Mere cutting of damaged plant scrap for removal is not manufacture and does not attract central excise duty.

Mere cutting of worn out or damaged plant parts and scrap for removal from a refinery structure does not amount to manufacture where no new commercially distinct product emerges. The Tribunal treated the activity as analogous to earlier rulings on dismantling of old or damaged machinery, and held that the items retained their character despite being cut for removal. On that basis, the scrap and damaged items were not excisable goods and no central excise duty was payable. The duty demand was therefore set aside with consequential relief.

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Issues: Whether worn out and damaged plant parts and scrap removed from a damaged/refinery structure were excisable goods liable to central excise duty.

Analysis: The cutting of the damaged items was found to be only for their removal from the plant and not a process of cutting into pieces after removal to create a new commodity. The facts were treated as analogous to the earlier Tribunal rulings relied upon, where scrap generated merely from dismantling or removal of old/damaged machinery was held not to amount to manufacture. On these facts, the Tribunal concluded that the goods in question did not lose their character merely because they were cut for removal, and that such activity did not amount to manufacture bringing new excisable goods into existence.

Conclusion: The scrap/worn out and damaged items were not excisable goods and no central excise duty was payable on them.

Final Conclusion: The appeal succeeded and the duty demand was set aside with consequential relief.

Ratio Decidendi: Mere cutting of damaged plant items for removal, without a manufacturing process resulting in a new commercially distinct product, does not amount to manufacture and does not attract excise duty.

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