1985 (2) TMI 267 - AT - Central Excise

Issues Involved:
1. Liability of broken glass (`Bhagar`) to central excise duty.
2. Applicable tariff item for `Bhagar`.
3. Time bar for recovery of past duties.
4. Classification of `Bhagar` as a manufactured item or process scrap.
5. Consideration of supplementary appeals and condonation of delay.

Detailed Analysis:

1. Liability of Broken Glass (`Bhagar`) to Central Excise Duty:
The primary issue was whether broken glass (`Bhagar`) is liable to central excise duty. The Appellate Collector had previously decided in favor of the respondents, holding that broken glass was a waste material and not excisable. The Department appealed this decision, arguing that `Bhagar` is a material of high value, regularly bought and sold, and used for making glass bottles and other articles. The Tribunal agreed with the Department, stating that `Bhagar` is different from its raw materials and satisfies the definition of "goods" as laid down by the Supreme Court. The Tribunal concluded that `Bhagar` is excisable goods.

2. Applicable Tariff Item for `Bhagar`:
The Department argued that after the amendment on 1-3-1979, item 23-A(4) of the Tariff, which is specific for other glass and glassware, should apply to `Bhagar`. Before this date, the residuary Item No. 68 would apply. The Tribunal agreed, holding that till 28-2-1979, `Bhagar` was classifiable under Item 68, and from 1-3-1979, under Item 23-A(4), as the item became specific to cover any material in the nature of glass.

3. Time Bar for Recovery of Past Duties:
The connected issue was whether the demands for recovery of past duties were partially hit by the time bar. The Department conceded that demands for duty made for the period prior to 5 years from the date of the respective show cause notices would not be sustainable. The Tribunal agreed with the respondents that since the longer time limit of 5 years had not been invoked in the show cause notices, only the normal time limit of six months was available for past recoveries.

4. Classification of `Bhagar` as a Manufactured Item or Process Scrap:
The respondents argued that `Bhagar` was process scrap and not a manufactured article, hence not excisable. The Tribunal, however, held that `Bhagar` is a manufactured item because it is different from its raw materials and involves labor and energy in its transformation. The Tribunal noted that `Bhagar` is regularly bought and sold, fetching considerable value, and thus satisfies the definition of "goods."

5. Consideration of Supplementary Appeals and Condonation of Delay:
The Department initially filed one consolidated appeal but later filed supplementary appeals upon realizing the need for separate appeals. The respondents had no objection to the delay being condoned, and the Tribunal condoned the delay, allowing the consideration of the appeals on merits.

Conclusion:
In the appeals listed at Sl. Nos. 1 to 4, 6, and 7, the Tribunal set aside the impugned Orders-in-Appeal, restored the orders of the Assistant Collector to the extent that they held `Bhagar` as a dutiable material, and restricted the demands for duty to the normal time limit of six months. For the period before 1-3-1979, `Bhagar` was classified under Item 68, and from 1-3-1979, under Item 23-A(4). The matter in Appeal No. 685/83-D listed at Sl. No. 8 was remanded to the Collector (Appeals) for a fresh decision regarding the respondents' plea that the material was trade goods. The Cross Objection listed at Sl. No. 5 was dismissed.

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