MIS. BALAJI ENTERPRISES, MADRAS versus THE COLLECTOR OF CENTRAL EXCISE, MADRAS

Citation: [1997] SUPP. 1 S.C.R. 53 · Decided: 05-05-1997 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

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MIS. BALAJI ENTERPRISES, MADRAS 
v. 
THE COLLECTOR OF CENTRAL EXCISE, MADRAS 
, MAY 5, 1997 
(S.P. BHARUCHA AND SUHAS C. SEN, JJ.) 
Central Excise Tariff: 
A 
B 
Tariff Items 27(a)(i) and 27(b) as they stood prior to amendment w.e.f. 
1.3.1981-'Aluminium Scrap'-Levy of duty on-Held, 'aluminium scrap' C 
generated in course of manufacture of aluminium containers cannot be 
treated as aluminium in cmde fonn and ta.xed under T./. 27(a)(i). 
Customs, Excise and Gold (Control) Appellate Tribunal-Jurisdiction 
of-Held, T1ibunal should examine the question of law raised before it and 
give proper answer. 
Words and Phrases : 
Word 'cmde' occurring in Tariff Item 27(a)(i) of Central Excise 
Tariff-Meaning of. 
The appellant-assessee, a manufacturer of aluminium containers, 
was required to pay duty on aluminium. scrap. The duty was to be paid on 
the value of the scrap at the rate of 40 percent under Tariff Item 27(a)(i) 
of the Central Excise Tariff. The assessee resisted the levy contending that 
D 
E 
the scraps generated in the course of manufacturing utensils could not be p 
classified under T.I. 27(a)(i). Assessee's case was· that it purchased . 
aluminium ingots .from open market, melted and converted them into 
sl;tbs, then sheets and ultimately in circles; the circles were then converted 
into containers on which duty was paid. In the process of manufacture, 
' 
while converting circles into containers, waste product such as aluminium 
scrap came into existence, which could not be classified uuder T.I. 27(a)(i). G 
Assessee's case was rejected and ultimately the Customs, Excise and Gold 
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(Control) Appellate Tribunal also held against it. Aggrieved, the assessee 
filed the present appeal. 
It was contended for the appellant-assessee that "aluminium scrap" H 
53 
54 
SUPREME COURT REPORTS [1997) SUPP. l S.C.R. 
A left after manufacturing the products like utensils could not be treated as 
"aluminium in any crude form" as described in T.I. 27(a)(i), and as such 
it could not be brought to tax under the said entry. 
B 
c 
Allowing the appeal, this Court 
HELD: 1.1. The aluminium scrap produced by the assessee in course 
of manufacturing utensils cannot be treated as aluminium in crude form 
and classified as such in T.I. 27 (a) (i); and therefore the same could not be 
taxed under T.I. 27 before its amendment on 1.3.1981. [61-B) 
1.2. The 'crude form' of aluminium as described in sub-item (a)(i) of 
Tariff Item 27, will include ingots, bars, blocks, slabs, billets, shots and 
pellets, i.e. the most primary form of the metal. The appellant manufactures 
circles which have been specifically included in T.I. 27(b) which speaks of 
aluminium manufactures. When ingots are converted into circles, the end 
D products or by-products are not treated as aluminium in crude form and, 
as such, the scrap which emerges as a result of further manufacturing 
process, cannot be treated as crude metal. It is an integral part and in-
evitable consequence of the manufacturing process. [57-F-H; 58-B; CJ 
Mis. Khandelwal Metal and Engineeling Works and Anr. v. Union of 
E India & Ors., [1985) 3 SCC 620, relied on. 
F 
Webster Comprehensive Dictiona1y, Intemational Edition, 1984, 
referred to. 
1.3. Besides, by virtue of an amendment, 'Waste and Scrap' has 
specifically been included in sub-heading (aa) of T.I. 27, with effect from 
1.3.1981. The obvious legislative intent was not to tax 'aluminium scrap 
and waste' prior to the said amendment. [58"E; 60-D) 
2. The Tribunal should have examined the question of law raised 
G before it and given proper answer. Whether the scraps generated during 
the course of manufacturing utensils should be treated as 'aluminium in 
crude form' is a question of law that had to be answered fairly and squarely 
by the Tribunal. It really avoided answering the question. The Tribunal's 
jurisdiction is not limited to deciding whether the decision of the 
H departmental authority was perverse or unreasonable. [61-A; 60-H) 
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B. ENIBRPRISES v. C.C.E. [SEN,J.] 
55 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1403 of A 
1987. 
From the Judgment' and Order dated 27.4.87 of the Customs, Excise 
and Gold (Control) Appellate Tribunal, New Delhi in A. No. 40/83. Bl in 
(Order No. 294 of 1987-Bl). 
Krishnan Venugopal and S.R. Setia for the Appellant. 
N.K. Bajpayee, R.S. Rana and P. Parmeswaran for the Respondent. 
The Judgment of the Court was delivered by 
SEN, J. The appellant, Balaji Ent

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