Manufacturing residue is not excisable duty goods merely because it can be sold if it is only waste or rubbish.

Waste or rubbish arising in the manufacture of dextrose monohydrate was held not to be excisable merely because it was saleable. The material cleared from the factory was an admixture of spent residues from several inputs, had lost its decolourising and clarifying properties, and was not a distinct marketable product of the chemical industry. On that reasoning, it was not classifiable under Heading 38.23 of the Central Excise Tariff Act, 1985 and was treated as non-dutiable residue rather than an excisable good.

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Issues: Whether the spent material arising in the manufacture of dextrose monohydrate constituted excisable goods classifiable under Heading 38.23 of the Central Excise Tariff Act, 1985.

Analysis: The material cleared from the factory was found to be an admixture of spent residues from several inputs used in the manufacturing process and not merely spent activated carbon. The sample had lost its decolourising and clarifying properties and was described as rubbish. Mere saleability of such rubbish did not by itself make it marketable goods liable to excise duty. Applying the principle that waste or rubbish thrown up in the course of manufacture is not necessarily excisable, the material could not be treated as a distinct dutiable product of the chemical industry.

Conclusion: The material was not excisable goods and was not classifiable under Heading 38.23; the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded because the disputed residue was held to be non-dutiable rubbish arising during manufacture rather than a taxable excisable product.

Ratio Decidendi: Waste or rubbish generated in the course of manufacture is not liable to excise duty merely because it is saleable, unless it is shown to be a distinct marketable excisable product.

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