Duty-free clearance of manufacturing scrap requires a specific exemption; Board instructions for aluminium scrap could not extend to silicon steel scrap.

Waste or scrap arising from manufacture could be cleared duty-free only if it was covered by a specific Central Government order under the relevant sub-rule. The earlier ruling treated that mechanism as mandatory, so a manufacturer could not rely on general Board instructions or on an analogy with aluminium scrap to extend duty-free treatment to other scrap. On that reasoning, silicon steel scrap sent to job workers for re-melting did not qualify for clearance without duty, and the prior appellate order was set aside.

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Issues: Whether silicon steel scrap generated during manufacture could be cleared to job workers for re-melting without payment of duty on the basis of Board instructions and the rationale applied to aluminium scrap.

Analysis: The governing provision treated waste arising from processing of inputs as removable without duty only where it fell within the category specifically ordered by the Central Government under the relevant sub-rule. The earlier decision held that this mechanism was mandatory, and that in the absence of a specific exemption or order covering the relevant class of scrap, duty-free clearance could not be claimed. Board instructions had been issued only for aluminium scrap and could not be extended to other scrap merely on analogous reasoning.

Conclusion: The claim for duty-free clearance of silicon steel scrap was rejected and the Collector (Appeals) order was set aside.

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