Scrap from dismantling used machinery is not excisable; duty applies only to manufacturing scrap.

Waste and scrap arising from dismantling old and obsolete machinery was treated as non-excisable, because duty attaches only to scrap generated in the course of manufacture or mechanical working of metals and metal goods. Scrap produced by breaking up used machinery was distinguished from manufacturing scrap, and the Tribunal applied its earlier rulings to hold that dismantled machinery scrap does not attract central excise duty. On that basis, the assessee's position was upheld and the Revenue's challenge was rejected.

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Issues: Whether waste and scrap arising from dismantling of old and obsolete machinery, as distinct from scrap generated in manufacture or mechanical working of metals and metal goods, is exigible to central excise duty.

Analysis: The demand was found to relate to disposal of waste and scrap pertaining to capital goods sold as waste or scrap. The Tribunal relied on its earlier decisions holding that duty liability arises only where scrap is generated out of manufacture or mechanical working of metals and metal goods, and that scrap generated by dismantling used machinery is not excisable goods.

Conclusion: The scrap arising from dismantling of used machinery was not excisable, and the Revenue's appeal failed.

Final Conclusion: The order allowing the assessee's appeal was upheld and the Revenue's challenge was rejected.

Ratio Decidendi: Scrap generated by dismantling used machinery is not excisable goods, whereas duty liability attaches only to scrap generated from manufacture or mechanical working of metals and metal goods.

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