1989 (2) TMI 233 - AT - Central Excise

Summary

Issues:
1. Whether breaking and scrapping defective cement poles constitutes a process of manufacture resulting in excisable goods.
2. Interpretation of previous tribunal decisions regarding remission of duty on defective goods.
3. Determining the stage at which goods can be considered fully manufactured and fit for marketing.
4. Consideration of commercial value and usage of broken poles in the factory premises.

Analysis:
1. The appeal challenged the Order-in-Appeal by the Collector of Central Excise, New Delhi, which held that breaking and scrapping defective cement poles into broken poles did not amount to a process of manufacture resulting in excisable goods. The Assistant Collector had imposed duty and penalty on the respondents, which was set aside by the Collector. The Tribunal examined the process of manufacture where poles developed defects and had to be broken and scrapped, with the broken poles used for ground leveling or as pillars for hedges/fencing.

2. The Tribunal referenced previous decisions to analyze the issue. In one case, it was held that fully manufactured poles drawn for testing were not eligible for remission of duty unless lost or destroyed by natural causes. However, the Tribunal distinguished this case from the present one, emphasizing that the defective poles in question had not reached the stage of completion or marketability. Another decision highlighted that goods must be fit for delivery to be considered fully manufactured, which was not the case with the defective poles being scrapped.

3. The Tribunal considered the stage at which goods can be deemed fully manufactured and fit for marketing. It concluded that the defective poles, due to the developed defects during manufacture, were not ready for marketing and hence not liable for excise duty. The commercial value or usage of broken poles within the factory premises did not change this finding, as the goods had not reached the required stage of completion for marketability.

4. The Tribunal rejected the argument that the broken poles were liable for duty based on a previous case involving 'Bhagar' on scrap or broken glass, where the item had commercial value. In the absence of similar evidence for the broken poles in the present case, the Tribunal upheld the impugned order, ruling that the broken poles were not subject to excise duty. The appeal was dismissed based on the above analysis and findings.