2012 (11) TMI 355

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....r manufacturing this final product, respondent used various plastic granules procured on payment of duty and availed credit of such duty paid under Cenvat Credit Rules, 2004. During the course of manufacturing finished products, plastic flakes are generated, which are recycled in the process by converting them into plastic granules (reprocessed). Most of the reprocessed granules are used within the factory but some quantity of reprocessed granules is cleared from Halol factory of the assessee to other factories, on payment of Central Excise duty. The lower authorities were of the view that no duty is payable on such reprocessed granules by virtue of notification issued under Section 5A of Central Excise Act, 1944. Lower authorities also ent....

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....y. It is his submission that the duty paid by the assessee on the clearances of reprocessed plastic granules should be considered as deposit and not as duty. He prays that the impugned order be set-aside. 3. Learned counsel appearing for the respondent assessee would submit that Notification No. 04/2006 does not exempt absolutely the reprocessed granules, as the benefit of said notification is subject to the conditions that the exempted plastic granules should be reprocessed out of scrap or waste and such specified goods would fall within specified Chapter. It is his submission that such a notification cannot be considered as an absolute notification and is a conditional one and hence provisions of Section 5A(1A) of the Central Excise....

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....eprocessed granules cleared by the assessee on payment of duty are not liable to duty by virtue of Notification No. 04/2006, which has been issued under the provisions of Section 5A(1A) of the Central Excise Act, 1944. Since they are not liable to discharge duty, the respondent assessee is required to discharge duty liability on the product Plastic Flakes, which are used for further processing of these granules. 8. The appeal of the Revenue does not have any merits for more than one reason. First and foremost, it is undisputed that the plastic flakes which are generated in the factory at the time of manufacturing of shoe last, are further processed into granules by undertaking process of melting and granulisation. It would indicate th....