Excise duty on waste and scrap from cigarette packing held unsustainable under the Cenvat regime.

Excise duty was held not payable on waste and scrap of packing materials generated during the manufacture and packing of cigarettes, because no separate process of manufacture was involved to attract central excise duty. The Tribunal followed its earlier ruling on waste paper arising in cigarette manufacture and found no basis to distinguish that precedent. It also noted that the relevant Cenvat regime did not contain a provision imposing duty on such waste and scrap, unlike the former Rule 57F of the Central Excise Rules, 1944. The duty demand was therefore not sustainable.

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Issues: Whether excise duty was payable on waste and scrap of packing materials generated during the manufacture and packing of cigarettes.

Analysis: The Tribunal followed its earlier decision holding that no process of manufacture was involved so as to attract central excise duty on waste paper arising during manufacture of cigarettes. It noted that the Revenue had not shown any basis to distinguish that decision and that the relevant Cenvat regime did not contain a provision imposing duty on such waste and scrap, unlike the erstwhile Rule 57F of the Central Excise Rules, 1944.

Conclusion: The issue was decided in favour of the assessee, and the demand of excise duty on the waste and scrap was not sustainable.

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