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TMI Blog2011 (4) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... nd bolts procured by the appellants, duty paid thereon has been merged as credit of the appellants, decision about dutiability of the products does not call for any interference. However, regarding ascertaining the assessable value, the matter will have to be remanded to adjudicating authority, as regard of penalty no interference is warranted, appeals disposed of X X X X Extracts X X X X X X X X Extracts X X X X ..... . He further submitted that ferrous waste was not generated out of any process of manufacture contemplated under Section 2(f) of the Central Excise Act, 1944. Drawing our attention to Section Note 8 to Section XV of the CETA the learned Counsel submitted that the worn out items which form part of capital goods cannot be considered as items manufactured as waste or scrap. He also submitted that assuming such product can be subjected to duty liability, the sale price thereof must be considered as inclusive of excise duty and duty has to be deducted in order to arrive at the assessable value and no such process has been adopted by the adjudicating authority. 5. The learned DR on the other hand placing reliance on the decision of the Larger Bench in the matter of Modernova Plastyles Pvt. Ltd. v. Commissioner of Central Excise, Raigad - 2008 (232) E.L.T. 29 (Tri.-LB) submitted that in terms of provisions of law once worn out product including a part of capital goods is cleared from the factory premises, the same will have to be subjected to duty liability. 6. Undisputedly ferrous waste is generated out of worn out items like nuts and bolts, valves and other parts which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into consideration the rival contention observed that "coming to the question of duty liability on the scrap, two types of scraps are generated in the factory of the appellants. The first category belongs to metal waste and scrap generated from the manufacture or mechanical working of metal and metal goods used in the factory. It is conceded before us that such scrap is liable to duty. Major quantity of the scrap and waste is generated in the course of dismantling of old and damaged locomotives." 9. The Tribunal further held that the Hon'ble Calcutta High Court was relying on the provisions contained in Heading 72 onwards of the Central Excise Tariff Act which stood at that time in relation to waste and scrap generated by breaking of ships and boats and other floating structures, so the said decision by the Calcutta High Court cannot have any application to the waste generated in the appellant's factory. Consequently, the said decision of the Calcutta High Court or Note 7 to Section XV of the CETA cannot have any application to the facts on hand. Chapter Note 7 deals with waste and scrap generated in the process of breaking of ships and boats and other floating structures. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not arise in the course of manufacture of any products and hold that same could not have been subjected to any duty. It can hardly be disputed that the product which is used merely for rapping the inputs procured by the manufacturer cannot form part of manufacturing process and in that connection scrap generated of such product is non-dutiable. 13. In Kissan Co-op. Sugar Factory Ltd. case the only contention that the department has sought to raise was about the applicability of Chapter 8(a) in Section XV of CETA while contending that the scrap was arising out of cutting of the metal which was definitely usable "as such" and, therefore, in terms of Section 2(f) of the Central Excise Act, 1944 the process amounted to manufacture and product was liable to duty. Apart from that the matter can be distinguished as facts the Tribunal has held that the scrap which was generated was of old and used capital goods and not arising out of mechanical working of metal in the factory. The case in hand as already observed the fact that the ferrous waste were generated due to wear and tear of nuts and bolts in the process of working on capital goods in relation to the process of manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X
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