Waste and scrap duty demand requires a specific finding that goods arose from manufacture or mechanical working of metals.

A duty demand on cleared material treated as waste and scrap could not be sustained without a specific finding that the goods arose from manufacture or mechanical working of iron and steel under the relevant tariff note. The disputed items were described as worn-out parts, machinery and pipelines removed because of corrosion and wear and tear, but the record did not address the assessee's contention that they fell outside the statutory description. As the issue could not be finally decided on the existing findings, the order was set aside and the matter remanded for fresh examination with opportunity to lead evidence.

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Issues: Whether the demand of duty on the cleared material as waste and scrap was sustainable without a specific finding that the material arose from manufacture or mechanical working of iron and steel, and whether the matter required remand for proper examination under Section Note 7 of Section XV of the Central Excise Tariff Act, 1985.

Analysis: The disputed goods were claimed to be worn-out parts, machinery and pipelines removed from the scrap yard due to corrosion and wear and tear. The order under challenge did not record a specific finding on the assessee's contention that the items had not arisen from manufacture or mechanical working of metals as contemplated by the tariff note. In the absence of such a finding, the issue could not be finally determined on the existing record. The proper course was to set aside the order and send the matter back for fresh examination with opportunity to adduce evidence.

Conclusion: The demand could not be sustained on the existing findings, and the matter was remanded to the original authority for reconsideration.

Final Conclusion: The assessee obtained a remand for fresh adjudication on the classification and duty liability of the cleared material.

Ratio Decidendi: A duty demand on alleged waste and scrap cannot be upheld without a specific finding that the goods satisfy the statutory tariff note describing waste and scrap arising from manufacture or mechanical working of metals; where such finding is absent, remand for fresh examination is warranted.

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