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TMI Blog2018 (11) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.02.2000-31.12.2004. The appellant cleared various items of used and worn out capital goods on which Modvat/Cenvat Credit were taken, without payment of duty. These capital goods were cleared as Waste & Scrap. Department was of the view that such Waste & Scrap of capital goods will be liable to payment of duty at the time of its clearance since such Waste & Scrap has been generated during the course of manufacture of the final product. Show Cause Notice was issued covering the entire period of dispute proposing to demand of duty on such Waste & Scrap of capital goods. The original authority ordered payment of duty alongwith interest and penalty of equal amount. The order of the original authority was challenged by the assessee before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(C)] had provided for payment of duty on capital goods if, sold as Waste & Scrap. Even though this rule have been superceeded the duty would continue to be payable in terms of the savings clause in Section 37 of the Act. (iii) Waste & Scrap of metal known arising out of capital goods has an identity which is distinct from capital goods and hence will fall within the scrap covering under CETH 72.04. Finally, he submitted that the impugned order may be set aside and the order passed by the original authority restored. 4. The respondent is represented by Dr. Samir Chakraboraty, Ld. Sr. Advocate against the appeal filed by the Revenue and his main arguments are summarized below : (i) He submitted that the Waste & Scrap cleared by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been held to be a process not amounting to manufacture. Revenue has argued that such goods cleared would fall within the description of Waste & Scrap in terms of Note 8 (a) Section XV of the Central Excise Tariff. 7. We note that the identical question was considered by the Apex Court in the case of Grasim Industries (Supra). The Apex Court decided that the scrap arising during the course of repair & maintenance of the capital goods in the factory, cannot be considered to arise through the process of manufacture and hence, will not fall within the Note 8 (a) ibid. The observations of the Apex Court are given below for ready reference: "14. In the present case, it is clear that the process of repair and maintenance of the machinery of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is turned out regularly and continuously in the course of a manufacturing business and is also sold regularly from time to time, an intention can be attributed to the manufacturer to manufacture and sell not merely the main item manufactured but also the subsidiary products. We are afraid, the decision does not help the Revenue because the metal scrap and waste arising out of the repair and maintenance work of the machinery used in manufacturing of cement, by no stretch of imagination, can be treated as a subsidiary product to the cement which is the main product. The metal scrap and waste arise only when the assessee undertakes repairing and maintenance work of the capital goods and, therefore, do not arise regularly and continuously in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the market for sale and purchase, and therefore, they meet the criteria for manufacture of excisable goods, hence, chargeable to excise duty. Accordingly, duty on such waste and scrap is payable. 6.3 We find that both the authorities have gone on the lines that the discarding of used capital goods will amount to manufacture of excisable goods. We are not able to appreciate the rational behind the said decision. The present case is akin to the case decided by the Tribunal in the case of Kissan Co-op Sugar Factory Ltd. cited supra. In this connection, para 4 of the said decision is reproduced below : 4. The contention of revenue is that as per the chapter note 8a in Section XV of Central Excise Tariff Act, the waste and scrap question made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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