Job-work scrap under Notification 214/86-C.E. retains its character and is not separately dutiable before clearance.

Waste and scrap arising at the principal manufacturer's end during a job-work cycle under Notification No. 214/86-C.E. were not to be treated as a final product for duty before clearance. The movement between principal manufacturer and job worker remained part of the same notified job-work arrangement, so the scrap and waste retained that character and could not be isolated as independently dutiable goods. Treating such movement as a final product would create a circular duty-credit mechanism without changing its legal nature under the notification. The departmental demand was therefore unsustainable.

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Issues: Whether the waste and scrap generated at the end of the principal manufacturer and sent to the job worker under Notification No. 214/86-C.E. was to be treated as a final product exigible to duty before such clearance, or as material eligible to move under the job-work notification.

Analysis: The movement of goods between the principal manufacturer and the job worker was part of the same job-work cycle governed by Notification No. 214/86-C.E. The scrap and waste arising in the course of manufacture at the principal manufacturer's end could not be isolated and treated as a final product for the purpose of fastening duty before its return to the job worker. The departmental theory would only create a circular duty-credit mechanism without altering the character of the movement under the notification.

Conclusion: The scrap and waste was not required to be treated as a final product for duty purposes, and the departmental demand was unsustainable.

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