Metal scrap from scrapped old machinery is not excisable absent manufacture, so duty demand and penalty fail.

Metal scrap arising from dismantling and scrapping imported old machinery, without any manufacturing process or mechanical working of iron or steel, was held not liable to central excise duty. As the scrap was not treated as dutyable excisable goods generated through manufacture, the duty demand was unsustainable. Once the demand failed, no penalty could be imposed. The assessee's appeal was allowed and the Revenue's appeal failed.

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Issues: Whether metal scrap arising from the scrapping of imported old machinery is liable to central excise duty.

Analysis: The scrap in question arose from dismantling and scrapping old machinery, and not from any process of manufacture or mechanical working of iron or steel. In the absence of any basis to treat the scrap as dutyable excisable goods generated through manufacture, the duty demand could not be sustained. Once the duty demand failed, no penalty could survive.

Conclusion: The duty demand on the metal scrap was unsustainable and the assessee's appeal was allowed. The penalty also could not be imposed, and the Revenue's appeal failed.

Final Conclusion: The order resulted in deletion of the duty demand and, consequently, no penalty could be sustained.

Ratio Decidendi: Scrap arising from the mere scrapping of old machinery, without manufacture or mechanical working of iron or steel, does not attract central excise duty.

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