1998 (7) TMI 166 - AT - Central Excise

Summary

Issues:
1. Whether the fine powdery substance called "Dust Collector Fine" is considered "goods" and excisable under CETA, 1985.
2. If classified as "goods," what would be its appropriate classification under CETA, 1985.

Analysis:

Issue 1:
The primary issue in this case revolves around determining whether the "Dust Collector Fine" is to be classified as "goods" and consequently be subject to excise duty under the Central Excise Tariff Act, 1985. The appellant Revenue contended that the substance, arising during the grinding and polishing of grinding wheels, is indeed goods as it is collected, sold, and possesses abrasive properties. However, the respondent argued that the substance, being a waste collected in a Dust Collector bag to prevent environmental pollution, does not qualify as goods. The Tribunal analyzed the manufacturing process detailed in the circular of CBEC and concluded that the nature of the product, being heterogenous and not consciously manufactured, aligns more with industrial waste rather than goods. The Tribunal emphasized that the mere act of selling an item does not automatically categorize it as goods, especially in cases where the product is waste collected incidentally.

Issue 2:
In the event that the substance is deemed as "goods," the secondary issue pertains to its correct classification under the Central Excise Tariff Act, 1985. The appellant relied on a specific circular for classification under 68.07, while the respondent argued against this classification citing differences in the manufacturing process and nature of the product. The Tribunal, after considering various legal precedents, including judgments related to waste materials in manufacturing processes, concluded that the "Dust Collector Fine" in question falls under the category of industrial waste. Despite the substance being sold for a nominal price, the Tribunal held that it does not qualify as excisable goods under the Central Excise Tariff Act, 1985, as there is no specific sub-heading for waste/scrap of abrasive materials in the Act. Consequently, the impugned order-in-appeal was upheld, and the Revenue's appeal was dismissed.

In summary, the Appellate Tribunal CEGAT, MADRAS, in its judgment, clarified the classification of the "Dust Collector Fine" substance, emphasizing the distinction between goods and industrial waste based on the manufacturing process, nature of the product, and legal precedents related to similar cases. The decision highlighted that the mere sale of an item does not automatically render it as goods, particularly in cases where the product is considered waste. The Tribunal's analysis led to the conclusion that the "Dust Collector Fine" does not qualify as excisable goods under the Central Excise Tariff Act, 1985, and hence, the Revenue's appeal was rejected.