2015 (6) TMI 44 - AT - Central Excise

Duty demand - whether PSF and POY manufactured by the appellant from plastic waste pet bottles, is liable to duty during the period April 2008 to March 2013 - Held that - PSF or PFY manufactured from plastic scrap and plastic waste were exempted as per the amendment carried under Notification No. 12/2012-CE dated 17.3.2012, an entry No. 172A was inserted by Notification No. 24/2012-CE dated 08.05.2012. So far as the period prior to 29.6.2010 is concerned, the same is covered by the decision of CESTAT in the case of CCE, Kanpur Vs. G.P.L. Polyfils Limited (2005 (1) TMI 375 - CESTAT, NEW DELHI). - HSN explanatory notes, Synthetic Filament Yarn includes Partially Oriented Yarn, Fully Oriented Yarn and Texturised Yarn of polyester which will be covered by the description PFY mentioned in Section 110 of the Finance Act, 2014, which retrospectively exempted the said goods. Therefore, the entire period is covered in the demand show cause notices, either because the duty was not leviable on PSF and POY manufactured by the appellants or the same were exempted under retrospective exemption or by introducing entry No. 172A in Notification No. 12/2012-CE dated 17.03.2012. Due to the corrective action taken by Revenue, it is held that there was no intention to charge duty on impugned PSF and POY for the period involved in these appeals. Exemption to waste and scrap under Notification No. 89/95-CE is subject to certain conditions mentioned in proviso contained in this notification. The aspect of availability of exemption is, therefore, required to be remanded back to the adjudicating authority, who will decide the same in the remand proceedings, after giving opportunity of personal hearing to the appellant. - Decided in favour of assessee.

Summary

Issues:
1. Duty liability on PSF and POY manufactured from plastic waste pet bottles from April 2008 to March 2013.
2. Exemption of waste and scrap of PSF and POY generated during manufacturing under Notification No. 89/95-CE dated 18.5.1995.

Analysis:

Issue 1: Duty liability on PSF and POY
The appellants contested the duty liability on PSF and POY manufactured from plastic waste pet bottles from April 2008 to March 2013. The main argument revolved around the retrospective exemption provided under Section 110 of the Finance Act, 2014, which exempted PSF and POY manufactured from waste pet bottles. The appellants relied on a Delhi High Court order that struck down a circular holding a view contrary to the CESTAT decision. The advocate emphasized that duty was not leviable for the period prior to 29.6.2010 and was exempted retrospectively until 16.10.2012. The exemption notification issued was also highlighted to support the case of duty exemption on the manufactured goods.

Issue 2: Exemption of waste and scrap
Regarding the exemption of waste and scrap of PSF and POY under Notification No. 89/95-CE dated 18.5.1995, the advocate argued that since PSF and POY were fully exempted, waste and scrap should also be exempted. However, the Revenue representative contended that the exemption under Section 110 of the Finance Act, 2014, only applied to PFY and PSF manufactured from specific plastic waste, excluding POY. The advocate countered this argument by referring to HSN explanatory notes indicating that POY falls under the category of PFY. The case records were examined to determine whether the PSF and POY manufactured by the appellant were liable to duty during the specified period and whether waste and scrap were exempted under the mentioned notification.

The judgment referred to a previous case to establish the non-leviability of duty on the goods manufactured by the appellant. It concluded that the demands for the period after 29.06.2010 did not stand due to exemptions provided retrospectively. The decision highlighted the coverage of the demand show cause notices, either due to duty exemption or corrective actions taken by the Revenue. The issue of duty liability on waste and scrap was remanded back to the adjudicating authority for further examination based on the conditions mentioned in the exemption notification. Penalties were not imposed on the appellants as the appeals were allowed on merits.

In conclusion, the appeals filed by the appellants were allowed based on the comprehensive analysis of duty liability on PSF and POY manufactured from plastic waste pet bottles and the exemption status of waste and scrap generated during manufacturing.