Manufacture test in excise law bars duty on worn-out conveyor belt scrap; mere sale does not make it excisable.

Scrap arising from worn-out conveyor belts used in a steel mill was held not to be excisable because central excise duty applies only to goods resulting from manufacture, and mere sale of removed worn-out material does not create a manufactured product. Note 6 to Chapter 40 was held inapplicable because it concerns waste arising from manufacture of rubber products and does not bring such scrap within the charging scheme. The scrap was therefore not liable to central excise duty and could not be classified under the impugned heading.

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Issues: Whether scrap arising from worn-out conveyor belts used in a steel mill is excisable and classifiable under sub-heading 4004.00 of Chapter 40.

Analysis: Central excise duty is attracted only when goods result from manufacture. Scrap of conveyor belts, as removed worn-out material, is not a manufactured product merely because it is sold. Note 6 to Chapter 40 does not alter this position, since it pertains to waste arising from manufacture of rubber products and does not bring such scrap within the charging scheme. The issue was also covered by the earlier Tribunal decision relied upon.

Conclusion: The scrap of conveyor belts was not liable to central excise duty and could not be classified for duty under the impugned heading.

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