1984 (7) TMI 380 - AT - Central Excise

Summary

Issues: Classification of scrap as a manufactured product under Central Excises and Salt Act, 1944.

Analysis:
1. The case involved a revision application under section 36 of the Central Excises and Salt Act, 1944, against an Order-in-Appeal passed by the Appellate Collector of Customs and Central Excise, Madras, regarding the classification of scrap arising during the process of manufacturing tungsten wire and molybdenum wire.

2. The appellants imported wire of higher micron sizes, drew them to finer sizes, and classified the broken pieces as scrap under T.I. 68, CET. The Assistant Collector held that the scrap did not retain the characteristics of the original product and was a manufactured product, rejecting the refund claim. The Appellate Collector also upheld the duty liability on the scrap, considering it as a by-product used in brushes, etc.

3. The appellants contended that the broken bits were rejects/scraps/throwaways and did not undergo a transformation into a new article with distinct characteristics, citing precedents where mere change in form did not amount to manufacture. They argued that the broken bits were not a byproduct or finished product and should not be subjected to duty.

4. The appellant's representative argued that there was no essential difference between the original and ultimate product, and the goods were sold as wire scrap, emphasizing the lack of evidence showing a change in characteristics. They referred to a decision stating that filaments continue to be tungsten and cannot be treated as parts of lamps.

5. The Departmental Representative asserted that duty was paid on the finished product, indicating no dispute regarding manufacture. They argued that the process of drawing and coiling altered the characteristics of the wire, making it brittle. They contended that the scrap occurring during coiling was dutiable as part of the end product.

6. The Tribunal acknowledged that the scrap in question was processing scrap arising during manufacturing but found it challenging to equate the scrap with the end product under T.I. 68. Consequently, the appeal was allowed, and relief was limited to six months from the date of payment in accordance with Rule 11, modifying the earlier order partially.