Per G.A. Brahma Deva, Member :

The dispute is in respect of the following items :-

1. Mutilated tyres, tubes and flaps

2. Rubberised fabric cut pieces

3. Scrap rubber compound

4. Floor Sweeping

5. Bead cuts from tyre

6. Rubberised bead wires

It was submitted on behalf of the assessee that dispute in respect of classification of the above products was an issue before the authorities below. But now in view of the settled position that the items as such are not excisable, they are rising itself a question for the first time before the Tribunal and this being a question of law, it can be admitted at this stage to decide the issue. He submitted that Delhi High Court in the case of Modi Rubber Limited, Modi Nagar, U.P. and Another Vs. Union of India and Others, reported in 1987 (29) E.L.T. 502 (Delhi) held that the above impugned products which are in the nature of scrap cannot be considered as manufactured items and therefore, are not goods for the purposes of levy of excise duty under Central Excises and Salt Act, 1944. The Representative submitted that the Collector (Appeals) has decided the issue in favour of the assessee in respect of Item No. 1, 5 and 6 and disallowed in respect of Item No. 2, 3 and 4. Accordingly, aggrieved by the respective finding portion of the Collector (Appeals) both the assessee as well as the department have filed appeals. He said that appeal No. E/2736/86-D is filed by the assessee whereas Appeal No. E/2727/86-D is filed by the department against the common impugned order.

2. Further he submitted that following the decision of the Delhi High Court in the case of Modi Rubber Limited, Modi Nagar, U.P. and Another referred to above, the Tribunal has held that scrap arising during the course of manufacture does not amount to manufacture and they are not liable for payment of Central Excise duty under Tariff Item No. 68. He referred to the order in the very parties case (order No. 36/97-D dated 20.12.96 in Appeal No. E/1604/88-D) wherein following the earlier decisions of the Tribunal including in the case of Collector of Central Excise Vs. Dunlop India Limited, reported in 1988 (36) E.L.T. 329 held that the items in question are not excisable. It was also submitted by him that the view taken by the Tribunal in the case of Dunlop India Limited was upheld by the Supreme Court while dismissing the appeal filed by the Collector against the Final order No. 313 to 327/88-D dated 29.4.1988 of the CEGAT as reported in 1995 Volume 79 ELT in Court-Room Highlights at page-205.

3. Shri Sangia, learned JDR appearing for the Revenue on going through the relevant submissions with reference to the respective items conceded that the decision has been in favour of the assessee. In the facts and circumstances, and following the earlier decisions, we hold that the impugned goods which arise during the course manufacture are not liable to excise duty. Accordingly assessee succeeds and department fails on the issue involved in this case. Both the appeals are disposed of in the above terms.