Captive use of worn moulds as waste and scrap did not attract duty under Rule 57-S, making the demand unsustainable.

Rule 57-S(1) of the Central Excise Rules, 1944 permits capital goods on which credit has been allowed to be used in the factory or removed on payment of duty, without any further restriction on in-factory use. On that basis, the captive use of moulds after wear and tear, when they had become waste and scrap and were used in manufacture of finished goods, did not attract separate duty. The demand was therefore unsustainable.

---

---

Issues: Whether moulds obtained as capital goods and used in the factory, including their subsequent captive use after becoming waste and scrap, attracted duty under Rule 57-S of the Central Excise Rules, 1944.

Analysis: Rule 57-S(1) permits capital goods on which credit has been allowed to be used in the factory of the manufacturer of the final product or to be removed on payment of duty for home consumption or export. The provision contains no qualification restricting such in-factory use, and therefore the manner in which the capital goods were used could not be questioned. No separate provision required duty to be paid merely because the moulds, after wear and tear, were used captively as waste and scrap in the manufacture of finished goods.

Conclusion: No duty was payable on the captive use of the moulds reduced to waste and scrap, and the demand was unsustainable.

---