Incidental factory waste and scrap are not excisable manufacture absent separate processing; extended limitation also fails without suppression.

Sweeping waste and scrap generated incidentally on the factory floor during manufacture, without any separate manufacturing process attributable to the assessee, was treated as not amounting to excisable goods manufactured by the assessee, so excise duty could not be sustained on that basis. The note also states that the extended period of limitation was unavailable because the demand depended on that unsustainable manufacture theory and there was no adequate basis to allege suppression or intent to evade duty. On that reasoning, the demand failed and the assessee's position was accepted on limitation.

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Issues: (i) Whether waste and scrap arising from sweeping the manufacturing floor could be treated as goods manufactured by the assessee and subjected to excise duty. (ii) Whether invocation of the extended period of limitation was justified.

Issue (i): Whether waste and scrap arising from sweeping the manufacturing floor could be treated as goods manufactured by the assessee and subjected to excise duty.

Analysis: The scrap in question arose as sweeping waste from the factory floor in the course of manufacture and was not shown to have been separately manufactured by any process attributable to the assessee. On that basis, the finding that such waste and scrap was manufactured by the assessee could not be sustained.

Conclusion: The issue was answered in favour of the assessee.

Issue (ii): Whether invocation of the extended period of limitation was justified.

Analysis: Since the demand rested on treating the sweeping waste as manufactured scrap and on the alleged failure to file declaration with intent to evade duty, the foundation for invoking the extended period was not made out. The circumstances did not justify alleging suppression or intent to evade duty.

Conclusion: The extended period of limitation was not available to the Revenue.

Final Conclusion: The demand could not be sustained and the appeal succeeded on limitation.

Ratio Decidendi: Waste generated incidentally during the manufacturing process, without any separate manufacturing activity, is not excisable manufacture, and the extended limitation cannot be invoked in the absence of sustainable grounds of suppression or intent to evade duty.

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