Captive use of metal in further fabrication excluded it from waste-and-scrap duty under the tariff definition.

Metal generated during fabrication was not treated as waste and scrap under the tariff definition because it was admittedly used captively for further manufacture of a trolley line. Section Note 8 to Section 15 covers only goods that are definitely not usable as such because of breakage, cutting-up, wear or similar causes, and material retained for further fabrication does not meet that description. A classification finding that the trolley line fell under Chapter 72 did not, by itself, justify duty on the material treated as scrap. The duty demand was therefore unsustainable, and the impugned order was set aside.

---

---

Issues: Whether metal waste generated during fabrication of a factory shed and used captively for fabrication of a trolley line could be treated as waste and scrap liable to duty; whether the trolley line could be classified under Chapter 72 so as to support the duty demand.

Analysis: The metal in question was not merely waste or scrap that had become unusable as such, because it was admittedly used captively for fabrication of a trolley line. On the plain meaning of Section Note 8 to Section 15 of the Central Excise Tariff Act, 1985, metal goods that are definitely not usable as such because of breakage, cutting-up, wear or other reasons alone fall within waste and scrap. Since the material was put to further use in manufacture, it did not answer that description. The finding that the trolley line fell under Chapter 72 did not justify duty on the material treated as scrap.

Conclusion: The duty demand on the alleged waste and scrap was unsustainable and was set aside. The appeal was allowed in favour of the assessee.

Final Conclusion: The impugned order was annulled because the material used captively for fabrication did not constitute dutiable waste and scrap on the facts found.

Ratio Decidendi: Material generated in manufacture and subsequently used captively for further fabrication is not dutiable as waste and scrap if it is not definitely unusable as such within the tariff definition.

---