Excise duty on waste and scrap from old capital goods is leviable when those goods were used in manufacture and later sold

Rule 57-S(2)(c) of the Central Excise Rules, 1944 was read with clauses (a) and (b) to cover capital goods used in manufacture and later sold as waste and scrap. The provision was held not to depend on waste and scrap arising only in the course of manufacturing the assessee's own goods. Where the assessee used the capital goods in its manufacturing process and did not itself manufacture and sell those capital goods, excise duty was held leviable on their sale as old and unusable scrap, and the contention against duty was rejected.

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Issues: Whether excise duty is leviable on sale of old and unusable capital goods sold as waste and scrap under Rule 57-S(2)(c) of the Central Excise Rules, 1944.

Analysis: Rule 57-S(2)(c) was read with clauses (a) and (b) of the same sub-rule. The rule was held to cover capital goods used in the manufacture and later sold as waste and scrap, and not to depend on waste and scrap being generated only in the course of manufacture of the assessee's own goods. Since the assessee used the capital goods in its manufacturing process and did not manufacture and sell the capital goods themselves, the contention that no duty could arise on such scrap was rejected.

Conclusion: Excise duty is leviable on the sale of old and unusable capital goods sold as waste and scrap under Rule 57-S(2)(c) of the Central Excise Rules, 1944, and the issue is decided against the assessee.

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