Job-work scrap and remnant waste: duty not leviable on non-excisable residues or scrap sent for conversion.

Plastic containers and residual lead arising at a job worker's premises from rejected batteries were treated as remanent waste and scrap, not excisable goods, and duty was therefore not leviable where the scrap was not returned to the principal manufacturer. Lead scrap cleared by the manufacturer to a job worker for conversion into lead ingots also did not attract duty, as the job-work removal was supported by the applicable rule and the larger Bench precedent on such processing arrangements. The Revenue's challenge to deletion of duty, interest and penalties failed, and the appellate order was upheld.

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Issues: (i) Whether duty was leviable on plastic containers and lead scrap generated at the job worker's premises from rejected batteries and not returned to the principal manufacturer. (ii) Whether lead scrap cleared by the manufacturer to a job worker for conversion into lead ingots attracted duty.

Issue (i): Whether duty was leviable on plastic containers and lead scrap generated at the job worker's premises from rejected batteries and not returned to the principal manufacturer.

Analysis: The rejected batteries were slit open only for recovery of lead contents for remanufacture. The plastic containers and residual lead left after extraction of usable lead were treated as remanent waste and scrap, not as goods emerging from a manufacturing process. The governing credit rules also did not require return of such waste and scrap to the principal manufacturer. The authority below relied on settled precedent that no duty can be demanded on such non-excisable remnants or on scrap for which the job worker is the manufacturer.

Conclusion: The demand of duty on plastic containers and lead scrap not returned by the job worker was not sustainable and was set aside.

Issue (ii): Whether lead scrap cleared by the manufacturer to a job worker for conversion into lead ingots attracted duty.

Analysis: The appellate authority had applied the Larger Bench ruling permitting scrap generated in the manufacturer's factory to be sent to a job worker for processing under the relevant rule governing job work removals. That finding was not shown to be erroneous, and no sustainable ground was raised to disturb it.

Conclusion: The duty demand on lead scrap sent to the job worker for conversion into lead ingots was not sustainable.

Final Conclusion: The Revenue's challenge to the deletion of duty, interest, and penalties failed, and the order of the appellate authority was upheld.

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