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Issues: Whether shredded and unmarketable Band-Aid waste generated during quality testing and sent for incineration was liable to central excise duty as excisable goods, and whether Rule 21 of the Central Excise Rules, 2002 was attracted.
Analysis: The waste arose when defective Band-Aid products were rejected during quality control and were required to be destroyed by shredding and incineration. Such shredded material was not a manufactured product, had no marketability, and did not answer the description of excisable goods. Since the final product itself fell under Chapter 30 of the Central Excise Tariff Act, 1985, and no specific tariff entry existed for the scrap or waste generated in this process, duty could not be levied merely because the original product was dutiable. In these circumstances, there was no occasion to invoke Rule 21 of the Central Excise Rules, 2002 for remission.
Conclusion: The shredded Band-Aid waste was not liable to central excise duty, and the demand could not be sustained. The finding was in favour of the assessee.
Final Conclusion: The impugned duty demand was set aside and the appeal succeeded.
Ratio Decidendi: Waste generated in the course of rejection and destruction of non-marketable goods is not exigible to central excise duty unless it is shown to be manufactured, marketable, and covered by a specific tariff entry.
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