1998 (12) TMI 151 - AT - Central Excise

Summary

Issues involved:
1. Interpretation of Notification No. 53/88 regarding exemption for waste and scrap of plastics.
2. Eligibility for Modvat credit on inputs contained in waste and scrap of plastic sheets.
3. Applicability of Rule 57D in cases of waste and scrap specifically classified under Heading 39.15.

Analysis:

Issue 1: Interpretation of Notification No. 53/88
The Revenue appealed against the Order-in-Appeal, arguing that the appellants were not entitled to the benefit of Notification No. 53/88 for waste and scrap of plastics. The Assistant Collector had demanded payment under CESA, 1944, but the Collector (Appeals) held that the waste and scrap of plastics were indeed covered by the notification. The Collector emphasized that the notification did not intend to deny credit on inputs contained in waste and scrap. The Collector's interpretation was based on rules such as Rule 57F(4) and Rule 57C, ensuring that final products were not exempted from duty. The Collector concluded that since the notification did not specify denial of nil duty for waste and scrap, the benefit should be extended.

Issue 2: Eligibility for Modvat credit
The Revenue contended that since the final product, plastic sheets, were cleared at a nil rate of duty under Notification No. 53/88, the appellants were not eligible for Modvat credit on inputs contained in plastic waste. They argued that Rule 57D did not apply as waste and scrap of plastic sheets were specifically classified under Heading 39.15 and cleared at a nil rate of duty. However, the Tribunal rejected this argument, citing a previous case involving M/s. MRF Ltd., where it was held that the benefit of the notification could not be denied for plastic waste that had already incurred duty.

Issue 3: Applicability of Rule 57D
The Vice President, in a separate opinion, reiterated that waste and scrap of plastic falling under Heading 3915.00 could be cleared duty-free under Notification No. 53/88. He emphasized that Modvat taken on the input did not need to be reversed despite the duty-free clearance. Referring to a previous case involving M/s. MRF Ltd., the Vice President concluded that Modvat could not be denied under Rule 57D(1) in such circumstances. Therefore, he upheld the rejection of the appeal based on the precedent set in the M/s. MRF Ltd. case.

In conclusion, the Tribunal upheld the Collector's interpretation of Notification No. 53/88, rejected the Revenue's argument regarding Modvat credit, and affirmed the applicability of Rule 57D in cases involving waste and scrap of plastics.