1996 (9) TMI 413 - AT - Central Excise

Issues:
Classification of goods as 'waste and scrap' under Heading 72.04 or as cuttings of tin plates under heading 72.12 of the tariff.

The judgment pertains to an appeal against an order-in-appeal passed by the Collector of Central Excise (Appeals), Ghaziabad. The respondents were clearing T.P. strips as waste and scrap, but the department found that these were sold to traders for manufacturing other products. The Assistant Collector (A.C.) considered the cuttings and trimmings not as waste and scrap but as small sheets/cut pieces based on Section Note 6(a) of Section XV and a relevant circular. The respondents cited a previous order-in-appeal, but the A.C. distinguished it and confirmed the demand. The Collector (Appeals) allowed the appeal, applying the ratio of a previous order-in-appeal in the case of the same factory to the present case.

The main issue in the case revolved around the classification of goods as 'waste and scrap' or as cuttings of tin plates under specific tariff headings. The Departmental Representative (D.R.) argued that since the material was used for manufacturing other products like buttons and toys, it could not be considered waste and scrap but as cuttings of tin plates. The A.C. had held that the goods did not qualify as waste and scrap under the relevant Section Note 6 of Section XV, which defines waste and scrap in the context of metal goods.

Upon analysis, the Tribunal observed that the Section Note 6 had two sub-clauses, with one specifically referring to metal waste and scrap from the manufacture or mechanical working of metals. The qualifying expression 'definitely not usable as such' applied to 'metal goods,' indicating that waste and scrap from metalworking processes should be treated as such. The Tribunal found that the A.C.'s reference to a circular was no longer relevant under the new tariff, as no such condition existed in Section Note 6. The Tribunal also noted that waste and scrap, despite having commercial value, could still be classified as such.

Furthermore, the Tribunal highlighted that the process of manufacturing items from the material in question had not been examined, and the fact that the material arose during the metalworking process was not disputed. However, crucial evidence, including the Order-in-Appeal considered by the Collector (Appeals) and statements from involved parties, was not presented before the Tribunal. The Tribunal emphasized the need to interpret the definition of waste and scrap in Section Note 6(a) in light of their observations and remanded the matter back to the Assistant Collector for reconsideration.

In conclusion, the Tribunal set aside the impugned order and directed a de-novo consideration by the Assistant Collector based on the observations made. The judgment underscored the importance of interpreting the relevant tariff provisions accurately and considering all aspects of the case before making a determination on the classification of goods as waste and scrap or cuttings of tin plates.

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