TaxTMI 
TaxTMI 
1995 (9) TMI 194
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.... to duty under Tariff sub-heading 3909.69 pertaining, inter alia, to "polyurethanes in primary form" is cleared without payment of duty in the factory itself for consumption in the manufacture of p.u. articles as aforesaid under exemption notification 217/86 since the final products - articles of cellular p.u. - are dutiable under Tariff sub-heading 3912.11 read with Notification 54/88-C.E., dated 1-3-1988 (as amended). 1.3 Prior to January 1990, the respondents were paying duty on the aforesaid `skins' and other waste, parings and scrap (WPS) arising during the course of manufacture of articles of cellular p.u. foam under Sl. 6 of the table to Notification 54/88. For better appreciation the extracts from Notification 54/88 are reproduced below :                 Polyurethanes In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules. 1944, the Central Government hereby exempts goods of the description specified in column (3) of the table hereto annexed and falling under heading Nos. or sub-headings of the Schedule to the Central Excise Tariff Act, 1985 (5 of....
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....lock left after cutting off the top, bottom and side skins. The latter 'waste', they submit, is liable to discharge the duty in terms of Notification 54/88 which is not indispute. Dispute is whether the 'WPS' arising in the form of top, bottom and side skins of p.u. foam block is liable to nil rate of duty in terms of Notification 53/88-C.E. 1.6  Collector C.E.(Judicial) has allowed the contention of the respondents herein. Hence, the present application under Section 35E of the Central Excises & Salt Act, 1944, as on the direction of the Central Board of Excise & Customs to be treated as appeal before us. 1.7  For appreciation of the controversy, we reproduce relevant extracts of Notification No. 53/88 :- In exercise of the powers conferrd by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 132/86-Central Excises, dated the 1st March, 1986, the Central Government hereby exempts goods of the description specified in column (3) of the Table hereto annexed, and falling under Heading Nos. or Sub-heading Nos. of the Schedule to the Centra....
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....3  He further submits that trade notice is mainly about clarification of 'WPS' under consideration. In fact both the Notifications 53/88 and 54/88 classify 'WPS' as under Heading 39.15. Trade Notice 51/89 is not relevant for deciding the controversy in question-whether Notification 53/88 or Notification 54/88 governs the rate of duty on WPS. 3.1  On the other hand, learned advocate Sh. Vinay Garg for the respondents has urged that the two Notifications 53/88 and 54/88 are different in character and operate for different products. Notification 53/88 speaks of WPS of all plastics whereas Notification 54/88 speaks only of WPS of flexible p.u. foam. Top, Bottom and side skins of a p. u. foam block are either not foamed at all or are only partially foamed. These are hard in character and by no means can be treated as WPS of flexible p.u. foam. Therefore, the WPS under consideration fall outside the scope of Notification 54/88. 3.2  On the other hand, the WPS in the form of top, bottom and side-skins satisfy the term of Notification 53/88 fully.There is no reason whatsoever to deny the benefit of the said notification. It is admittedly WPS of plastic, p.u. being a pl....
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....ication specifically applicable to HVI Spindle oil carried a higher rate of duty whereas a 'mineral oil (HVI Spindle oil) was leviable to lower rate of duty. Conditions of both the notifications were satisfied by the product of the I.O.C. Tribunal allowed the contention of the I.O.C. for allowing the benefit of notification imposing lower burden of duty. 4.3  We, however, observe that there is no sufficient force in the appellant's plea that removal of p.u. foam block under Notification 217/86 for captive consumption would mean that the p.u. foam block has not already paid the duty leviable thereon. This position is now well settled in Patna High Court's judgment in the case of Tata Yodogawa Ltd. & Another v. UOI & Others [1987 (32) E.L.T. 521 (Patna)]. This judgment has been followed by the Tribunal in a series of judgments e.g. 1990 (49) E.L.T. 284 & 1988 (35) E.L.T. 142. A question in Tata Yodogawa arose whether ingots, which were exempted from payment of duty if melting scrap ( from which such ingots were manufactured) had already paid duty, would still be entitled to exemption if the scrap used in manufacture of such ingots was fully exempted. It was held that ingots w....
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.... is not that the respondent cleared the bound goods in the garb of waste skins, but the allegation is that there was deliberate excess production of waste skins from January, 1990 with the intention of clearing them without payment of duty under Notification 53/88 instead of clearing them on payment of duty under Notification 54/88 as was being hitherto done by the respondents. It is also alleged that this tendency on the part of the respondents started after filing revised classification list claiming exemption under Notification 53/88. We do not see any offence in this scheme or intention of the respondents, even if it be true, particularly after upholding respondents' contention of applicability of Notification 53/88 to top skin, bottom skin and side skins. 6.  Hence, in sum, we dismiss the appeal of the Revenue. Sd/- (P.C. Jain) Member (T) [Assenting Order per : G.P. Agarwal, Member (J)]. My order is as follows : 7.  The respondents M/s. Maruti Foam (P) Ltd. are engaged in the manufacture of articles of Cellular/Flexible Polyurethane Foam which are cleared on payment of duty. For this purpose they imported plastics in primary form that is....
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....0 effective from 11-1-1990 claiming that since the said top skin, bottom skin and shredding falls under Chapter Heading 3915.90 as articles of plastics they were entitled for the benefit under Notification No. 53/88, dated 1-3-1988 as amended. However, a Show Cause Notice was issued to the respondents inter alia on the ground that as per [the] condition of the Notification No. 53/88 (Sl. No....) nil rate of duty on waste, parings and scrap of plastics falling under Tariff Heading 39.15 is applicable only if such waste paring and scrap of plastics arise from goods on which the duty of excise leviable thereon or the additional duty as the case may be has already been paid and since in the instant case blocks of Polyurethane Foam of irregular shape in primary form falling under 3909.60 were removed for captive consumption under Notification No. 217/86, dated 1-3-1986 without payment of duty on the condition that final product shall be cleared on payment of duty, the benefit of the said Notification No. 53/88 cannot be extended. However, the Collector of Customs and Central Excise, Meerut dropped the said demand holding that the waste and scrap of plastics enjoys the benefit of exempti....
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....he goods given in the said two Notification Nos. 53/88 and 54/88 was not either brought to the notice of the Bench or not noticed by the Bench itself. He also submitted that the final products referred to in the Proviso to Notification No. [217/86] refer to the finished final product only and not to the by-products, waste or residue emerging at intermediate stage and known as intermediate product. But it appears that this was also not brought to the notice of the Bench in the case of M/s. Tirupati Foams Pvt. Ltd., supra. 10.  I have considered the submissions. The following facts stand established from the record in the instant case : (i)  that the respondents imported plastic material on payment of duty for manufacture of articles of cellular/flexible polyurethane foam: (ii) that the first product which came out of their plant was blocks of Polyurethane Foam of irregular shape in primary form which were not fully foamed and have an uneven surface and stiff and hard sides skins classifiable under Heading 3909.60 and attracting Central Excise duty at the rate specified therein, but the same were cleared for captive consumption as inputs for manufacturing the ....
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.... E.L.T. 794 (SC), the Apex Court was concerned with the interpretation of Proviso to Notification No. 201/79 which was identical to the Proviso to Notification No. 217/86 which provided that the notification shall not apply when such final product was wholly exempted from the duty of excise or chargeable to nil rate of duty and after analysing the case law and the Notification it was held that, the condition that the goods should not be fully exempted was with reference to the final product only and not to the by-products, waste or residue emerging at intermediate stage and, therefore, set off of duty paid on the input could not be denied or reduced even on that part which was contained in the waste or by-product generated during the manufacture of final product. In the case of Detergents India Ltd. v. Collector of Central Excise, 1992 (61) E.L.T. 310 it was held by this Tribunal that there is nothing in the Rules to suggest that Modvat Credit could be taken only for that portion of the inputs which got consumed in the manufacturing process. Under the Rules the inputs may be used in or in relation to the manufacture of the final product. For the purpose of Modvat Rules, it makes no....
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....tics as well as waste parings and scrap of Polyurethane Foam fall under the sub-heading that is to say 39.15 but the scope of both these Notifications is different inasmuch as they applies to different WPS namely, Notification No. 53/88 applies to waste, parings and scrap of plastics (see Col. No. 3 of the Table atttached to Notification wherein the description of the goods is given). Whereas Notification No. 54/88 applies to waste, parings scrap of Flexible Polyurethane Foam. (See Col. No. 3 of Table attached to it wherein the description of the goods has been given). In the instant case it is not in dispute that after the issuance of Trade Notices as aforesaid in 1989 the waste, that is to say top, bottom and side skins is classifiable as waste, parings and scrap of plastics. In this view of the matter the arguments of the ld. Jt. CDR that the Notification No. 54/88 is special since it speaks of part exemption and Notification No. 53/88 is general and, therefore, Notification No. 54/88-C.E. should prevail upon Notification No. 53/88-C.E. cannot be accepted. 14. Now coming to the question of fulfilling the condition of the Notification No. 53/88, it was contended by the Ld....
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.... of India Ltd., 1978 (2) E.L.T. (J 416) (S.C.) = AIR 1972 SC 2563 and D.R. Kohli v. Atul Products Ltd., 1985 (20) E.L.T. 212 (S.C.) = AIR 1985 SC 537. In fact the Government of India also interpreted the said expression in the same way and issued Circular No. M.F. (D.R.) TRU F. No. 339/6/80-TRU, dated 6-12-1980, to that effect. The relevant portion of the said order is reproduced as under : "....Notification 180/61 allows the exemption to the specified secondary dyes only when the primary dyes are such "on which excise duty or countervailing customs duty has already been paid". The matter was referred to the Ministry of Law who have opined that the specified secondary dyes manufactured from primary dyes in this case are entitled to exemption under Notification No. 180/61 even though the primary dyes had availed full exemption of duty under Notification, No. 71/78 or 80/80. An extract of the opinion of the Ministry of Law is enclosed. The Board has accepted the opinion of the Ministry of Law". Annexure-II-Extracts from notes recorded by Ministry of Law : "Exemption under Notification 180/61 will be available "if and only if such dyes are manufactured from any other dye on w....
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....that the said top skin, bottom skin, side skin and shreddings results from inputs on which appropriate duty has been paid at the time of importation. However, before the Tribunal an additional ground was raised that the expression `the duty of [excise] leviable thereon used in Notification No. 53/88 also includes nil rate of duty. Further, alternative view was also taken that if their plea for the benefit of Notification No. 53/88 was to be rejected, they would be entitled to the benefit of Notification No. 54/88. The Tribunal rejected the main plea of the appellants that the WPS results from inputs on which appropriate duty has been paid at the time of importation, which is not the case here as the present appellants are not claiming the benefit of Notification No. 53/88 on the ground that the impugned goods that is to say WPS results from inputs on which appropriate duty has been paid at the time of importation. As regards the additional ground raised by M/s. Maruti Foam (P) Ltd. in that case the expression `the duty of excise leviable thereon' used in Notification No. 53/88 also includes `nil rate of duty', the Tribunal rejected the same by observing as follows : "Considered.....
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.... to say articles of plastic is manufactured. And, therefore, its emergence as intermediate product does not preclude the appellants from claiming the benefit of exemption under Notification No. 217/86 ; (iii)  that from the case of M/s. Tirupati Foam (P) Ltd. it is clear that in that case the assessee therein was claiming the benefit of Notification No. 53/88 on the total waste paring and scraps, that is to say, top skin, bottom skin, side skin and shreddings which arise during the entire manufacturing process of the final products, namely, articles of plastics on the ground that the said WPS results from the inputs on which appropriate duty has been paid at the time of importation and the case was argued in the wholesale manner for the entire WPS without bringing to the notice of the Bench that there are two types of waste which occurs at two different stages, i.e. at the first stage when uneven surface and stiff & hard skin known as top skin, bottom skin and side skin are removed from the semi foamed PU foam block of irregular shape and size in primary form. And later waste occurs when these flexible PU foamed blocks of regular shape and size are shredded and cut to size ....
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.... the commercial world comes into existence even, though, used for captive consumption. There is no principle of res judicata operating on subsequent matters nor Rule of estoppel arises in fiscal matters if fresh facts comes to the light (see CIT v. Brij Lal Lohia, 1972 (84) ITR 273 (SC); Seth Mathura Dass v. CIT, 1962 (44) ITR 517 (SC): Seth Ram Nath Daga v. CIT, 1971 (82) ITR 287at page 291 (Bom.) and Punjab National Fertilizers & Chemicals Ltd. v. Collector of Central Excise, 1991 (54) E.L.T. 115. In 'Salmond on Jurisprudence' Twelfth Edition Section 27 page 153 it was opined that : "A decision passed sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The Court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the Court. In such circumstances, although point B was logically involved in t....
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....cited as a precedent in another case. where more evidence was available to reach a contrary conclusion since "one additional or different fact can make a world of difference between conclusions in two cases even when the same principles are applied in each case to similar facts". 20.  As regards, the charge of inflated production of waste skin during the month of January, 1990 onwards as compared to their production during the preceding 12 months I agree with my Ld. Brother Technical Shri P.C. Jain for the reasons mentioned by him in paragraph 5 above. 21.  In the result, I also reject the appeal Sd/- (G.P. Agarwal) Member (J) 22. [Contra per : P.K. Kapoor, Member (T)]. I have gone through the orders recorded by the learned brothers S/Shri P.C. Jain and Shri G.P. Agarwal. I am unable to agree with the finding arrived at by the learned members that the disputed "Waste Paring and Scrap" arising from the top, bottom, and side skin of polyurethane foam block is eligible for the exemption under Notification No. 53/88-C.E. I am, therefore, recording the following order : 23.  From the facts outlined in the ....
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....cation of blocks of irregular shape as polyurethane in primary form is supported by Note 6(II) of Chapter 39 of the Tariff which is reproduced below : 6. (a) In Heading Nos. 39.01 to 39.14, the expression "primary forms" applies only to the following : (i) ........................................................................ (ii) Blocks of irregular shape, lumps, powders (including moulding powder), granules, flakes and similar bulk forms. (b) Notwithstanding anything contained in Note 3 to this Chapter, Heading Nos. 39.01 to 39.14 shall also include primary forms obtained from conversion of another primary form, falling under the same heading, and such conversion shall amount to "manufacture". In terms of Note 7 to Chapter 39 of the Central Excise Tariff, which is reproduced below it is seen that Heading 39.15 does not apply to Waste, Paring and Scrap of single thermoplastic material which is transformed into primary form : "7. Heading No. 39.15 does not apply to waste, parings and scrap of a single thermoplastic material, transformed into primary forms (Heading Nos. 39.01 to 39.14)" On a combined reading of Notes 6 and 7 to Chapter 39 it follows ....