Using Scrap Feature & Manufacture Settings

Hi,
The manual says as follows:
“Scrap from the BOM will only work if Manufacture Entry is created based on BOM, and not based on Material Transfer. This is configurable from Manufacturing Settings”

But i am able to change the settings to Material Transfer and still be able to add scrap items in BOM.

Is this setting still relevant w.r.t scrap transaction from production order?