Tariff note does not create manufacture by itself, so excise duty on metal scrap clearances was unsustainable.

Section Note 8(a) of Section XV of the Central Excise Tariff Act, 1985 was treated as a tariff classification and rate provision only, and not as a deeming fiction that by itself creates manufacture under Section 2(f) of the Central Excise Act, 1944 unless the statute expressly says so. Applying its earlier order on identical facts, the Tribunal held that duty on clearance of waste and scrap of metals, including used capital goods, was unsustainable. The appellate order dropping the demand was therefore sustained and the Department's appeal failed.

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Issues: Whether the duty demand on clearance of waste and scrap of metals, including used capital goods, was sustainable, and whether Section Note 8(a) of Section XV of the Central Excise Tariff Act, 1985 could be treated as creating manufacture for the purposes of Section 2(f) of the Central Excise Act, 1944.

Analysis: The matter was covered by the assessee's own earlier case on an identical issue. The controlling principle applied was that Section Note 8(a) in Chapter XV serves only to determine the applicable tariff classification and rate of duty, and does not by itself create a deeming fiction of manufacture under Section 2(f) of the Central Excise Act, 1944 unless the section note expressly says so. Following the earlier Tribunal order in identical facts, the demand was found unsustainable.

Conclusion: The issue was decided in favour of the assessee and against the Department; the demand was not payable on the disputed clearances.

Final Conclusion: The impugned appellate order dropping the demand was sustained and the Department's appeal failed.

Ratio Decidendi: A tariff section note that determines the rate of duty does not, by itself, create manufacture for central excise purposes unless the statute expressly so provides.

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