TaxTMI 
TaxTMI 
1991 (10) TMI 131
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....azed tiles" and claimed the same as waste matter under Rule 50 of the Central Excise Rules. Another Show Cause Notice was issued on 7-10-1983 proposing classification under TI 23B(3). The Assistant Collector vide his order dated 13-12-1983 classified the product under this Heading. The Collector (Appeals) set aside the order-in-original holding that the broken glazed tiles were not excisable under Rule 50. Hence these appeals by the Department. 3. It is an admitted position that broken pieces of glazed tiles arise in the course of manufacture of glazed tiles. The Hon'ble Supreme Court, in the case of Khandelwal Metal and Engineering Works [1985 (20) E.L.T. 222 SC] has held that "the production of waste and scrap is a necessary incident of the manufacturing process. It may be true to say that no prudent business man will intentionally manufacture waste and scrap. But it is equally true to say that waste and scrap are the by-products of the manufacturing process. Sub-standard goods which are produced during the process of manufacture may have to be disposed of as "rejects" or as scrap. But they are still the products of manufacturing process". It is necessary to note carefully that ....
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.... on waste and scrap. The Khandelwal judgment does not support this levy. In 1987 (29) E.L.T. 502 (Del.) [1987 (12) ECR 850 (Delhi)] (Civil Writ Petition No. 214/1982 decided on 8-12-1986) re : Modi Rubber Limited, the High Court at New Delhi dealt with just this problem. The waste and scrap of rubber tyre products were assessed by the department under Item 68. The court noticed that Item 15A had specific heads for waste and scrap, and Item 18 for non-cellulosic waste; but Item 16 for Tyres had none. The court observed that when the legislature wanted to cover waste or scrap arising in manufacture it has been specifically provided in the tariff items. After a thorough analysis, the court ruled in para 16 that waste and scrap obtained in the course of manufacture are not goods, and that there was no event of manufacture of waste or scrap." Hence the order of assessment under TI 68 on aluminium waste and scrap was set aside. 4. In the case of M/s. Indian Aluminium Company Ltd. v. Collector of Central Excise, Belgaum [1987 (31) E.L.T. 158 (Tri.) = 1987 (12) ECR 1192 (Tri.)] the Tribunal held that aluminium dross and skimmings are not goods excisable to duty under Item 68. The Tribun....
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....ision in the case of M/s. Seshasayee Paper and Boards Ltd. v. Collector of Central Excise, Madras and Others reported in 1987 (28) E.L.T. 258 was delivered prior to the Delhi High Court Division Bench decision in the Modi Rubber Ltd. The Delhi High Court's judgment which is later in point of time as well as a Judgment of a Division Bench is to be preferred to a Single Judge's decision of the Madras High Court. 8. In the light of the above discussions and the various High Courts' and Tribunal's decisions (supra) we hold that waste and scrap of glazed tiles are not excisable, and are, therefore, entitled to the benefit of the provisions of Rule 50 of the Central Excise Rules, 1944. 9. We uphold the impugned order and reject the appeals. 10. [Order per: N.K. Bajpai, Member (T)]. -1 have seen the order written by Ms. Jyoti Balasundaram, learned Member (Judicial) and, while I respectfully agree with her conclusions, I consider it necessary to examine certain other aspects of the matter and record my reasons for reaching the same conclusion. 11. Shri L.C. Chakraborty, the learned SDR had, besides placing reliance on the judgment of the Supreme Court in the case of Khandelwal Metal & ....
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....21) (SC)] and South Bihar Sugar Mill's [1978 (2) E.L.T. (J 336) (SC)] cases and by the Allahabad High Court in Oudh Sugar Mills [1982 (10) E.L.T. 937 (All.)] case. During his arguments, Shri Chakraborty, learned SDR, had submitted that based on the analogy of broken glass as held by the Tribunal in this case, if broken tiles are not held classifiable under Item 23B(3), then they should alternatively be held to be classifiable under Item 68 on the ground that broken tiles is not waste; nor is it a bye-product. He had referred to the observations of the Supreme Court as contained in paragraph 34 of its judgment in Khandelwal's case (supra). He had also cited the decision of the Madras High Court in the case of Seshasayee Paper & Boards Ltd. v. Collector of Central Excise & Others, [1989 (28) E.L.T. 258 (Mad.)], in which it was held that causticising lime sludge manufactured out of paper, even though a scrap, was excisable in view of the decision of the Supreme Court in Khandelwal's case. 13. It appears to me that the pronouncement which comes nearest to the point at issue before us is the decision of the Tribunal in Hindustan Scientific Glassware's case (supra). While broken glass o....