coal ash left out in burning of coal would not attract duty for the reason that in burning of coal as fuel, resulting in coal ash as a waste product, no manufacturing process was involved.

Bureau Report