Non-excisability of glass scrap in manufacture: cullet arising during production was held outside Heading 7001.

Broken glass scrap or cullet arising during the manufacture of aerated water from bottles was held not to be excisable merely because it was sold or could fit a tariff description under Heading 7001. The controlling factor was the absence of manufacture: waste glass emerging in the course of production did not become a manufactured product liable to excise duty. The earlier High Court view on broken glass and cullet was followed, and the tariff change did not alter that principle. The demand and penalty therefore could not survive.

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Issues: Whether broken glass scrap arising during the manufacture of aerated water from bottles was classifiable and dutiable under Heading 7001.

Analysis: The scrap was argued to fall within Heading 7001 because it constituted waste and scrap of glass, but the controlling consideration was whether the goods emerged as manufactured products liable to excise duty. The reasoning adopted the view that broken glass or cullet arising in the course of manufacture does not become excisable merely because it is sold or because it is said to fit a tariff description; the decisive factor is the absence of manufacture. The earlier High Court view on broken glass and cullet was followed, and the change in tariff structure did not alter the basic principle.

Conclusion: The scrap did not attract duty under Heading 7001, and the demand and penalty could not survive.

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