TMI Blog1983 (12) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... from 1-3-1978. The lower authorities have not accepted their claim and have held that scrap rubber is chargeable to duty under Item 68. The appellants stated before us that scrap rubber was an automatic, involuntary and unavoidable arising in the course of manufacture of tyres and tubes. They sold a part of the rubber scrap to kabaris and whatever portion was left unsaleable was consumed within their factory by burning. They relied on the Supreme Court judgment in the DCM case to say that taxable event for levy of excise duty was manufacture of goods and since they did not intend to manufacture rubber scrap and on the contrary it arose automatically as a process waste, no manufacturing activity could be said to have taken place in regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials into tyres and tubes and similarly into scrap rubber. The process involved was a process of manufacture, according to the test laid down by the Supreme Court in the DCM case. Further scrap rubber was goods according to the test laid down by the Supreme Court in South Bihar Sugar Mill case as it was sold by the appellants to others and ultimately it was used for making hard rubber products such as cycle brakes and paddles and shoe soles. The Supreme Court had held that to become goods an article must be something which can ordinarily come to the market to be bought and sold. Scrap rubber thus satisfied this definition. The Department s representative sought to distinguish the Indian Aluminum Company case saying that scrap rubber o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the anomaly related to a short period only (1-3-1980 to 30-6-1980) and that since 1981 the appellants had been paying duty on rubber scrap under Item 68. 4. In a brief rejoinder, the appellants stated that baggasse, glass lumps and saw dust were distinct products while their rubber scrap was only a process waste which was sold to kabaris or just burnt. They also stated that rubber scrap was not specified anywhere in the Central Excise Tariff. 5. We have carefully considered the matter. We agree with the Appellate Collector that as between the raw materials like raw rubber, chemicals and yarn etc., on the one hand and rubber scrap on the other, labour and manufacturing activity is involved and that rubber scrap is a different arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... useful articles. Further, in order to be taxable under Item 68, it is not a condition that the articles must be finished products. Thirdly, as against this judgment, there is the subsequent Division Bench judgment of the Allahabad High Court in Oudh Sugar Mills case wherein the Court categorically held that the word production in Section 3 of the Act was used in juxtaposition with the word manufacture and obviously referred to finished and semi-finished articles made from raw materials and, therefore, any by-product or intermediate or residual product in the manufacture of particular goods would be covered by the word production . We are in respectful agreement with this judgment of the Allahabad High Court. We find no authority to sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The facts of that case are different from the facts of the present case before us inasmuch as the starting raw material of the appellants is not rubber scrap but raw rubber, various chemicals and yarns etc., and, therefore, they cannot claim that their rubber scrap is arising out of rubber scrap. 6. Applying the combined ratio of the Supreme Court judgment in the DCM and South Bihar Sugar Mills cases, and the Allahabad High Court judgment in the Oudh Sugar Mills case and also consistent with the view taken by us earlier in the cases relating to bagasse, glass lumps and saw dust cited by. the Department s representative, we hold that rubber scrap arising in the appellants factory was liable to duty under Item 68 of the tariff. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
