Kryten ambushes the Inquisitor with an activated holo-saw, severing the Simulant's hand and the Time Gauntlet
The Inquisitor regrows his hand, likely through nano-technology
A Holo-Saw was a piece of JMC mining equipment. When not activated, it was simply a handle. When activated from the handle, it resembled a large, glowing-red industrial saw; formed from a kind of hard-light hologram.
There were some holo-saws present in the cargo bays of Red Dwarf, and were presumably originally designed to cut apart rocks, much as the bazookoids were used to blow apart ores. Also much like the bazookoids, the holo-saw could be improvised into a weapon.
When the gang were threatened by the Inquisitor, Kryten was able to sneak up on the Simulant from behind and cut off the Simulant's hand with a holo-saw. Although the Simulant quickly "regrew" his hand (likely through some form of nano-technology) and killed Kryten by crushing his head, Kryten's actions enabled Lister to get hold of the Simulant's Time Gauntlet, and also bought Lister some time.
With this, Lister was eventually able to erase the Inquisitor from the timeline, and undo everything the Inquisitor had done. ("The Inquisitor", Series V)