9911796707
TMI Blog1995 (4) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... ming classification under heading 3904.00 with duty at 30% under Notification No. 418/86. The jurisdictional Assistant Collector of Central Excise Pune passed an order, dated 10-4-1987 classifying the scrap of electric wires and cables under heading 8544.00 and approved classification of scrap of PVC compound under heading 3915.00 liable to duty of 40% ad valorem. The assessee appellant filed an appeal to the Collector of Central Excise (Appeals), Bombay against the Assistant Collector s order and the Collector (Appeals) by his order, dated 26-5-1988 set aside the Assistant Collector s order and remanded it for observing principals of natural justice. Accordingly, the Assistant Collector adjudicated the matter afresh and passed his order on 1-4-1991 after issuing of a show cause notice as to why the scrap of wires and cables be not classified under heading 8544.00 because of the fact that there is no distinction between the longer length and short length of such wire cables in the tariff heading or in the Chapter or Section Notes. They were also asked to show cause why the scraps of PVC compound for which they are claiming the classification under heading 3904.00 be not classified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her observed that in the course of manufacture of any product some waste and scrap is bound to arise and he noted that this fact is recognised in Rule 57D of the Central Excise Rules related to MODVAT where it is mentioned that MODVAT Credit should not be denied or varied on the ground that part of the input on which the credit has been taken is contained in any waste refused or by product arising during the manufacture of the final product whether or not such waste etc is exempt from duty. The Collector (Appeals), therefore, directed that the assessee should follow the procedure of 6-7-1964 of the Board and the goods can be cleared without payment of duty if the Central Excise Officer is satisfied that it has been rendered into scraps. In so far as the scrap of PVC compound is concerned, the Collector (Appeals) held that the goods are classifiable under 3915.00 Central Excise Tariff and liable to duty as per Notification No. 132/86. 2. The assessee appellant herein thereafter filed the present appeal before the Tribunal. They also filed a Writ Petition before the Bombay High Court on the same issue of classification arising out of a show cause notice of 16-6-1994 issued by the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for amendment of their appeal Memorandum before the Collector (Appeals) and referred to the papers at Annexure XXIII at Page 65 to 67 of the Paper Book. In this the assessee appellant have added the ground that they have been paying duty at 40% ad valorem but they have come to understand in view of various judicial pronouncement waste scrap of PVC compound is assessable to nil rate of duty under Serial No. 24 [of] the Table to the Notification No. 53/88, dated 1-3-1988 as amended. In view of (sic) this, the appellants have submitted that waste and scrap of plastic including that of PVC compound though classifiable under Heading 39.15, the scrap should be subject to nil rate of duty. They had also sought the grounds of appeal before the Collector (Appeals) by submitting that waste of PVC compound generated in the manufacture of electric wires and cables falling under Chapter 85 of the Tariff Schedule should be assessed to nil rate of duty under Serial No. 24 of Notification No. 53/88. Shri Rangwani, the learned Consultant submitted that this amended appeal petition before Collector (Appeals) does not seem to have been considered by Collector (Appeals) by passing this impugned order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .K. Singhal, the learned Departmental Representative contended that the order of the Collector (Appeals) is only one of remand and is not a final order. It is not a final order as regards the dutiability of goods in question. The learned Departmental Representative pointed out that Notification No.132/86 at Serial No. 6 covers PVC compound at nil rate of duty and does not cover the scrap thereof with which we are concerned in this appeal. The learned Departmental Representative also pointed out that the additional grounds that the assessee appellants are said to have submitted before the Collector (Appeals) do not seem to have been considered at all by the Collector (Appeals) nor have the appellants been able to produce any evidence of submission thereof before the Collector (Appeals) by way of acknowledgement from the Collector office. Besides, the authorities below have largely gone by the assessee appellants own acceptance of classification of these scraps of PVC compound under Heading 3915 Central Excise Tariff Act. The learned Departmental Representative drew the attention to the grounds of appeal of the department to say that short length of wires and cables by itself will no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inevitable due to various factors like power failure, workmanship defect, changing of master batch colour, machinery breakdown, etc. The short lengths generated during the manufacture of cables are marketable as cable and not scrap. We have never contested about the dutiability of short lengths and have always cleared the same on payment of prescribed excise duty. These short lengths are not.to be confused with scrap of cables. The scrap of cables is unserviceable/defective pieces of cables. It is very often in the form of a mass of metal and insulating compound. The scrap is not marketable as cables. What is being classified by us as scrap is neither long length nor short length but tiny, rejected, assorted mixed scrap of cables scrap which cannot be called cable by any stretch of imagination." Therefore, what is sought to be cleared as scrap is material in the nature of rejects unmarketable as wires and cables. Where marketable but short length cables have been generated during the manufacture, the appellants have submitted that they have never contested their dutiability which is a submission which remains unrebutted. This would answer the Department s contention that short le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tem 68 C.E.T. The Tribunal observed as follows in para 5 of its decision to say how scrap is not goods : Scrap is not a goods that the factory set out to produce. We can even say that the scraps arose in spite of the factory s efforts to prevent their appearance because they represent a loss to the factory as rejects incapable of fetching the price of the prime products. When they do sell the scrap, it is at a fraction of the price of the prime goods. This led the Assistant Collector into seeing in the scraps a finished product with a new character and new name and new use. Scraps have no character nor do they have a name unless the word scrap is a name; but I hold differently. Scrap is a name that is not much used in central excise assessment; it applies to copper aluminium, iron, plastic, paper; it is no name to assess a product by; waste, scraps and rejects are not names of goods but names of non-goods, materials that could have been but did not become prime goods. 6. The Tribunal, thereafter, considered the Supreme Court decision in the case of Khandelwal Metal Engg. Works v. U.O.I. - 1985 (20) E.L.T. 222 and noted that the Supreme Court said that the production of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rap of PVC compound, it is seen that the Show Cause Notice, dated 29-7-1988 was issued relating to the Classification List No. 6/86, dated 8-10-1986 submitted by the assessee-appellants in which they had claimed classification of scrap PVC compound under heading 3904.00 Central Excise Tariff Act and it was proposed in the Show Cause Notice to classify it under heading 3915.00 and applying Notification No.132/86. The appellants reply to Show Cause Notice on this was, As regards scrap of PVC compound, we have been paying duty under heading 3915.00 at 40% ad valorem and we have no dispute in this regard. The Assistant Collector in his adjudication order, thereupon, held Regarding scrap of PVC compound, they have accepted the classification of the product under heading No. 3915.00 with the rate of duty at 40% ad valorem. Hence the approval to the above classification and rate of duty accorded in the earlier classification lists stands continued. In their appeal memorandum before Collector (Appeals), dated 12-7-1991, they had challenged only exigibility and classification of scrap of electric wires and cables under Heading 85.44 CETA, 1985, and the appeal memorandum was totally sil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was handed over to Collector (Appeals) during personal hearing. If that be so, it is not clear as to how there is no reference at all in the impugned order to any of the submissions in the appellants amended appeal memo. In these circumstances, we conclude as follows :- The scrap of PVC compound is covered under Heading 39.15 which covers waste, parings and scrap of plastics . The same arguments and ratio of case law by which it is found that scrap as wires and cables is not excisable earlier in this order, would go to support the conclusion; that scrap of PVC compound is exigible. It is internationally traded as is evident from similar heading in Chapter 39 of HSN Explanatory Notes. The assessee-appellants have also not disputed the exigibility and classification of the goods. The question is of eligibility to exemption. The lower authorities have granted exemption under Notification No. 132/86 against Sr. No. 39 of the Table to that notification which reads as follows :- 39. to 39.01 39.15 All goods other than polyurethanes falling under sub-heading No. 3909.60 40% ad valorem. The assessee-appellants claim that their fresh ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal memorandum before Collector (Appeals)] that scrap of PVC compound is eligible for full duty exemption under Notification 222/86, dated 3-4-1986 which is also subject to the same condition as in Notification 53/88. The condition is that the scrap should be shown to have arisen from goods falling under Chapter 39 or any other Chapter of CETA, 1985 on which Central excise duty or the additional duty of Customs (CVD) has already been paid. Whether the condition is satisfied or not would require factual verification and no such verified data is available before us and it may not be proper to go merely by the appellants assertion in the matter. In this context, one has to bear in mind the well-settled principle that exemption from duty is an exception and it is for the assessee who claims the exemption to establish that he fulfils the conditions therefor. What emerges, therefore, is that admittedly for the period 1-3-1986 to 2-4-1986 at any rate only notification which covered scrap PVC compound was Notification 132/86 and, therefore, for this period exemption under this notification has rightly been extended by the lower authorities to the assessee. The assessee s latter claim sai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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