Rejected packaging scrap from biscuit manufacture was not manufacture, so excise duty demand failed.

Waste and rejected packaging material arising during biscuit manufacture was treated as scrap, with no separate manufacturing activity found in relation to it. On that basis, the material did not amount to manufacture for excise purposes, so the duty demand could not be sustained. The issue was decided in favour of the assessee.

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Issues: Whether waste and rejected packaging material arising in the course of biscuit manufacture amounted to manufacture and was liable to excise duty.

Analysis: The appellant manufactured biscuits, and during the manufacturing process some packaging material became waste and was cleared as scrap. The material was only rejected waste from the process and no separate manufacturing activity was found in relation to it. In the absence of manufacture, the demand could not be sustained.

Conclusion: The demand was not sustainable and the issue was decided in favour of the assessee.

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