2023 (6) TMI 453 - AT - Central Excise

Classification of goods - goods imported by the appellant for manufacturing of re-processed granules - main bone of contention in this case concerns the eligibility of the Re-processed granules, manufactured by the appellants for exemption under Sl. No. 78 of Notification No. 4/2006-C.E., dated 1-3-2006 - To be classified under chapter heading 3915 or fall under Chapter heading 3906 and 3912? - Extended period of limitation. HELD THAT - The exemption under notification No. 4/2006 (Sl. No. 78) is available to plastic materials manufactured in factory using waste and scrap of goods falling under Ch. 39, 54 etc. as input. Clearly, benefit of exemption under Notification No. 4/2006 (Sl. No. 78) is available where inputs are waste and scrap of goods falling under Ch. 39, 54 etc. The words of goods is of critical importance. It is not merely waster and scrap but waste and scrap of goods . It is obviously applies to used and discarded goods of Ch. 39, 54 etc. assorted and collected as waste and scrap.In the present matter documents i.e. Certificate of foreign supplier, Test Report of imported goods produced by the appellant clearly show that the goods imported by the appellant are material not of prime grade. Further in the present matter there is no dispute on the use of the imported goods as waste scrap by appellant in factory premises. Thus, it is evident beyond the scope of any doubt that the imported plastics granules were nothing but waste and scrap of goods falling under chapter 39 - the imported goods have to be considered as waste scrap of goods falling under chapter 39 and entitled to above exemption. Hence there are no merit in impugned order. Extended period of limitation - suppression of facts - HELD THAT - The issue involved is clearly an interpretational issue of exemption notification and the interpretation made by the Revenue could have been made from the claim of notification as declared in their ER-1 return. It is also fact on record that the appellant have cleared the goods by filing bills of entry and the fact that the goods imported is not classified under 3915 was well informed to the Department. Therefore, in the peculiar facts as noted above there is no suppression of fact or malafide intention on part of the appellant, therefore, the invocation of extended period is illegal and incorrect. Accordingly, the demand for the longer period is not sustainable on the ground of time bar also. The impugned order is set aside and the appeal allowed with consequential relief, if any, as per law.

Summary

Issues involved:
The issues in this case involve the eligibility of re-processed granules for exemption under Notification No. 4/2006-C.E. dated 01.03.2006, the interpretation of the conditions of the exemption notification, and the bar on time limitation for the show cause notice.

Eligibility for Exemption under Notification No. 4/2006-C.E.:
The appellant contended that the waste imported for manufacturing re-processed granules falls under Chapter 39, which fulfills the conditions of the exemption notification. They argued that the waste of plastics reprocessed in India can fall under any category within Chapter 39, not limited to Tariff Item 3915. The appellant provided evidence that the imported goods were waste of plastics, which were reprocessed in their factory and cleared under the exemption notification. They also highlighted that the show cause notice was issued beyond the limitation period, emphasizing that there was no suppression of facts or intent to evade duty. The Tribunal agreed with the appellant's arguments, finding that the imported goods were indeed waste and scrap falling under Chapter 39, thus eligible for the exemption.

Interpretation of Exemption Notification:
The Tribunal examined the wording of the exemption notification, particularly the requirement that the reprocessed granules must be manufactured using waste and scrap of goods falling under Chapter 39. It was noted that the critical phrase was "waste and scrap of goods," indicating that the exemption applies to used and discarded goods of Chapter 39. The documents provided, including the certificate of the foreign supplier and test reports, confirmed that the imported goods were not of prime grade and were used as waste and scrap in the appellant's factory. Therefore, the Tribunal concluded that the imported goods qualified as waste and scrap of goods falling under Chapter 39, making them eligible for the exemption.

Time Limitation for Show Cause Notice:
Regarding the time limitation for the show cause notice, the Tribunal found that the demand for the longer period was not sustainable. The appellant had declared the exemption notification in their ER-1 return, and there was no suppression of facts or malafide intention. The Tribunal emphasized that the Revenue could have assessed the eligibility of the exemption notification based on the information provided in the ER-1 return. Since there was no suppression of facts and the Revenue was aware of the claimed exemption, the invocation of the extended period was deemed illegal and incorrect. Therefore, the demand for the longer period was set aside both on merit and limitation grounds.

Conclusion:
Based on the analysis of the issues, the Tribunal set aside the impugned order and allowed the appeal with consequential relief, if any, as per the law.