Manufacturing scrap exemption extends to by-products and waste from a new industrial unit under section 4A.

A new industrial unit eligible for exemption under section 4A was held to have its manufacturing scrap also covered by that exemption. The exemption notification applied to "any goods" manufactured by the unit, and the relevant eligibility regime did not require advance specification of each product. A later circular clarified that exemption extended not only to main products but also to by-products and waste products arising from manufacture. Iron, tin and copper scrap left after cutting sheets for fan manufacture was treated as manufacturing waste or scrap, so its turnover also fell within the unit's exemption.

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Issues: Whether scrap of iron, tin and copper arising during manufacture of electric stamping and ceiling fans, in the case of a new unit entitled to exemption under section 4A, was also exempt from trade tax.

Analysis: The exemption notification under section 4A covered "any goods" manufactured by a new industrial unit. For the relevant period, the eligibility certificate regime did not require advance specification of each product, and the subsequent circular clarified that new units established during the specified period were entitled to exemption not only on main products but also on by-products and waste products arising from manufacturing. The scrap in question was found to be the residue left after cutting sheets for manufacture, and therefore constituted waste product or scrap generated in the manufacturing process. Once treated as manufactured scrap, its turnover also fell within the exemption attached to the unit.

Conclusion: The scrap of iron, tin and copper was exempt from tax and the revision was without merit.

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