Waste and scrap in manufacture are not excisable unless specifically covered; exemption on PVC scrap depends on strict proof.

Waste and scrap of wires and cables arising as rejects in manufacture are treated as unmarketable material and are not excisable goods unless the tariff specifically covers them; classification under Heading 85.44 therefore does not arise. Scrap of PVC compound is treated as waste, parings and scrap of plastics under Heading 39.15 and is exigible, but entitlement to full exemption depends on strict satisfaction of the notification conditions, including proof that the scrap arose from duty-paid inputs. The exemption question requires factual verification and is remitted for fresh consideration.

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Issues: (i) Whether waste and scrap of wires and cables is excisable and classifiable under Heading 85.44 of the Central Excise Tariff Act, 1985. (ii) Whether scrap of PVC compound is excisable and, if so, whether it is entitled to exemption under the relevant notifications.

Issue (i): Whether waste and scrap of wires and cables is excisable and classifiable under Heading 85.44 of the Central Excise Tariff Act, 1985.

Analysis: The scrap in question was found to be rejects and unmarketable material arising in the course of manufacture, not marketable wires and cables. The tariff heading for insulated wires and cables did not specifically cover waste or scrap of such goods. The departmental circular and accounting instructions also proceeded on the basis that unmarketable rejects arise in manufacture, and the settled principle applied was that waste and scrap are not goods unless specifically brought within the tariff entry.

Conclusion: Waste and scrap of wires and cables are not excisable goods, and classification under Heading 85.44 does not arise. This issue is decided in favour of the assessee.

Issue (ii): Whether scrap of PVC compound is excisable and, if so, whether it is entitled to exemption under the relevant notifications.

Analysis: Scrap of PVC compound falls under Heading 39.15 as waste, parings and scrap of plastics. The Tribunal accepted that it is exigible, but the extent of exemption depended upon whether the conditions of the later exemption notifications were satisfied. The claim for full exemption under the superseding notification required factual verification of the condition that the scrap arose from duty-paid inputs, and no verified material was available before the Tribunal. The proper course was therefore to preserve the classification finding while remanding the exemption question for fresh consideration.

Conclusion: Scrap of PVC compound is classifiable under Heading 39.15, but the claim for full exemption is remanded for factual verification. This issue is partly in favour of the assessee.

Final Conclusion: The appeal succeeds on the non-excisability of scrap of wires and cables, while the exemption question relating to scrap of PVC compound is sent back for fresh adjudication on facts.

Ratio Decidendi: Waste and scrap arising in manufacture are not excisable goods unless the tariff specifically covers them, while exemption notifications must be strictly proved by the claimant in accordance with their conditions.

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