Manufacturer not liable for duty on waste & scrap from job workers. Job workers are considered manufacturers under Central Excise Rules.

The Tribunal held that the principal manufacturer is not liable to pay duty on waste and scrap generated at the job workers' end, even if job charges include the value of waste and scrap. The duty on scrap generated and sold by job workers cannot be imposed on the principal manufacturer, as the job worker is considered the manufacturer of waste and scrap under the Central Excise Rules. Therefore, the appellant was not required to pay duty on waste and scrap generated at the job workers' end, and the appeal was allowed with consequential relief.

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Issues:
Whether the appellant, as the principal manufacturer, is liable to pay duty on waste and scrap generated at job workers' end where job charges form part of the value of waste and scrap.

Analysis:
The appellant, a manufacturer of IC engines and their parts, sent processed goods to job workers, resulting in the generation of scrap. The revenue demanded duty on the scrap, contending that the appellant should pay duty on the waste and scrap generated at the job workers' end. The appellant argued that based on a previous Tribunal case, the duty on scrap generated and sold by job workers cannot be imposed on the principal manufacturer. The department did not ask the appellant to reverse the Cenvat Credit on inputs used in generating waste and scrap, further supporting the appellant's position.

The department argued that as per agreements between the parties, the value of waste and scrap is included in the job charges, making the appellant liable to pay duty on waste and scrap. The Tribunal considered the submissions and focused on the key issue of whether the appellant, as the principal manufacturer, is obligated to pay duty on waste and scrap generated at the job workers' end, especially when job charges include the value of waste and scrap.

Referring to previous cases, the Tribunal clarified that the duty cannot be demanded from the principal manufacturer for waste and scrap generated at the job workers' premises. The Tribunal emphasized that the job worker is considered the manufacturer of waste and scrap under the Central Excise Rules, and the duty liability falls on the person who produces or manufactures excisable goods. The Tribunal highlighted that the liability to pay excise duty and the manner of payment are governed by specific rules, and the Cenvat Credit Rules do not create a liability to pay excise duty. Therefore, the principal manufacturer supplying inputs to job workers for further processing is not liable to pay duty on waste and scrap generated at the job workers' premises.

Consequently, the Tribunal held that the appellant is not required to pay duty on waste and scrap generated at the job workers' end. The impugned order was set aside, and the appeal was allowed with consequential relief, if any.

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