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Issues: Whether waste arising from destructive testing of inputs used for quality assurance in manufacture can be treated as waste arising in the course of manufacture under Rule 57D, so as to give rise to a referable question of law.
Analysis: The Tribunal distinguished between a factual enquiry into whether a particular process forms part of manufacture in a given case and the broader legal question whether processes essential to producing a marketable product can fall within the expression "in the course of manufacture" in Rule 57D. On the facts placed before it, the matter was held to raise a legal question requiring reference to the High Court. The second proposed question was not pressed and was therefore not examined.
Conclusion: The question regarding waste arising from destructive testing was directed to be referred to the High Court as a question of law arising from the expression used in Rule 57D.
Final Conclusion: The order did not decide the substantive MODVAT entitlement on merits and only settled that the first issue was fit for reference while the unpressed issue was not pursued.
Ratio Decidendi: Where the legal scope of "in the course of manufacture" under the excise credit provision is material to determining the tax consequence of a process integral to quality assurance, the matter raises a referable question of law rather than a mere question of fact.
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