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2014 (12) TMI 315 - AT - Central ExciseCENVAT Credit - waste and scrap of plastics arisen in the course of manufacture of BOPP films - Held that - Nowhere in the Central Excise Act or Rules, it is stated that when credit is taken, the input becomes non-duty paid. Payment of duty is a question of fact and once duty is paid, the product remains duty-paid and that fact cannot be erased or obliterated on what happens subsequently. Therefore, as rightly observed by this Tribunal in the case of MRF Ltd. (1998 (11) TMI 233 - CEGAT, NEW DELHI) and Supreme Industries - 1997 (3) TMI 529 - CEGAT, MUMBAI , affirmed by the Apex Court 1998 (3) TMI 676 - Supreme Court of India by taking credit, the inputs do not become non-duty paid. The very fact that credit has been allowed itself is a proof that duty has been paid on the inputs and without payment of duty, no credit can be taken. Therefore, benefit of Notification 53/88 cannot be denied on waste and scrap of plastics manufactured from duty-paid inputs. - Plastic waste and scrap arising in the course of BOPP films cannot be considered as a final product and it is only a byproduct and therefore, provisions of Rule 57D is applicable to the facts of the present case and the respondent has rightly taken the credit on the inputs contained in the waste and scrap of plastics which has arisen as byproduct in the course of manufacture of BOPP films. Rule 57D, as it stood at the relevant time, clearly laid down that credit of specified duty allowed in respect of any inputs shall not be denied or varied on the ground that part of the inputs is contained in any waste, refuse or by-product arising during the manufacture of final product, whether or not such waste, refused or by-product is exempted from whole of the duty of excise thereon or is chargeable to nil rate of duty or is specified as a final product under Rule 57A. - Decided against Revenue.
Issues:
1. Interpretation of Notification 53/88 regarding exemption of duty on waste and scrap of plastics. 2. Application of Rule 57D of the Central Excise Rules, 1944 to the case. 3. Classification of waste and scrap as final product or by-product. Analysis: Issue 1: Interpretation of Notification 53/88 The case involved a dispute regarding the exemption of duty on waste and scrap of plastics under Notification 53/88. The Revenue contended that once Cenvat credit is taken on inputs, the exemption condition is violated. However, the appellate authority ruled that waste and scrap cannot be considered final products, and therefore, the exemption applies. The Tribunal emphasized that the payment of duty on inputs remains even after taking credit, and the benefit of the notification cannot be denied based on this. The Tribunal referred to previous decisions to support this interpretation, ultimately dismissing the Revenue's appeal. Issue 2: Application of Rule 57D The Revenue argued that waste and scrap were declared as final products, making Rule 57D inapplicable. However, the respondent's counsel pointed out that Rule 57D allows credit even if inputs are contained in waste exempt from duty. The Tribunal agreed with the respondent, stating that Rule 57D permits credit in such cases, contrary to the Revenue's claim under Rule 57C. The Tribunal upheld the respondent's position, emphasizing that Rule 57D applies to the facts of the case. Issue 3: Classification of waste and scrap The respondent argued that waste and scrap should be considered by-products, not final products, based on previous tribunal decisions. The Tribunal concurred, citing a High Court ruling that waste arising in the course of manufacturing is not a final product. Applying this reasoning to the case, the Tribunal determined that the waste and scrap of plastics were byproducts of BOPP film manufacture. Therefore, the respondent was justified in taking credit on inputs in the waste, leading to the dismissal of the Revenue's appeal. In conclusion, the Tribunal found no merit in the Revenue's appeal and upheld the respondent's position, dismissing the appeal and disposing of the cross-objection.
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