M/S Grasim Industries Ltd vs Union Of India

The Supreme Court held that the metal scrap generated during the repair of machinery does not constitute 'manufacture' under Section 2(f) of the Central Excise Act, 1944, and is therefore not subject to excise duty. The Court overturned the High Court's decision, affirming the Tribunal's ruling that the scrap does not arise from a manufacturing process, thus setting aside the duty demand and penalties imposed under Section 11A and Section 11AC of the Act. The outcome favored the assessee, confirming that the scrap is not excisable.