Old and Used Lead Acid Batteries Recovered from Ship Breaking Classifiable Under Heading 8507, Not as Lead Waste and Scrap: CESTAT [Read Order]
CESTAT held that old and used Lead Acid Batteries recovered from ship breaking are classifiable under Heading 8507 as Lead Acid Batteries, not as Lead waste and scrap.
![Old and Used Lead Acid Batteries Recovered from Ship Breaking Classifiable Under Heading 8507, Not as Lead Waste and Scrap: CESTAT [Read Order]](https://images.taxscan.in/h-upload/2025/10/01/2093013-cestat-lead-acid-batteries-gst-old-batteries-classification-taxscan.webp "Old and Used Lead Acid Batteries Recovered from Ship Breaking Classifiable Under Heading 8507, Not as Lead Waste and Scrap: CESTAT [Read Order]")
The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that old and used Lead Acid Batteries recovered from ship breaking are classifiable under Heading 8507 as Lead Acid Batteries and not as Lead waste and scrap under Heading 7802.
Madhav Industrial Corporation, the appellant is engaged in ship breaking activities and recovers various materials from dismantled ships, including old and used Lead Acid Batteries. During audit, the department found that these batteries were cleared without payment of excise duty.
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The department argued that the goods should be classified as lead scrap under Heading 7802 of the Central Excise Tariff Act and that duty was payable under Note 9 of Section XV. A show-cause notice was issued, followed by an order confirming the demand, interest, and penalty.
The Commissioner (Appeals) upheld the order. The appellant challenged the decision before the CESTAT.
The appellant’s counsel argued that Lead Acid Batteries are specifically covered under Chapter Heading 8507 and not under Chapter 78, which deals with lead and articles thereof. They argued that the goods were removed as such from ships and not processed into scrap.
The counsel also referred to CBEC Circular No. 345/61/97-CX, which clarified that items recovered during ship breaking falling outside Section XV are non-excisable.
The revenue argued that Note 9 of Section XV deems goods obtained from ship breaking as manufactured products and that the batteries should be treated as lead scrap under Heading 7802.
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The two-member bench comprising Dr. Ajaya Krishna Vishvesha (Judicial Member) and Satendra Vikram Singh (Technical Member) observed that Lead Acid Batteries fall under Chapter Heading 8507, which is not part of Section XV covering Chapters 72 to 83. It explained that Note 9 of Section XV applies only to goods listed under those chapters and cannot extend to goods under Chapter 85.
The tribunal pointed out that the appellant sold the batteries as such to licensed recyclers and did not undertake any activity to convert them into lead scrap. It explained that goods must be classified in the condition in which they are cleared and not based on their future use.
The tribunal observed that since the goods are properly classifiable under Heading 8507, they do not fall under Heading 7802, and Note 9 of Section XV is not applicable. The demand of duty, interest, and penalty was set aside.
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