Duty on waste and scrap clearance cannot rest on a rule not in force during the relevant period.

Duty on clearance of used nuts and bolts as waste and scrap could not be upheld by invoking Rule 57S(2)(c) of the Central Excise Rules, 1944, because that rule was not in force during the relevant period. The Tribunal also noted that the later Modvat rules did not contain an identical provision requiring duty payment on such clearance. As the demand had been raised under Section 11A of the Central Excise Act, 1944 on an inapplicable rule, it could not be sustained and the appeal succeeded for the assessee.

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Issues: Whether duty could be demanded on clearance of used nuts and bolts as waste and scrap by applying Rule 57S(2)(c), and whether such reliance was permissible when the rule was not in force during the relevant period.

Analysis: The demand had originally been raised under Section 11A of the Central Excise Act, 1944, treating the assessee as liable for duty on the waste and scrap. In appeal, reliance was placed on Rule 57S(2)(c) of the Central Excise Rules, 1944. The Tribunal found that the said rule was not in force during the relevant period and therefore could not be invoked. It further noted that the later set of Modvat rules did not contain an identical provision requiring duty payment on clearance of such goods as waste and scrap.

Conclusion: The demand could not be sustained on the basis of a rule not in existence during the relevant period, and the appeal was allowed in favour of the assessee.

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