2000 (11) TMI 410 - AT - Central Excise

Summary

Issues:
1. Liability of duty on paring and scrap generated in the manufacture of BOPP films.
2. Classification and liability of duty on granules manufactured from recycled waste in the manufacture of BOPP films.

Analysis:

Issue 1: Liability of duty on paring and scrap generated in the manufacture of BOPP films:
The appeals involved a dispute regarding the liability of duty on paring, cuttings, and scrap generated during the production of BOPP films. The Commissioner (Appeals) had ruled that paring, cuttings, and scrap were exempt from duty as per Notification No. 53/88-C.E. The Department contended that since the manufacturer was taking Modvat credit on granules, duty should be paid on the scrap. However, the Tribunal noted that Rule 57D allowed credit on inputs contained in waste and that the specific exemption under Notification No. 53/88-CE for waste, scrap, parings, and cuttings in the manufacture of BOPP films overrode the general duty payment requirement under Rule 57F(4). Therefore, it was held that no duty was payable on waste, scrap, parings, and cuttings cleared for home consumption.

Issue 2: Classification and liability of duty on granules manufactured from recycled waste:
Regarding the granules produced from recycled waste used in manufacturing BOPP films, the Tribunal differentiated between superior quality granules used in production and sub-standard granules cleared for home consumption. The manufacturer argued that even sub-standard granules were waste and exempt under Notification No. 53/88-C.E. However, the Revenue contended that granules, regardless of quality, were marketable products distinct from waste. The Tribunal agreed with the Revenue, holding that duty was chargeable on granules, including sub-standard ones, as they were recognized as marketable products distinct from waste. Therefore, duty was deemed payable on sub-standard granules cleared for home consumption.

In conclusion, the Tribunal ruled that no duty was payable on waste, scrap, parings, and cuttings generated in the manufacture of BOPP films if cleared as such. Additionally, no duty was payable on granules manufactured from recycled waste and used in BOPP film production. However, duty was deemed payable on sub-standard granules not suitable for BOPP film production and cleared for home consumption. The appeals were disposed of accordingly.