2002 (6) TMI 218

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....e and in view of wear and tear, some parts became worn out and further due to fire accident, it had necessitated cutting up and removal of damaged parts of the plant which were sold. He said that since no manufacture has taken place, the question of excisability does not arise in the instant case. According to the Department, the metal scrap cleared by the party consisted miscellaneous steel melting scrap, copper-nickel heat exchanger tube scrap, miscellaneous iron and alloy steel scrap, steel scrap-damaged tank plates and structural, aluminium - brass heat exchanger tube scrap and steel scrap-damaged structural. The Commissioner observed that the above said scrap falls under two broad categories namely (1) worn out and damaged parts and eq....

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....d structural steel of tanks which were destroyed in fire accident." 2. It was the contention of the party that the process of wear and tear which had reduced the usefulness of the articles of metal, cannot, under any stretch of imagination be called manufacture; that the cutting resorted only to remove the worn out parts from a major plant cannot be termed as manufacture; that the destruction of plant due to the fire which had necessitated the cutting and removal of the damaged parts of the plant cannot also be termed as manufacture. Shri Rajesh Chander Kumar, appearing for the appellants submitted that since no manufacturing process has taken place while removing the damaged parts of the plant and the sale of such worn out and damage....

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.... Heading No. 76.02. In view of this I am of the opinion that the waste originated during the course of dismantling of the locomotive is also excisable good and the process of dismantling amounts to manufacture." The Commissioner proceeded to levy duty on such quantity of scrap and waste relying on the decision of the Calcutta High Court in M/s. S.S. Jain and Co. reported in 1986 (25) E.L.T. 14. Commissioner has erred in placing reliance on the decision of the Calcutta High Court to support his stand that the scrap and waste generated during the dismantling of old locomotives is also liable to duty. The Calcutta High Court was relying on the provisions contained in Heading 72 onwards of the Central Excise Tariff Act which stood at that time....

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....had sold the condemned machinery on 'as is where is' basis. Therefore, no dismantling of the machinery, leading to generation of scrap was carried out by the appellant. The dismantling and removal of scrap were carried out by the buyers of condemned machinery. Further, dismantling of machines is not a process of manufacture leading to emergence of new goods. The ld. Counsel for the appellants also referred to the decision of this Tribunal in the case of Diesel Component Works, Patiala v. CCE, Chandigarh [2000 (120) E.L.T. 648 (T) = 2000 (40) RLT 641] that scrap arising in the dismantling of old railway engines was not liable to duty. For these reasons, the appellants have contended that demand of duty in respect of scrap involved in the pre....