Job work scrap duty liability does not arise against the principal manufacturer under the Cenvat Credit Rules.

Waste and scrap generated in a job worker's factory could not be subjected to central excise duty in the hands of the principal manufacturer under Rule 4(5)(a) of the Cenvat Credit Rules, 2004. The Tribunal followed its earlier decisions in the same matter and held that any such liability existed under the erstwhile Central Excise Rule 57F(3), not under the later Cenvat Credit regime. In the absence of a specific provision fastening duty on the principal manufacturer for scrap arising at the job worker's premises, the demand was unsustainable and the impugned orders were set aside.

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Issues: Whether the principal manufacturer was liable to discharge central excise duty on waste and scrap arising in the job worker's factory and cleared by the job worker without payment of duty.

Analysis: The issue had already been settled in the appellant's own earlier matters. The Tribunal followed its prior decisions and noted that the liability to pay duty on waste and scrap generated at the job worker's end did not arise under Rule 4(5)(a) of the Cenvat Credit Rules, 2004. The reasoning also drew support from the position that such liability existed only under the erstwhile Central Excise Rule 57F(3), not under the later Cenvat Credit regime. On that basis, the demand could not be sustained.

Conclusion: The issue was decided in favour of the assessee, and the demand was held unsustainable.

Final Conclusion: The impugned orders were set aside and the appeals were allowed with consequential relief, if any, in accordance with law.

Ratio Decidendi: In the absence of a specific provision making the principal manufacturer liable, waste and scrap generated during job work at the job worker's premises cannot be subjected to duty in the hands of the principal manufacturer under the Cenvat Credit Rules, 2004.

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