Retrospective excise exemption and pre-Chapter Note dutyability defeat demand on polyester products, while scrap exemption is remanded.

CESTAT Ahmedabad held that polyester staple fibre and polyester oriented yarn manufactured from plastic waste and PET bottles were not liable to central excise duty for April 2008 to March 2013, as the later period was covered by retrospective relief under Section 110 of the Finance Act, 2014 and the earlier period was outside dutyability before insertion of Chapter Note 1A in Chapter 54; the demand on the principal products was set aside. For waste and scrap generated in manufacture, exemption under Notification No. 89/95-CE depended on the notification's conditions, and because the claim had not been examined by the adjudicating authority, the matter was remanded for fresh decision.

---

---

Issues: (i) Whether polyester staple fibre and polyester oriented yarn manufactured from plastic waste and PET bottles were liable to central excise duty for the period April 2008 to March 2013. (ii) Whether the waste and scrap generated in the manufacture of such goods were exempt under Notification No. 89/95-CE dated 18.5.1995.

Issue (i): Whether polyester staple fibre and polyester oriented yarn manufactured from plastic waste and PET bottles were liable to central excise duty for the period April 2008 to March 2013.

Analysis: The demand for the later period was covered by the retrospective legislative and exemption relief granted by Section 110 of the Finance Act, 2014, along with the relevant exemption notifications. The earlier period was covered by the view that such goods were not exigible to duty prior to the insertion of Chapter Note 1A in Chapter 54, and the Tribunal also treated partially oriented yarn as within the scope of the exempted/relevant polyester filament yarn description. The demand on the main products therefore did not survive.

Conclusion: The issue was decided in favour of the assessee and the duty demand on polyester staple fibre and polyester oriented yarn was set aside.

Issue (ii): Whether the waste and scrap generated in the manufacture of such goods were exempt under Notification No. 89/95-CE dated 18.5.1995.

Analysis: The exemption for waste and scrap depended on the conditions in the notification, and the record showed that the availability of the exemption had not been raised before the adjudicating authority. Since the factual and conditional requirements needed examination, the question required reconsideration by the original authority.

Conclusion: The issue was remanded to the adjudicating authority for fresh decision.

Final Conclusion: The common demand on the principal products was deleted, while the claim relating to waste and scrap was sent back for reconsideration, so the appeals succeeded in part.

Ratio Decidendi: Where a later statutory retrospective exemption and related exemption notifications cover the disputed period, duty demand on the principal goods cannot survive, and a conditional exemption claim on ancillary goods may be remanded when its factual foundation was not examined below.

---