Waste and scrap classification under excise law cannot by itself create manufacture for duty liability.

Excise duty on clearance of waste, scrap of metals, and used capital goods in a factory turns on the interplay between tariff notes and the concept of manufacture. The Tribunal applied Section Note 8(a) of Section XV of the Central Excise Tariff Act as a provision for tariff classification and rate determination only, and not as a deeming fiction of manufacture unless expressly stated. Following its earlier decision in the assessee's own case, it found the issue already settled in favour of the assessee and held the duty demand unsustainable.

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Issues: Whether excise duty was payable on clearance of waste and scrap of metals and used capital goods arising in the factory.

Analysis: The dispute was governed by the treatment of waste and scrap under Section Note 8(a) of Section XV of the Central Excise Tariff Act, 1985 and its relationship with the concept of manufacture under Section 2(f) of the Central Excise Act, 1944. The Tribunal followed its earlier order in the assessee's own case and the underlying principle that the Section Note serves the limited purpose of determining the applicable tariff entry and rate of duty, and does not by itself create a deeming fiction of manufacture unless the note expressly so provides. As the issue was identical to one already decided in favour of the assessee, no reason was found to sustain the duty demand.

Conclusion: The demand of excise duty on the disputed waste and scrap was not sustainable and the appeal was allowed in favour of the assessee.

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