2005 (2) TMI 384 - AT - Central Excise

Summary

Issues:
Whether central excise duty should be paid on polyethylene film waste and scrap cleared by manufacturers of tyres availing Cenvat credit.

Analysis:
The appeals arose from the order of the Commissioner of Central Excise (Appeals), Cochin, regarding the payment of central excise duty on polyethylene film waste and scrap. The key issue was whether duty should be paid at the appropriate rate upon clearance of such waste and scrap, considering the respondents are tyre manufacturers availing Cenvat credit. The polyethylene films are utilized to wrap tread rubber and other items to prevent contamination and sticking.

The Tribunal referred to its decision in the case of Viral Laminates Ltd. v. CCE, Ahmedabad-II, where it was established that plastic waste and scrap, including polyethylene film scrap, fall under chapter Heading 39.15 of the Central Excise Tariff Act, 1985. The respondents argued that duty liability arises only when scrap is generated during the manufacture of final products, i.e., rubber tyres. However, as per the respondents' own submission, the inputs are indeed used in relation to the manufacture of final products, aligning with the Tribunal's decision.

The Tribunal found that the respondents' attempt to distinguish the previous decision was not valid, and the duty demand needed to be recalculated by considering the price as cum duty price, following the precedent set by the larger bench in the case of Srichakra Tyres Ltd. Consequently, the impugned order was set aside, and the appeals were allowed. The decision was dictated in court, affirming the Tribunal's ruling.