Waste arising in manufacture is not excisable unless it becomes a distinct new product with separate identity and use.

Scrap edge cuttings arising incidentally during the manufacture of transmission and conveyor beltings were treated as waste material rather than excisable goods. Because the cuttings were uneven in width and dimensions, they could not be classified as plates, sheets or similar products under Item 16A(2), and they also did not fall under Item 68. The analysis applies the principle that material produced only as scrap or waste in the manufacturing process does not become a new excisable article merely because it is marketable or may fetch a price; it must emerge as a distinct product with separate identity, character and use.

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Issues: Whether scrap edge cuttings arising from the manufacture of transmission and conveyor beltings are classifiable under Item No. 16A(2) of the Central Excise Tariff Schedule, Item No. 68, or are non-excisable waste material.

Analysis: The goods were found to be uneven in width and dimensions and, on inspection, could not be classified as plates, sheets or similar products under Item No. 16A(2). They arose only as edge cuttings in the course of manufacture of beltings and therefore constituted waste material. Mere ability to find some use or fetch a price in the market did not make them the result of manufacture of a new article with a distinct name, character or use. The reasoning applicable to waste or scrap arising in manufacture supported the view that such material was not excisable goods.

Conclusion: The scrap edge cuttings were not excisable goods and were not classifiable under Item No. 16A(2) or Item No. 68 against the assessee.

Ratio Decidendi: Waste or scrap arising incidentally in the course of manufacture does not become excisable goods merely because it has some marketability or use; it must result from manufacture of a new article with a distinct identity.

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