Central excise duty on paper waste and broke was unsustainable where the waste arose in another unit and broke was not marketable goods.

Central excise duty could not be fastened on the appellant for paper waste and scrap generated during manufacturing in another unit, because the waste arose from that other unit's processing activity and not from the appellant's manufacture. Broke was also held not liable to duty because it was not marketable goods. The duty demand against the appellant was therefore unsustainable, and no central excise duty attached to broke.

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Issues: Whether central excise duty could be demanded from the appellant on paper waste, scrap and broke arising during processing undertaken in another unit, and whether broke was liable to duty.

Analysis: The paper waste and scrap arose during the manufacturing activity carried out by the other unit, not by the appellant, so the duty demand could not be fastened on the appellant. Broke was also treated as not liable to central excise duty because it was not marketable goods.

Conclusion: The duty demand was unsustainable against the appellant, and broke was not liable to central excise duty.

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