Modvat credit does not make inputs non-duty paid; plastic waste and scrap remained exempt under the successor notification.

Plastic waste and scrap arising from inputs on which Modvat credit had been taken were held to remain eligible for exemption under Notification No. 14/92, treated as the successor to Notification No. 53/88. The Tribunal followed its earlier view that taking Modvat credit under Rule 57G does not make the inputs non-duty paid, so the exemption is not defeated on that ground. The result was that the appellants were entitled to the notification benefit and the excise demand was unsustainable.

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Issues: Whether plastic waste and scrap arising from inputs on which Modvat credit had been taken were entitled to exemption under Notification No. 14/92 dated 1-3-1992.

Analysis: Notification No. 14/92 was treated as the successor to Notification No. 53/88, which granted exemption to plastic waste and scrap arising from goods under Chapter 39 or any other Chapter of the Central Excise Tariff Act, 1985 on which duty had already been paid. The Tribunal followed its earlier view that taking Modvat credit under Rule 57G of the Central Excise Rules does not make the inputs non-duty paid, and therefore does not defeat the exemption.

Conclusion: The appellants were entitled to the benefit of Notification No. 14/92, and the demand was not sustainable.

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