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TMI Blog2010 (1) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... e rejected goods does not amount to manufacture and if the resultant products are cleared, the Cenvat credit taken on the resulted goods received back is required to be reversed. In the case before us, it is seen that the appellant avails credit of the entire amount of the duty paid on rejected final products, seeks to pay the duty only on the waste and scrap, which at any stretch of imagination cannot be said to be arising out of a process of manufacture. We are of the view that the appellant cannot claim that the waste and scrap which arises from rejected goods, are due to the process of manufacture as there is no manufacture, involved in the process, as is explained by the appellant before us as well as before the lower authorities. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared on payment of duty at scrap value were made from the rejected finished goods on which cenvat credit was taken and scrapping of the BOPP films by cutting, etc., does not amount to manufacture, by virtue of rule 16(2) of the Central Excise Rules, 2002, the appellants were required to clear the said waste and scrap on payment of amount equal to the cenvat credit taken on such rejected BOPP films (from which the said scrap was obtained). It is pertinent to note that no demand has been raised on the rejected BOPP film which was first converted into scrap, then to reprocessed granules and finally used for the manufacture of fresh BOPP films cleared on payment of duty. Accordingly, duty demand of Rs.1,87,059/- has been confirmed and a penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELT 799 (Tri - Mumbai). 3. Learned DR on the other hand relies on the decision of the Tribunal in the case of Hindalco Industries Ltd. Vs. CCE Belapur reported in 2007 (215) ELT 547 (Tri. - Mumbai) in support of his contention that if the rejected goods brought back to factory and part of it is cleared as waste and scrap after process of unwinding rolls received back, inspecting them, subsequently cutting and re-rolling them, such scrap cannot be said to be arising out of process of manufacture. 4. I have considered the submissions made by both the sides. As per the provisions of Rule 16 of Cenvat Credit Rules, if the process involved on the rejected goods does not amount to manufacture and if the resultant products are cleared, the Cenva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention on the part of the manufacturer. It is therefore clear that plastic waste is a result of manufacture. 5. We are also not able to agree that the plastic waste which emerged at the appellants hands is not capable of being classified under Heading 39.15 of the Tariff. Heading 39.15 is for waste and scrap of plastic. BOPP film scrap that emerged is clearly includable in such plastic waste and scrap. The argument that this heading will only apply to waste and scrap which arises during the course of manufacture of such plastic is not acceptable. We have already dealt with it earlier. Therefore there is no merit in the claim. 5. It has to be noted that in that case appellant was not engaged in the manufacture of BOPP film at all. They ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant into the factory under the provisions of Rule 16 of Central Excise Rules, 2002. After the inspection of such rejected goods, appellant cleared those goods, which conformed to the specification of customers on payment of duty and cleared the balance as waste and scrap. The appellant availed Cenvat credit as per provisions of Rule 16 of Central Excise Rules, 2002 when they received the goods back from their customers and while clearing the goods second time to their customers they paid the duty on such clearances. On the balance goods, which are waste or scrap, the appellant paid appropriate duty as waste and scrap. Show cause notice was issued to appellant directing them the show cause as to why the excess amount of credit availed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a process of manufacture. We are of the view that the appellant cannot claim that the waste and scrap which arises from rejected goods, are due to the process of manufacture as there is no manufacture, involved in the process, as is explained by the appellant before us as well as before the lower authorities. Accordingly, we find that the impugned order, to the extent it confirms the demand is correct and legal and does not require any interference. On reading of both the paragraphs together what emerges is that the Tribunal did not discuss whether cutting and re-rolling of the goods brought back to the factory would amount to manufacture or not. The tribunal seems to have gone on the assumption that the appellants availed credit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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