Marketability test for scrap goods: defective and test-returned tyres were not liable to excise as scrap.

Tyres that emerged from the mould without meeting quality standards, and tyres issued for testing and later returned under the relevant notification, were not treated as scrap for central excise purposes because they were not marketable. The Court applied its earlier view that marketability is essential before goods can fall within the scrap entry, so defectiveness or prior testing use alone did not attract duty on that basis. The tyres were therefore outside the scrap category and not exigible to central excise duty as scrap.

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Issues: Whether tyres coming out of the mould without conforming to quality standards, and tyres issued for test and returned after testing under the relevant notification, were to be treated as scrap liable to central excise duty.

Analysis: The issue was held to be covered by the Court's earlier decision that such tyres were not marketable. Since marketability is essential to treat the goods as scrap for excise purposes, tyres of this kind could not be brought within the scrap entry merely because they were defective or had been used for testing.

Conclusion: The tyres were not liable to be treated as scrap and were not exigible to central excise duty on that basis.

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