1997 (1) TMI 254 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 57D regarding the allowance of Modvat Credit on waste recycled granules.
2. Whether recyclable inputs can be considered as waste under Rule 57A of the Central Excise Rules, 1944.

Analysis:
1. The case involved a dispute regarding the allowance of Modvat Credit on waste recycled granules. The Commissioner of Central Excise raised questions of law concerning the clearance of regenerated granules at nil rate of duty and the eligibility of Modvat Credit on the recycled waste. The respondents, engaged in manufacturing BOPP film, were availing Modvat Credit under the scheme. The Superintendent issued a show cause notice questioning the credit availed on waste and scrap, alleging that the percentage of wastage exceeded final products. The Assistant Collector initially held that the benefit of Rule 57D, which allows Modvat Credit on inputs contained in waste, should not apply due to the high proportion of waste. However, the Collector (Appeals) disagreed, stating that the Rule should apply regardless of the waste quantity.

2. The Tribunal, in its decision, referred to a previous judgment stating that Rule 57D covers the credit of inputs in waste generated during BOPP film manufacturing, irrespective of the waste quantity. The Tribunal emphasized that the key issue was whether the waste quantity determined the eligibility for Rule 57D benefits. Upon reviewing the lower authorities' findings, the Tribunal concluded that the benefit under Rule 57D was applicable regardless of the waste amount. However, upon further examination of all facts and submissions, the Tribunal found that the legal points raised in the reference application did not directly relate to the impugned order. Consequently, the reference application was rejected, and the decision was in favor of the respondents regarding the application of Rule 57D for Modvat Credit on waste recycled granules.

This detailed analysis highlights the core legal issues surrounding the interpretation of Rule 57D and the application of Modvat Credit on waste recycled granules in the context of the Central Excise Rules, 1944.