ORDER
J.H. Joglekar, Member (T)
1. The appellant use glass bottles in their product-aerated waters. During the processing breakage of bottles occurs. The resultant scrap was cleared on private documents without payment of duty. After issue of the show cuse notice and after hearing the assesses, the Assistant Collector held that the said scrap of glass was classifiable under sub-heading 70001.10 and in this belief-confirmed duty and imposed penalty. The Commissioner (Appeals) having upheld this order, the present appeal is before us.
2. We have heard both sides.
“Cullet and other waste and scrap of glass;-”
“Whereas scrap of glass of all kinds arising from the manufacture of glass also broken articles. Waste glass is generally characterised by its sharp edges”.
4. Whereas scrap in terms of the sub-notes would fall under this sub-heading where “arising from the manufacture of glass”, an argument was made that where such scrap or waste resulted in an activity of manufacture of products other than glass, the heading was not attracted. This argument is interesting. But then the classification under a particular heading cannot be governed by the area in which it occurs. Scrap may occur any where but would be classifiable. under heading 7001.
5. But the case law before us does not support this logical conclusion. The Calcutta High Court was considering the dutiability of broken glass arising in the process of manufacture of glass items in their judgement reported in 1990 (45) [Hindustan Safety Glass works Ltd.. Vs. C.B.E.& C. In paragraph 12 of the High Court held as under:
“After thoroughly scrutinising the pleadings of the parties and looking to the provisions of law, this Court is of the view that in the process of manufacture of several classes of items, the broken glass/cullets and/or Bhagars cannot be construed as items ‘manufactured’ or can be construed as any by-product or having any character of marketability and thus cannot be liable to be levied, under the provisions of Excise and Customs Act, Secondly, this court is of the view that such waste arising out of manufacturing the non-items are not clearly stated in the Tariff Items and there cannot be any demand of excise duty upon such waste materials or items by drawing the analogy with in the meaning of ‘other glass”.
As we observed above a thought had emerged that heading 7001, would be attracted where the scrap occurs in the factory of manufacture of glass and not elsewhere. But in this case the court held that even in the factory of manufacture of glass, such scrap cannot be called as item “manufactured”.
6. Two submissions were made by the Revenue on the reading of this judgement. The first was that the marketability was established in this case inasmuch as the goods were regularly sold. We observed that where the issue was of “manufacturer”, and where the finding was in the negative, mere marketability could not attract duty of excise. On behalf of the appellants the Supreme Court judgement of Supreme Court in the case of UOI Vs. Indian Alluminium Co. Ltd. [1995 (77) ELT 268] was cited where the Court made the observation that merely because a product could be sold it did not make it a marketable commodity . But for the reason mentioned above we need not go into the aspect of marketability.
7. The second observation made was that the Calcutta High Court judgement was in the context of the old tariff. We find that the extract made above deals with the basis issue of manufacture and the effect there of is not reduced merely by the changes in the structure of the tariff.
8. The Calcutta High Court Judgement has been followed in a number of cases by the Tribunal. The identical case is that reported in [1993 (13) RLT 745 (CEGAT-A)]. In that case the assessees were manufacturers of ‘Electric Bulb”, the Tribunal made a distinction between the manufacturers of glass and manufacturers of bulb. In paragraph 4 the Tribunal held in terms that the activity of breaking of glass bulbs did not result in a new product emerging.
9. We thus find in the light of the judgement given by t he Calcutta High Court the impugned order does not survive.This appeal is allowed with consequential relief if any.
(Pronounced in Court)