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TMI Blog1998 (11) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... falling under Chapter 39 is one of the inputs used in the relation to the manufacture of tyres and they are taking Modvat credit of duty paid on these polyethylene films. It is also alleged that the scrap arising out of these duty paid polyethylene films used in the process of manufacture of tyres is sold by them without payment of duty. Thereby they have contravened the provisions of Rules 173B, 173F, 173C read with Rule 9, Rule 173G read with Rules 53 and 226 of Central Excise Rules, 1944 inasmuch as :- They had manufactured and cleared scrap of plastics falling under sub-heading 39.15 without filing the classification list as required under Rule 173B, and cleared the goods without determining the Central Excise duty to be paid on the goods as required under Rule 173F, without filing the price list as required under Rule 173C, without payment of duty as required under Rule 9, without maintaining statutory records as required under Rule 173G read with Rules 53 and 226 of Central Excise Rules, 1944 and without gate pass as required under Rule 52A of the Central Excise Rules, 1944. It was alleged that they had removed the goods without intimating to the authorities which amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as decided that even the damage/rejection and waste arising during the processing of inputs for the manufacture of final products, comes within the encompassing language of Rule 57D(1). They also stated that the Sr. No. 24 of the Table to the Notification No. 53/88, dated 1-3-1988 grants full exemption from duty as this waste arises from the polyethylene film falling under Chapter 39 on which duty had already been paid. They also stated that it is a well settled principle that Modvat credit is not equitable to refund and duty paid inputs do not lose duty paid character because of Modvat credit. In this regard, they relied on the judgment rendered in the case of Collector of Central Excise v. V.S. Engineering as reported in 1990 (49) E.L.T. 561. As can be seen from the Sr. No. 24 of the said Notification, there is no conditon to the effect that credit of duty should not be availed under Rule 57A on the goods for making the waste eligible for Nil rate of duty, as mentioned at Sr. No. 39 of the same Notification. The only condition stipulated here is that the goods from which the waste arise should have suffered duty which has been satisfied. It is also pleaded that all the details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-1988 grants total exemption from payment of duty in respect of waste/parings and scrap of plastics which fall under Heading 39.15 on the condition that if such waste/scrap of plastics arise from goods, falling under Chapter 39 or another Chapter of the Schedule to the Central Excise Tariff Act, 1985, on which the duty of excise leviable thereon under the Central Excises and Salt Act, 1944 or the additional duty leviable thereon under Section 3 of the Customs Tariff Act, 1975 as the case may be, has already been paid. The Collector has held that the duty paid character of the goods are lost after they have been utilised in the process of manufacture of final product viz. tyres. He has held that the Board s executive instructions on the issue, as cited by the party, cannot over-ride the legal provisions as set out in Rule 57F(1)(ii). We are not agreeable with the findings of the Learned Commissioner that the waste for the first instance has not arisen out of the waste as contended by the appellants. However, it does not lose the duty paid character as the polyethylene sheets admittedly falling under Chapter 39 and had suffered duty and it had been utilised as an input. After its us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he market. 7. Nor do we see any force in the Revenue s contention that Notification No. 132/86 does not apply in the present case because it does not confer full exemption from duty unlike Notification Nos. 54/88 and 178/88. Whether the concessional rate of duty should be 35% ad valorem or nil is a matter of policy. But that cannot influence the interpretation of a notification especially in the absence in Notification No. 132/86 of a prohibition or restriction as in Notification Nos. 54/88 and 178/88." 9. We also notice that the Board itself has clarified by its circular and the trade notice that the raw materials and component parts on which proforma credit has been taken under Rule 57A could not be treated to be non-duty paid in character. This Boards letter and the trade notice is binding on the Commissioner. 10. We also notice that the plea of time bar taken by the appellants is also sustainable. In view of the matter that they have not suppressed any fact about the scrap/waste of plastic having been sold to scrap dealers. The appellants had maintained registers pertaining to the polyethelene sheets which were used in the manufacture of tyres. These details were obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Central Excise formalities in that regard, invocation of the extended time period provisions was justified. 14. I have considered the submissions of the appellants referred to by the ld. Member (J) in his order (and therefore not repeated) and those of the ld. Departmental Representative. I observe that undisputably the plolyethene film is one of the inputs in the manufacture of tyres and these were duty paid. The department s contention that the taking of Modvat credit affects the duty paid character has not been accepted by the Tribunal in a series of its orders and it is a settled point now. 15. The appellants had described the manufacturing process (which has not been disputed) and it is evident therefrom that scrap of polyethene film arises during the process of the manufacture of tyres. Therefore, the appellant s case is covered by Rule 57D(i) which clearly lays down that credit of duty shall not be denied on the ground that parts of inputs are contained waste, refuse or by-product arising during the manufacture of final product. 16. Further more Notification No. 53/88 grants exemption from payment of duty in respect of waste and scrap of plastics which fall under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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