Manufacturing waste and scrap not dutiable where Rule 57S(2)(C) applies only to scrap from disposed capital goods.

Waste and scrap arising during manufacture of excisable goods was treated as outside the scope of Rule 57S(2)(C), because that rule applies only where capital goods are disposed of as scrap after Modvat credit is taken. On the stated facts, the scrap did not result from disposal of capital goods, but from the manufacturing process itself. It was also found not to fall under any tariff heading, so it was not exigible to duty in those circumstances.

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Issues: Whether waste and scrap arising during manufacture of excisable goods was dutiable, and whether Rule 57S(2)(C) of the Central Excise Rules, 1944 applied to such clearances.

Analysis: Rule 57S(2)(C) applies where capital goods are disposed of as scrap after availing Modvat credit. The scrap in the present case arose out of the manufacture of excisable goods, not from disposal of capital goods as scrap. Such scrap was also found not to be covered by any tariff heading, and therefore not exigible to duty on the facts of the case.

Conclusion: Rule 57S(2)(C) was held inapplicable, and the waste and scrap cleared during manufacture was held not dutiable.

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