Manufacturing waste retains its character on sale, keeping fibre glass cuttings within concessional tax entry.

Fibre glass sheet cuttings sold by a manufacturer were treated as waste products covered by Entry 29 of the February 17, 2000 notification, because goods that become waste in the manufacturing process retain that character when sold, even to another manufacturer or through an intermediary. The controlling test was whether the goods had ceased to be waste at the time of sale; on that reasoning, the cuttings did not lose their identity as waste products and could not be assessed as unclassified goods at the higher rate. The Tribunal's contrary classification was therefore set aside.

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Issues: Whether fibre glass sheet cuttings sold by the assessee were waste products covered by Entry 29 of the notification dated February 17, 2000 and taxable at 5%, or unclassified goods liable to tax at 10%.

Analysis: Entry 29 extended concessional treatment to old, discarded, unserviceable or obsolete machinery, stores or vehicles, including waste products. The controlling test was whether the goods had become waste in the manufacturing process and retained that character when sold. Applying the earlier Division Bench view, waste products of a manufacturer do not lose their character merely because they are sold to another manufacturer, directly or through an intermediary, for use in manufacture of other articles. The fibre glass sheet cuttings sold by the assessee fell within that description and could not be treated as goods having lost their identity as waste products.

Conclusion: The goods were covered by Entry 29 of the notification dated February 17, 2000 and were not liable to be taxed as unclassified goods at 10%.

Final Conclusion: The revision succeeded and the Tribunal's contrary classification was set aside.

Ratio Decidendi: Waste products that arise in the manufacturing process retain their character when sold to another manufacturer, including through an intermediary, unless the statute indicates otherwise.

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