Scrap classification for discarded machinery: wholly unserviceable metal goods fell under the specific schedule entry, excluding the residuary entry.

Discarded, wholly unserviceable machinery and spare parts purchased by weight for melting and recasting were treated as scrap in common parlance and in substance. The Gujarat HC held that such goods answered entry 3 of Schedule B to the Bombay Sales Tax Act as iron and steel scrap, because they were suitable only for reprocessing and could no longer function as machinery. As the goods were specifically covered by that entry, the residuary entry 22 of Schedule E could not apply. The claimed set-off under rule 41 was therefore not available, and the reference was answered in favour of the Revenue.

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Issues: Whether old and unserviceable machinery and its spare parts purchased by the assessee were covered by entry 3 of Schedule B to the Bombay Sales Tax Act, 1959 as iron and steel scrap, or by the residuary entry 22 of Schedule E, so as to entitle the assessee to set-off under rule 41 of the Bombay Sales Tax Rules.

Analysis: The relevant inquiry was whether the goods were of iron and steel and whether they amounted to scrap. The Court held that discarded, unserviceable machinery purchased by weight for melting and recasting, and suitable only for reprocessing, answers the description of scrap. Even on the common parlance test, totally unserviceable machinery is understood as scrap when it can no longer serve as machinery and is treated only as metal for reprocessing. Since entry 3 of Schedule B expressly includes iron scrap and steel scrap, the residuary entry 22 of Schedule E cannot apply where the goods are specifically covered by entry 3.

Conclusion: The machinery and spare parts did not fall under the residuary entry 22 of Schedule E. They fell within entry 3 of Schedule B, and the assessee was not entitled to the claimed set-off.

Final Conclusion: The reference was answered in favour of the Revenue by holding that discarded machinery and spare parts constituted scrap covered by the specific entry in Schedule B, excluding resort to the residuary entry.

Ratio Decidendi: Where discarded and wholly unserviceable machinery is purchased as metal for reprocessing, it is scrap in common parlance and falls within a specific tariff or schedule entry for scrap rather than a residuary entry.

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