Central Excise - Classification of waste generated due to misprinting, improper lamination and wrong sealing of the printed articles of plastics in Roll and Pouch form - Clarification regarding - Central Excise - 25/90-CX.3

Central Excise - Classification of waste generated due to misprinting, improper lamination and wrong sealing of the printed articles of plastics in Roll and Pouch form - Clarification regarding Circular No. 25/90-CX.3 Dated 16-5-1990 [From F. No. 93/15/90-CX.3] Government of India Central Board of Excise Customs New Delhi Subject : Central Excise - Classification of waste generated due to misprinting, improper lamination and wrong sealing of the printed articles of plastics in Roll and Pouch form - Clarification regarding. Doubts have been expressed regarding the classification of defective plastic sheets and defective plastic pouches arising in the course of manufacture of printed sheets of plastics and printed plastics pouches, whether classifiable as waste, parings and scrap of plastics under Heading 39.15 of,CET. Further, doubts have also been expressed as to whether duty paid on inputs contained in such defective sheets/pouches which has been taken as credit should be varied in case such defective sheets/pouches are treated as waste classifiable under Heading 39.15. 2. The matter has been examined. It is reported that three types of wastages normally occur during the course of manufacture of printed plastic sheets and printed plastic pouches. They are 1) printing waste 2) lamination waste and 3) sealing/trimming waste. The stages at which the three types of wastages occur are briefly summarised as follows : The Polyester Film is printed by Rotogravure process in different colours as per the requirement of the customer. Although the machine is electronically controlled but in multi colour jobs some Polyester Film is misprinted because during the start up some misregistration of colours happens. The above printed Polyester Film in Roll form is subjected to inspection on Inspecting Machines wherein the misprinted Polyester Film is taken out being unusable. The inspected Printed Polyester Film is subject to lamination where it is bonded to another layer of Plastic for barrier properties and sealing purposes. In this process again there is small wastage which happens due to improper bond between the two substractes. This materials after getting properly cured is slitted into smaller sizes as pers the requirements of the customer and converted into pouches on the Pouch Making Machine. Here the wastage results in the side trimming and improperly sealed pouches. 3. The main reasons giving rise to the doubts regarding the appropriate classification of the three types of wastages as referred to above are that defective plastic sheets plastic pouches are in the form of fully finished excisable goods conforming to Heading descriptions of sub-heading No. 3920.38 as 'flexible laminated sheets of plastics'or sub-heading No. 3929.90 as 'other articles for the conveyance or packing of goods, of plastics'. As per the Explanatory Notes under Heading No. 39.15 of HSN which corresponds to Heading No. 39.15 of CET, the Heading covers products which may consist of broken or worn out articles of plastics clearly not useable for their original purposes, or of manufacturing waste shavings, dust, trimmings etc.). As the Heading No. 39.15 of CET is aligned with the corresponding Heading of HSN, it is possible to take a view that defective sheets/pouches, which cannot be put to the original use for which they are ment, are to be treated as waste. Though HSN Explanatory Note is in the context of broken and worn out articles of plastics, it is definitely not exhaustive. The expression used in the Explanatory Note is 'may'. This connotes that the scope of Heading 39.15 is much wider and, given a judicious interpretation, the products which have been rendered unfit for the original purpose for which they are meant would also merit classification as waster. Further, as per Explanatory Note, waste covered under Heading 39.15 also includes manufacturing waste (shavings, dust, trimmings etc.). Though defective plastic sheets and pouches meant for packaging purposes cannot be called 'shavings, dust, trimmings', the expression etc. would appear to include such types of waste also. A similar view was taken by the Board on the classification issue of defective tyres and tubes since defective tyres and tubes are not meant for their original purpose and are disposed of as waste after cutting (cut tyres and tubes) vide F.No. 99/17/89-CX.3, dated 28-9-1988 . A similar view could be taken regarding the classification of printing waste, lamination waste and sealing waste in the form of plastic sheets/pouches which are unfit for use for which they are actually meant. 4. In view of the above, the appropriate classification of the defective plastic sheets/defective plastic pouches which are definitely not useable for the purpose for which they are meant would merit classification as waste, parings and scrap of plastics under Heading 39.15 of CET. However, in order to ensure that there is no misuse of such classification, the assessing officers should satisfy themselves about the exact nature of such waste. 5. As regards the issue whether MODVAT credit requires to be varied if such wastes are classified as 'waste, parings and scrap of plastics' falling under Heading 39.15, it is observed that under the provisions of Rule 57D of Central Excise Rules, the credit cannot be varied merely because a part of the input is contained in waste arising in the course of manufacture of the final products irrespective of the fact whether such waste is cleared on payment of duty or not. In the light of the provisions of Rule 57D, varying of credit in the cases referred to above does not arise. 6. The above clarification may be brought to the notice of the lower field formations and the trade interests may also be suitably advised. 7. All pending assessments may be finalised on the above basis.