1989 (5) TMI 69 - HC - Central Excise

Glass & Glassware - Broken Glass/Cullets/Bhagars - Writ jurisdiction - Refund - Limitation - Interpretation of Statute

Issues Involved:
1. Levy of excise duty on broken glass/cullets under Item 23A of the First Schedule of the Central Excises & Salt Act, 1944.
2. Classification of broken glass/cullets as 'goods' or waste.
3. Applicability of Rule 56A of the Central Excise Rules, 1944.
4. Maintainability of the writ petition despite alternative remedies.

Detailed Analysis:

1. Levy of Excise Duty on Broken Glass/Cullets:
The petitioner, Hindustan Safety Glass Works Limited, challenged the levy of excise duty on broken glass/cullets under Item 23A of the First Schedule of the Central Excises & Salt Act, 1944. The petitioner argued that broken glass/cullets are waste products and not 'goods' within the meaning of the Act, thus not subject to excise duty. The Court examined whether broken glass/cullets could be considered manufactured items excisable under the Act. It concluded that broken glass/cullets arising during manufacturing cannot be construed as 'manufactured' items or by-products with marketability, and thus are not liable to excise duty under the Act.

2. Classification of Broken Glass/Cullets as 'Goods' or Waste:
The petitioner contended that broken glass/cullets are waste materials and not goods that can be bought or sold in the market. The Court referred to previous decisions, including the case of M/s. Indian Tube Co. Ltd. v. Collector of Central Excise, where spent sulphuric acid was considered waste and not excisable. The Court determined that broken glass/cullets, similar to waste pickle liquor, do not have independent market value and are not excisable. The Court also noted that broken glass/cullets do not fit within the definition of 'other glass' under Item 23A(4) of the First Schedule.

3. Applicability of Rule 56A of the Central Excise Rules, 1944:
The respondents argued that the petitioner availed proforma credit under Rule 56A for raw materials, and thus, broken glass/cullets could not be removed without payment of duty. However, the Court found that the finished goods of the petitioner were assessed under Tariff Item 68, not Item 23A, as per a Supreme Court decision. Therefore, the proforma credit taken on raw materials was not applicable, and the petitioner was entitled to a refund of the excise duty paid under Item 23A.

4. Maintainability of the Writ Petition Despite Alternative Remedies:
The respondents argued that the writ petition was not maintainable due to the availability of alternative remedies. The Court, however, decided to entertain the writ petition since it had been pending since 1982 and substantial questions were involved. The Court referred to the decision in Associated Pigments Ltd. v. Collector of Central Excise, Calcutta, which supported the view that long-pending writ petitions should be adjudicated on their merits rather than directing the petitioner to seek alternative remedies.

Conclusion:
The Court allowed the writ petition, quashed the impugned orders, and issued a writ of Mandamus commanding the respondents not to levy excise duty on broken glass/cullets under Item 23A or any other item of the First Schedule of the Act. The Court also allowed the petitioner to file for a refund of any excise duty paid, to be considered by the respondents without regard to any limitation period. There was no order as to costs, and all other orders were vacated, allowing the petitioner to withdraw any bank guarantee provided in the matter.

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