1987 (10) TMI 202 - AT - Central Excise

Summary

Issues:
- Whether "Bhagar" cleared by M/s. Gayatri Glass Works is liable to duty under Item No. 23A(4) of the Central Excise Tariff Schedule (CET).
- Interpretation of the term "manufactured goods" for the purpose of levy of excise duty.
- Application of legal precedents in determining the excisability of waste or scrap generated during the manufacturing process.

Analysis:
1. The case involves a dispute regarding the excisability of "Bhagar" cleared by M/s. Gayatri Glass Works and whether it attracts duty under Item No. 23A(4) of the Central Excise Tariff Schedule (CET). The Assistant Collector of Central Excise passed an order demanding duty from the respondents for the period from 1-3-1979 to 31-3-1980. The Collector (Appeals) set aside the Assistant Collector's order, stating that broken glass was a waste material not excisable. The Collector of Central Excise, Kanpur, challenged this decision in the present appeal.

2. During the hearing, the respondents did not appear but submitted their inability to attend. The appellant relied on a previous Tribunal decision to argue that "Bhagar" was liable to duty under Item No. 23A(4), CET. The Tribunal had previously held that waste materials generated during the manufacturing process could be considered "goods" liable for excise duty.

3. However, a recent judgment by the Delhi High Court in Modi Rubber Ltd. v. Union of India established that waste or scrap generated in the course of manufacturing the end product may not be excisable. The Court emphasized that waste/scrap must result from a process of manufacture to be considered excisable. The judgment highlighted that waste or scrap obtained in the manufacturing process, without transformation into a new and distinct article, may not be subject to excise duty.

4. The Tribunal considered the Delhi High Court's ruling in Modi Rubber Ltd. and other relevant precedents regarding the excisability of waste or scrap. Applying these principles to the case at hand, the Tribunal concluded that "Bhagar" did not qualify as excisable goods for the purpose of levying excise duty. The Tribunal upheld the Collector (Appeals) order, dismissing the appeal brought by the Collector of Central Excise, Kanpur.

5. The Tribunal's decision was based on the principle that waste or scrap generated during the manufacturing process, without undergoing a transformation into a new article, may not be considered excisable goods. The judgment emphasized the distinction between waste materials and manufactured goods for the purpose of excise duty, in line with the legal precedents and interpretations provided by higher courts.

6. In conclusion, the Tribunal's decision in this case aligns with the legal principles established by the Delhi High Court and other relevant judgments regarding the excisability of waste or scrap. By applying these principles, the Tribunal determined that "Bhagar" cleared by M/s. Gayatri Glass Works was not subject to excise duty under Item No. 23A(4) of the Central Excise Tariff Schedule.