TMI Blog1987 (6) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... rts that scrap was not dutiable. The Supreme Court in its decision quoted by the JDR was only considering the question of countervailing duty; this decision was not relevant to this dispute. He then read the Tariff Item 27, and quoted 1980 E.L.T. 789. In 1980 E.L.T. 146 Indian Aluminium Co. Ltd. another v. A.K. Bandyopadiyay others, the Bombay High Court ruled that dross and skimmings were not goods. He also cited a number of decisions, but they have no relevance; it would take too much time to discuss them. 3. In his Order-in-Original No. V(68)(17)2/76 dated 28.10.1980 the Assistant Collector of Central Excise, Smabalpur records the following paragraph in his finding :- The wires and cables was intended to be manufactured but at times in the process of such manufacturing some portion comes out defective and damaged which is unfit to be used as goods as perfect material or unfit for being reprocured or remade to bring into perfect shape or size. Scraps of wires and cables are nothing but an entangled mass of different sizes and shapes and almost a refuse. Above all, it is damaged and defective for rendering. Its further utility as useless as E.W.C. Therefore scraps of E.W. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copper aluminium, iron, plastic, paper; it is no name to assess a product by; waste, scraps and rejects are not names of goods but names of non-goods, materials that could have been but did not become prime goods. The use of the scrap, says the Assistant Collector, is to be melted, and this is the new use. He perhaps does not know that the prime quality wires can be melted just as quickly, as can the raw material from which they both come. 6. The arguments in favour of assessing the scrap for duty under Item 68 are merely dialectical activities. They have no convincing grounds in law or in technology or in usage. It is not the intention of the law to ensnare every product or non-product or refuse or reject under the catch-all Item 68; I do not think this item was designed for this work. Its very nominative definition suggests that it was designed to cover only goods i.e. products, that a man or a manufacturer employs capital, labour in producing; goods which he plans to put on the market by bestowing on them expenditure of energy and resources and for which he sees a regular customer demand. He devotes his time and his skill to produce prime goods, not scraps and waste. I have h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equally true to say that waste and scrap are the by-products of the manufacturing process. Sub-standard goods which are produced during the process of manufacture may have to be disposed of as rejects or as scrap. But they are still the products of the manufacturing process. Intention is not the gist of the manufacturing process. We have already dealt with this aspect of the matter and do not consider it necessary to elaborate upon it any further. Paragraph 38. The argument of legislative competence of the Parliament is a facet of the same contention. Section 3 of the Act of 1944 brings to duty excisable goods produced or manufactured in India. Section 2(d) of the act defines excisable goods to mean goods which are specified in the First Schedule as being subject to the duty of excise. Therefore, the goods mentioned in the First Schedule will attract excise duty under Section 3 only if they are manufactured in India and not otherwise. Entry 26A(1b) of the First Schedule of the Act of 1974 cannot be held to be beyond the legislative competence of the Parliament because, the pre-condition of the excitability of the articles mentioned therein, namely, waste and scrap, is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the law lists waste and scrap as excisable under the tariff, they became excisable goods to be taxed, if produced in India. 13. Item 68, under which the department wanted to levy M/s. Aluminium Industries scrap, has not received such a confirmation from the court; nor is it an entry of the central excise tariff for imposing duty on waste and scrap as was Item 26A(1b). Because Item 26A(1b) was found lawful entry by the Supreme Court for taxing waste and scrap is not a reason for finding Item 68 similarly lawful. The court gave it, approval to the taxation of waste and scrap in the Khandelwal judgment only because it found an explicit entry waiting for them. So, even if no prudent man will intentionally manufacture waste and scrap, if such waste and scrap are produced, they must be taxed as the legislature has specifically levied a tax on them; and that levy is not unconstitutional. 14. There is nothing of this specificity about Item 68 for scrap, nor can we say that the Supreme Court s decisions allow a levy on scrap under Item 68. It does not; and this was the levy in this case which the factory rightly contests: not a levy on waste and scrap. The Khandelwal judgment does ..... X X X X Extracts X X X X X X X X Extracts X X X X
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