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TMI Blog1992 (10) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... Miscellaneous Products of Chemical or Allied Industries" which may also consist of mixtures of natural products but that does not mean that simple mixtures of natural products can be classified under this heading. (b) The appellants, being manufacturers of grinding wheels, are not covered by the expression "Chemical and allied industries" because no chemicals are manufactured by them. (c) Grains arising as scrap in the appellants' factory cannot belong to the family of products listed as being covered by Chapter 38 as can be seen by the Explanatory Notes thereto of the HSN. 3. The appellants claim is that in the course of manufacture of grinding wheels, certain scrap rejections occur. Such scrap wheels cannot be marketed as grinding wheels, which are their end-products. Such scrap wheels are crushed into powder and graded as per mesh size and sold as grains. The further claim is that there are some buyers who buy the graded grains for use in sand blasting, cleaning lithographic plates etc. 4. When the appeal was listed for hearing on 28th September 1992, the appellants sent a Note on their contentions and submitted that the matter may be decided on merits as they would not be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ite nuggets etc. Further the items are bonded with clay which is the binding material. Under Note (2) to Chapter 25, it is clearly stated that heading 25.05 covered only products which have been washed without changing the structure of the product. In the present case, the structure of the product has undergone a change inasmuch as binding material has been added, not only the same have been fired and after firing because of breakage in manufacture of grinding wheels unusable fired product is crushed and powdered and are sold under the various names mentioned above. Therefore, it is not possible to classify the same merely by the predominant composition and the product classifiable under Chapter 25 should be unmixed products but merely crushed, sifted or purified. As such, the contention of the appellants is not correct. Coming to the other conditions that Chapter 38 includes only miscellaneous products of the chemical or allied industries, I find that the heading under 3801 tariff item states only miscellaneous products of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included. Therefore, the objection t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause for mixtures of natural products added within brackets in the Heading itself. The appellants have disputed this part of the observation of Collector (Appeals) and have placed reliance on the judgment of the Madras High Court in the case of Southern Automatic Industries (P) Ltd. v. Assistant Collector of Central Excise, Madras & Another, [1987 (30) E.L.T. 693] in which while dealing with an exemption notification which was amended a number of times, the Hon'ble Single Judge observed in paragraph-3 as under :- "The general rule of construction is that no word should be read in isolation, and its colour and content should be derived from the context in which it occurs and it is the duty of the Court to examine a particular word occurring in a statute in its context, and when I stay "context" I mean the context in which it stands located." 9. In view of these observations, the contention is that the term "allied industries" should be understood as referring to industries which are allied to chemical industries covered by Heading 38.01 and since their industry cannot, by any stretch of imagination be said to be a Chemical or Chemical allied industry, the classification of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stones/minerals. Inasmuch as only the physical processes of crushing and grading are involved in producing the grains from the scrap and no chemical reaction or process or change takes place during the crushing and grading of the scrap, and the scrap itself does not have any specific identity, the grains so obtained will not be amenable for classification under Chapter No. 38, (Sub-heading 3801.90) of the Central Excise Tariff Act, 1985. The Nomenclatures of the grains under reference are indicative of their end-uses/applications or their natural origin as in the case of Flint fines. The grains are generally used by the consumers for sand/shot blasting and similar surface cleaning operations (as in the case of cleaning of lithographic plates) etc. It is, therefore, our submission that these grains will qualify for classification only under Chapter sub-heading No. 2505.00, as had duly been covered by us vide our classification list concerned." 12. It is clear from the above that what stated by being described and claimed in the Classification Lists as "Grains" in March 1986 became "scrap" -not excisable at all - by the time the appeal came to be filed in July 1987. The plea ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts on record. 15. Now we consider the case law on the subject cited by the appellants. The earliest case cited is that of Indian Aluminium Co. Ltd. v. A.K.Bandyopadhyay and Others, [1980 (6) E.L.T. 146], in which Mr. Justice Lentin of the Bombay High Court held that dross skimmings are neither 'goods' nor 'end-products' and observed as under in paragraph - 22 :- "22. It is difficult to come to the conclusion that dross and skimmings are "goods" and the contention to the contrary urged on behalf of the petitioners is not entirely devoid of substance. As stated earlier, dross is nothing but "scum thrown off from metals in something; refuse, rubbish or worthless impure metal" and skimming is "that which is removed or obtained from the surface by skimming". These are nothing but "ashes" resulting in the process of the manufacture of aluminium sheets from aluminium ingots. In Union of India v. Delhi Cloth and General Mills Co. Ltd., A.I.R. 1963 SC 791 = 1977 (1) E.L.T. (J 199), it was held that "goods" must be something which can ordinarily come to the market and be bought and sold and that the "manufacture" which is liable to excise duty under the Central Excises and Salt Act, 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor have they been so described anywhere by the appellants themselves. Therefore, the ratio of this decision has no application to the present case. 19. The decision of the Tribunal in the case of Swastik Packaging, Bombay v. Collector of Central Excise, Bombay, [1986 (23) E.L.T. 217], deals with the question of levy on aluminium foils once at the plain stage and second time at the printed stage and it is in this context that the Tribunal referred to the concept of manufacture and followed the decision of the Supreme Court in DCM case. That decision is, therefore, not relevant to the consideration of the issue before us in the present appeal. 20. In the case of Toshiba Anand Batteries Limited, Ernakulam v. Collector of Central Excise, Cochin, [1987 (27) E.L.T. 187], the Tribunal was concerned with the question of excisability of a single dry cell battery and it was held that since a single dry leclanche cell of primary cell is capable of producing e.m.f. as a collection of primary cells, it was liable to duty. The ratio of that decision has, therefore, no relevance in support of the contention of the appellant. 21. In the case of Kamath Packaging (P) Ltd. v. Collector of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fulfilled. This Note is as under :- "2. Heading Nos. 25.01, 25.03 and 25.05 cover only products which have been washed (even with chemical substances, eliminating the impurities without changing the structure of the product), crushed, ground, powdered, levigated, sifted, screened, or concentrated by floatation, magnetic separation or other mechanical or physical processes ( except crystallisation), but not products that have been roasted, calcined or obtained by mixing." (Emphasis added) 24. Since the products in the present case have undergone a change inasmuch as binding material has been added and these have also been fired, unusable fired product is crushed and powdered and sold under various names; they are excluded from the purview of Chapter 25. As we have seen, the appellants have not contested these facts nor the reasoning of this finding in their appeal. This being so the goods would go out: of the purview of Chapter 25 on this count alone. 25. We observe that the appellants' contention that Chapter 38 includes only miscellaneous products of the chemical or allied industries has been rejected by Collector (Appeals) on the ground that these also include products consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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