1991 (1) TMI 308 - AT - Central Excise

Summary

Issues:
1. Determination of whether caprolactum recovered from nylon polymer waste by depolymerisation is exempt from excise duty under Notification 36/85.
2. Applicability of the limitation period for the demand of duty.
3. Classification of caprolactum as goods subject to excise duty.
4. Double taxation on imported caprolactum recovered by recycling.
5. Co-relation of waste and recovered caprolactum quantities.
6. Price fixation for caprolactum.
7. Non-filing of ground plan.
8. Justification of penalty imposed.

Analysis:

1. The main issue in this appeal was the determination of whether caprolactum recovered from nylon polymer waste through depolymerisation is exempt from excise duty under Notification 36/85. The appellants contended that the depolymerisation process should be considered as recycling, thus qualifying for the exemption. The order under challenge held that depolymerisation is distinct from recycling, denying the exemption and imposing duty and penalty. The Tribunal analyzed the process of depolymerisation and recycling, ultimately ruling in favor of the appellants based on a previous decision and the lack of evidence of marketability.

2. The appellants raised the issue of the limitation period for the demand of duty, arguing that the show cause notice was issued beyond the statutory 6-month period. They claimed no suppression as they had filed classification lists, challenging the extended limitation period of 5 years. Additionally, they highlighted a jurisdictional fact regarding the Collector's order, asserting that any change in the Department's interpretation should only apply prospectively, citing relevant case law.

3. Another issue was the classification of caprolactum as goods subject to excise duty. The appellants argued that caprolactum in liquid form is not bought or sold, thus not attracting duty. They also raised concerns about potential double taxation on the same imported caprolactum recovered through recycling, citing previous cases to support their position.

4. The co-relation of waste and recovered caprolactum quantities was discussed, with the appellants pointing out discrepancies in the figures presented. They also challenged the basis of price fixation for caprolactum and the allegation of non-filing of the ground plan, asserting that it was submitted albeit belatedly.

5. The Tribunal considered the penalty imposed, with the appellants arguing that it was unwarranted. The respondent countered by explaining the technical aspects of monomers, polymers, polymerisation, and depolymerisation, emphasizing the chemical distinctions and marketability of caprolactum. The Tribunal ultimately ruled in favor of the appellants, determining that the depolymerisation process constituted recycling, entitling the caprolactum to exemption under the relevant notifications.

6. In conclusion, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellants based on the precedent set by a previous decision. The judgment highlighted the importance of marketability in determining excisability and concluded that caprolactum recovered through depolymerisation qualified for the exemption, aligning with the interpretation of recycling processes.