Modvat credit on plastic waste and scrap upheld where compacted granules fit the declared classification and prior rulings supported it.

Modvat credit was admissible on compacted granules received as inputs where they were declared as waste and scrap of plastics under Sub-heading 3915.90. The classification at the consignor's end supported the assessee's description, and the expression "waste and scrap" was treated as having a wide ambit in line with prior decisions on similar inputs. The Revenue's reliance on price difference between compacted granules and ordinary waste and scrap was rejected as irrelevant, and in any event as a factual plea not raised in the show cause notice and unsuitable for second appellate consideration.

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Issues: Whether Modvat credit was admissible on compacted granules received as inputs and declared as waste and scrap of plastics under Sub-heading 3915.90.

Analysis: The goods received by the assessee were classified at the consignor's end under Sub-heading 3915.90, which supported the assessee's declaration of the inputs as waste and scrap of plastics. The term 'waste and scrap' was treated as having a wide ambit, and the prior decisions relied upon had accepted that description for similar inputs. The objection based on price difference between compacted granules and ordinary waste and scrap was held to be irrelevant to the issue and, in any event, a factual plea not raised in the show cause notice, and therefore not fit to be canvassed at the second appellate stage.

Conclusion: Modvat credit on the impugned inputs was held admissible and the Revenue's challenge failed.

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