Full Judgment
2. We are concerned in these appeals with the product that emerged during such manufacture, which had been described by the respondent as tape ends, tape scrap, side cuts, tape waste. The manufacturers cleared these goods under heading 8546.00 as electrical insulators. The Deputy Chief Chemist of the department, after testing the sample of the product, found that the sample from Bhor Steel Grip Tapes to be a yellow coloured tape with very little adhesive property. He found the sample from Kamalakshi Finance Corporation Ltd to be "black coloured self-adhesive plastic tape and it is composed of base PVC film coated on the side with adhesive compound weight". The notice issued to each of the assessees proposed classification of the goods in Heading 39.15 as waste of scrap of plastic. The assessee in reply stated that the goods should be treated as tape waste, tape ends, tape scraps, side cuts in Heading 85.46. The Assistant Collector, in his two orders said "one cannot deny the fact that the final product is PVC electrical insulation tapes which has been accepted and that the waste should be classified under respective heading." He therefore dropped the proceedings. The department appealed this order. The Commissioner (Appeals) noted that the ground in the appeal that the department's enquiry showed that the customer who purchased the waste removes the adhesive properties and sells the tape to chap-pal manufacturers have not been confirmed. He found that the tapes contained adhesive properties. He finds no reason to interfere with the Assistant Commissioner's order and dismissed the appeal. This appeal by the department is against that order.
3. The common ground in these appeals that the assessee had admitted that the goods are soaked in hot water is without substance. There is no such material on record and this is hotly denied by the Counsel for the respondents. It is also not disputed that the goods were not usable as electrical insulating tapes. The department has not adduced any material in this regard. We had asked the respondent to file an affidavit indicating the nature of the goods, then the persons to whom they were sold it and the price at which they are sold. The affidavit filed by Srinivas Gajanan Mahadadalkar, General Manager of Bhor Steelgrip Tapes Ltd. and Laxmikant Jamnadas Tanna, Director of Kamalakshi Finance Corporation Ltd. are commonly worded. They indicate that the goods were sold to dealers of scrap at a price of Rs 1.46 per kilogram. The Counsel for the respondent states on a reply that during the same period electrical insulation tape was sold to the dealers of the respondent at Rs. 12 per tape of 1.9 metres length. He adds that at this rate the sale price would be around Rs. 400 per kilogram.
4. It is clear that the goods are sold by the respondent not to persons who are normally in electrical goods dealing but dealers in scrap. It follows from this that the goods cannot be equated with electrical insulating tapes. They are clearly, as the description shows, in the nature of waste or a residuary product. The contention that, since they are waste of insulating tapes, they should be classified in heading in which the tapes are classifiable is clearly unacceptable. It is difficult to comprehend waste of tapes and tapes any one more than waste of car as distinct from waste of tractors or from waste of steel structures. Waste is regarded in the trade and dealt with as waste irrespective of its origin. Waste, in other words, does not, by and large, continue to carry with it the identity of the product in the manufacture of which it emerges as such; it is characterised by reference to the material which comprises it. These are spares of metal waste or glass waste, not waste of car or bicycle or waste of bottles, etc. Even when there is commonly a reference to waste by its origin, such a reference is in fact for ease of convenience, and does not denote the waste to be the product. Thus, yarn waste is a waste which arises in the manufacture of yarn, and such waste cannot be equated with the yarn; all that can be said is that the physical composition of the yarn and the waste is the same. Even this could not be true in the case of many goods, where the presence of impurities beyond the prescribed limit may render the goods waste. The predominant material from which the waste under consideration emerges is plastic. The classification as plastic product appears to us therefore to be correct.
5. The contention of the Counsel for the respondent that since this is tape of polyvinyl chloride per se should be classifiable as insulating tape. He relies upon the judgment of the single learned Judge of the Bombay High Court in Amartara Limited v. Union of India - 1989 (39) E.L.T. 523.
6. We are not unable to find that the judgment of the High Court says what is purported to say. After considering the evidence from L & T to Hindustan Cables Ltd., the main customer, it says "The secondary use of the PVC tape is of course insulation of the coaxial cores at low voltage." The High Court concluded that the goods were correctly classifiable as electrical insulating tapes. This is very different from saying that all polyvinyl chloride tapes has the properties of electrical insulation or can be used as such for that purpose. If that were the case, there would be no market specifically for the goods termed as "electrical insulation tapes" and the activity of the respondents and many others like it manufacturing such tapes would be wasteful and unnecessary, 7. It is further contended that it does not follow that merely because scrap dealers purchase the goods, they cease to be electrical insulating tapes. This argument is clearly specious. No one would buy a product which is required for safety and protection from fire from electrical leakage of an unspecified or dubious quality from scrap dealer except in time of emergency that would clearly constitute normal use of goods. We also do not find to accept the contention of the department's appeal is extraneous to the show cause notice or go beyond the show cause notice. The common contention in the notice and in the appeal is that the goods are not sold as insulating tapes and are not so used.
8. The appeals are accordingly allowed and the order of the Commissioner (Appeals) is set aside. The order of the Assistant Commissioner is restored.