The attachment provided are excerpts from a book which do not draw any reference from any court judgement, law, circular, notification or legal explanation. It is a trivial inference drawn by the author and should not be considered as final word or reference.
The definition of scrap and definition of seller are two different provisions in the statue and as such should not be mixed to draw a narrow conclusion.
The definition of Seller as it stands in statue today covers a vide array of persons including even individuals and HUF having turnover over specified limits which was not there when this section was originally conceived in 1988 and subsequently overhauled in 1992.
The definition of scrap has been provided to define the underlying item on whose sale TCS provisions are applicable in whatever mode of sale. It doesn't mean that only manufacturer or producer of such sale shall be treated as SELLER for the purposes of TCS. There is no such restriction in statue while defining SELLER. And yes, in Alangh if the wastage is generated by cutting the hull, body, anchor or any other part of the ship, unusable engine parts worn out over the period and cannot be used as such, the same would fall under the definition of scrap.
The exemption from applicability of TCS is provided with respect to BUYERS. The definition of BUYER has undergone many changes since it was first introduced in 1992. Since it's introduction in 1992 till amendment vide Finance Act, 2003 the BUYER was defined as :
"buyer means a person who obtains in any sale, by way of auction, tender or any other mode, goods of the nature specified in the Table in sub-section (1) or the right to receive any such goods but does not include,--
(i) a public sector company,
(ii) a buyer in the further sale of such goods obtained in pursuance of such sale, or
(iii) a buyer where the goods are not obtained by him by way of auction and where the sale price of such goods to be sold by the buyer is fixed by or under any State Act
From the above it is clear that by virtue of second clause above any buyer in second sale was exempted from TCS.
By Finance Act 2003 clause (iii) above was deleted to bring in more buyers in TCS net. However, by Direct Tax Amendment Act, 2003 second clause above was also amended as " a buyer in the retail sale of such goods purchased by him for personal consumption" the provisions as it stands even today.
Thus it makes legislative intent very clear that buyers in all subsequent sales are liable for TCS unless the goods are purchased by them in retail sale for personal consumption or the goods are purchased by actual consumers of such scrap in manufacturing or processing (sub section 1A).