Ship-breaking scrap and excise duty: Tribunal refused to confirm demand, following prior rulings and departmental instructions.

Ship-breaking activity involving dismantling, breaking and cutting ships into scrap was treated as not giving rise to a confirmed excise demand, as the Tribunal followed earlier binding treatment of ship scrap and departmental instructions. The dispute centred on whether the process amounted to manufacture for central excise purposes and whether the duty demand could be sustained under the excise rules and extended limitation. Relying on prior Gujarat High Court and Tribunal decisions, together with the relevant circulars, the Tribunal held that the demand could not be confirmed against the assessee.

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Issues: Whether ship-breaking activity involving dismantling, breaking and cutting of ships, resulting in scrap, amounted to manufacture exigible to central excise duty, and whether the duty demand could be sustained.

Analysis: The dispute turned on whether the process of breaking ships brought into existence a manufactured product attracting duty under the excise law. The demand had been raised under the relevant excise rules and the extended limitation provision, while the assessee relied on exemption and on the departmental circulars and prior orders of the Gujarat High Court and Tribunal decisions dealing with ship scrap. The Tribunal followed the earlier binding treatment of the issue and the departmental instructions on ship scrap, and held that the demand could not be confirmed against the assessee.

Conclusion: Ship-breaking scrap was not subjected to the confirmed demand in this appeal, and the assessee succeeded.

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