ORDER
G. Sankaran, Sr. Vice-President
1. The facts giving rise to this appeal are that M/s. Gayatri Glass Works (the respondents) cleared from their factory “Bhagar”, i.e., molten and broken glass. In view of the changes in the description of Item No. 23A(4) of the Central Excise Tariff Schedule (CET) with effect from 1-3-1979, the Assistant Collector of Central Excise, Agra, considered that the aforesaid “Bhagar” also attracted duty. Accordingly, after holding adjudication proceedings, he passed an order on 1-7-1981 demanding Rs. 83,244.00 from the respondents on account of “Bhagar” cleared during the period from 1-3-1979 to 31-3-1980 without payment of duty. In appeal, the Collector (Appeals) set aside the Assistant Collector’s order by holding that broken glass was a waste material generated during the process of manufacture of articles of glass and, therefore, not excisable. It is this order that is challenged by the Collector of Central Excise, Kanpur, in the present appeal.
2. The respondents did not appear during the hearing. However, they had furnished certain submissions and expressed their inability to be present during the hearing. We have, accordingly, heard Shri Balbir Singh, Sr. D.R., for the appellant and perused the records.
3. The learned Sr. D.R. relied on this Tribunal’s decision in the case of Collector of Central Excise, Kanpur v. Hindustan Scientific Glass & Fancy Glassware Works and Anr., 1985 (21) ELT 195, in support of the contention that during the period from 1-3-1979 “Bhagar” was liable to duty under Item No. 23A(4), CET. In that case, the Tribunal had relied on the ratio of its earlier decision in the case of Super Tyres (Pvt.) Ltd. v. Collector of Central Excise, Delhi [1984 (3) ETR 305] holding that rubber scrap arising in the course of manufacture of tyres and tubes were “goods” and liable to excise duty under Item No. 68, CET. Applying the ratio of the said decision, this Tribunal in the case of Hindustan Scientific Glass Works held that since “Bhagar” was different from its raw materials viz. silica sand, soda ash and chemicals, the considerations that it was the transformation result of employment of labour and energy and that it was known in the trade as broken glass, waste glass etc., it was “manufactured” goods liable to duty as glass under Item No. 23A(4), CET, with effect from 1-3-1979.
4 But we find that the Delhi High Court in a recent judgment in Modi Rubber Ltd. and Anr. v. Union of India and Ors. 1987 (29) ELT 502 has ruled that waste or scrap obtained not by a process of manufacture, but in the course of manufacturing the end product is not excisable. The goods in that case were waste/scrap obtained in the course of manufacture of tyres, tubes, flaps and other rubber products. In the course of manufacture, quantities of rubber compund (required for manufacture of the aforesaid goods) are rejected due to defects such as wrong mixing or over-heating. Also, at various stages of manufacture, quantities of rubber cuttings emerge. Further, sub-standard and defective goods are destroyed by cutting and punching. All these waste/scrap were claimed to be non-excisable by the petitioner whereas the department contended that they were excisable under the residual Item No. 68, CET. The Court, after observing in para 7 of the report that the result of conscious human labour, treatment and manipulation was the end product which came into existence on completion of the manufacturing process, viz. tyres, tubes, flaps, and other rubber products, observed in para 8 as follows:
“8. It cannot, however, be said that waste/scrap is the result of any treatment or any labour or any manipulation by the petitioner Company whereby a new and different Article emerges. At various stages of the manufacture of tyres, tubes, flaps and other rubber products which are admittedly goods manufactured, rubber cuttings and waste is generated and comes into existence. The process whether essential or incidental or ancillary to fall within the ambit of the expression ‘manufacture’ is one which must have some relation to the manufacture of a finished product. The waste/scrap is obtained not by any process of manufacture but in the course of manufacturing process to produce the end-product of tyres, tubes, flaps etc. The waste/scrap is obtained in the course of manufacture and not out of manufacture of the end-product . In our opinion, it is not as a result of manufacture, because no one would produce any such degrading or even inferior thing. If the raw material of rubber compound has undergone some change in the process of manufacture so as to turn into waste or scrap, it cannot be equated with any finished product. There is a change but every change in the raw material is not manufacture. There is no transformation in case of waste/scrap of a new and different Article. No one has brought into existence a new substance having a distinctive name, character or use.”
5. The observations of the Bombay High Court in Indian Aluminium Co. Ltd. v. A.K. Bandopadhyay and Ors., 1980 ELT 146 (para 24 of the report) on the excisability of dross and skimmings thrown up in the course of manufacture of aluminium sheets from ingots are also apposite. The Court said that dross and skimmings were not the result of treatment, labour or manipulation whereby the end-product is dross and skimmings. They were merely the refuse or scum or rubbish thrown out in the course of manufacture of the finished product, namely, aluminium sheet. Nor were they a by-product. The Court observed that almost anything could be sold for a price but this circumstance would not alone be conclusive of the excisability of the product. To the same effect are the Delhi High Court’s observations in para 11 of its judgment in the Modi Rubber case (supra). The Court further noted that wherever the legislature sought to tax waste or scrap, it specifically provided for the purpose, as for example, in Item Nos. 18-IV, 15A. No such provision exists in the case of rubber scrap under Item No. 16, CET.
6. All the aforesaid observations apply with equal force in the present case with reference to “Bhagar”. The Tribunal’s decision in the case of Hindustan Scientific Glass & Fancy Glassware Works (supra) was rendered long before the Delhi High Court’s judgment in the Modi Rubber Ltd. case (supra). As such, respectfully following the ratio of the Delhi High Court’s judgment, we hold that “Bhagar” were not “goods” for the purpose of levy of excise duty. As such, we uphold the impugned order of the Collector (Appeals) and dismiss the present appeal.