Composite waste classification under excise turns on the goods as cleared, not on isolating one predominant constituent.

Composite waste from hammered defective dry cell batteries could not be classified as zinc waste and scrap merely because zinc formed part of the composition. Excise classification had to be made on the goods as actually presented for clearance, and in the absence of a tariff entry specifically covering waste and scrap of dry cell batteries, the product was not excisable under the Central Excise Act on a predominant-metal theory. The article was treated as waste arising in manufacture, but duty could not be demanded by isolating the zinc content where no segregation had occurred before sale. The Revenue's demand was set aside and the appeal was allowed.

---

---

Issues: Whether the scrap arising from hammering defective dry cell batteries was classifiable as zinc waste and scrap under Heading 79.02/79.03 and liable to central excise duty, and whether duty could be demanded only on the zinc content of the composite scrap.

Analysis: The scrap arose during manufacture and, having been treated as waste for the purposes of Rule 57D(1), had to be dealt with under Rule 57F(4), including removal on payment of duty if otherwise excisable. However, the goods cleared were not zinc scrap alone but a composite waste of hammered dry cell batteries containing only 16% to 20% zinc, and there was no segregation of zinc before sale. Classification for excise purposes had to be on the basis of the goods as presented, and in the absence of any tariff entry specifically covering waste and scrap of dry cell batteries, the product could not be treated as excisable goods under Section 2(d) of the Central Excise Act, 1944 or classified under Heading 79.02/79.03 merely because zinc predominated in part of the composition.

Conclusion: The scrap of hammer-formed dry cell batteries was not classifiable as zinc waste and scrap and was not liable to duty on the basis adopted by the Revenue.

Final Conclusion: The impugned order was set aside and the appeal was allowed.

Ratio Decidendi: Where the cleared article is a composite waste product and not a separately identifiable tariff item, excise duty cannot be levied by isolating one constituent on a predominant-metal theory; classification must be made on the goods as actually presented for clearance.

---