1993 (5) TMI 104 - AT - Central Excise

Summary

Issues:
Whether waste parings and scrap of plastics arising from uncut polyurethane foam block are leviable to nil rate of duty under Notification No. 53/88 or chargeable to duty under Notification No. 54/88.

Analysis:
The appeals involved a common issue regarding the classification of waste parings and scrap of plastics. The main contention was whether these items are exempt from duty under Notification No. 53/88 or should be charged duty under Notification No. 54/88, as determined by the Appellate Authority. The waste materials in question were derived from uncut polyurethane foam blocks, which were themselves exempted under Notification No. 217/86 as inputs captively consumed for further manufacturing. The appellants argued that since duty was paid on the inputs, the waste materials should also be exempt. An additional ground was raised, citing a High Court decision that the term "duty of excise leviable thereon" in Notification No. 53/88 includes nil rate of duty. The appellants also sought the benefit of concessional rates under Notification No. 54/88 if their primary argument was rejected.

During the hearing, the appellants reiterated their arguments, while the JDR did not oppose the inclusion of additional grounds and supported the Order-in-Appeal. The Tribunal considered the arguments and noted that no duty was paid on the uncut polyurethane foam blocks from which the waste materials originated. The Tribunal reasoned that accepting the appellant's plea would render Notification 54/88 redundant, which should be avoided. This interpretation was supported by the provisions of Notification No. 217/86, which excludes inputs used in the manufacture of final products exempt from duty or charged at nil rates. Therefore, the waste materials could not be covered under Notification No. 53/88 without conflicting with Notification 217/86.

The Tribunal rejected the argument that duty had been paid on the inputs, emphasizing the distinction between raw materials and resultant goods. It was clarified that duty paid on raw materials does not automatically apply to the resulting goods. A harmonious interpretation of the relevant notifications led to the conclusion that waste materials from uncut polyurethane foam blocks, on which no duty was paid, should be charged duty under Notification No. 54/88. The Appellate Authority's decision to allow the benefit of concessional rates under Notification No. 54/88 was upheld, and the appeals were rejected. The Misc. petition was also disposed of accordingly.