Job-work waste and scrap: duty liability rests with the job-worker, not the raw material supplier, on these facts.

Rule 4(5)(a) of the CENVAT Credit Rules, 2004 permits sending inputs for job work and return of processed goods, but it does not by itself fasten excise duty on the supplier of raw material for waste and scrap arising at the job-worker's premises. Excise duty under Section 3 of the Central Excise Act, 1944 attaches to manufacture of a marketable commodity, and on these facts the job-worker was treated as the manufacturer of the waste and scrap. The Tribunal also noted that earlier decisions had consistently taken the same view in favour of the assessee, and therefore granted waiver of pre-deposit with stay of recovery.

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Issues: Whether the principal manufacturer was liable to pay excise duty on waste and scrap generated at the job-worker's premises under Rule 4(5)(a) of the CENVAT Credit Rules, 2004, and whether waiver of pre-deposit and stay of recovery were warranted.

Analysis: Rule 4(5)(a) governs sending inputs for job work and the return of processed goods, and does not create a liability on the supplier of raw material to pay duty on waste and scrap arising at the job-worker's end. Excise duty liability arises under Section 3 of the Central Excise Act, 1944 on manufacture of a marketable commodity, and in the present situation the waste and scrap was generated in the job-worker's premises. On that basis, the job-worker was treated as the manufacturer of the waste and scrap, not the appellant. The Tribunal also noted that the issue had been consistently decided in favour of the assessee in earlier tribunal decisions.

Conclusion: The appellant was not prima facie liable for duty on the waste and scrap generated at the job-worker's premises, and unconditional waiver of pre-deposit with stay of recovery was granted.

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