The incident took place at 'Khadi Machine' square at Kondhwa when the shell, which was being weighed at the shop, blew up unexpectedly, said police who had earlier suspected it to be a cylinder explosion.
The deceased was identified as Aslam Chaudhary (20), the owner of the scrap shop who hailed from Uttar Pradesh. Two others at the shop sustained injuries. The blast also made a seven-inch hole in the ground.
There was however no suspicion of a sabotage or foul play in the incident, Pune anti-terrorism squad (ATS) officer Bhanuprasad Barge told PTI.
Police are examining the chemicals used in the explosives, suspected to be planted by someone out of personal enmity with the victim.
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