Dutiability of waste and scrap :

The long legal battle on the dutiability of waste and scrap was settled by the Supreme Court by its decision in Khandelwal Metal & Engineering Works Vs. U.O.I 1985(20) ELT 222 by holding that notwithstanding that process waste and scrap arose as intermediate products or by-products out of final products, nevertheless such process waste and scrap, if marketable, would be chargeable to duty in view of the incorporation of the specific sub-headings in various Chapters of the revised Tariff. The Apex Court held that process waste and scrap was a commercially distinct and identifiable product and has commercial value. Hence, such waste and scrap were chargeable to duty, if covered in the Tariff.

It is important to note here is that as the excise duty is on manufacture, the waste and scrap actually generated in the course of manufacture alone is chargeable to duty .