TaxTMI 
TaxTMI 
2010 (1) TMI 1105
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....jected goods were subjected to cutting etc. and as result a portion became waste & scrap and these were accounted in the records together with the scrap generated during the course of manufacture of final products in the factory. The said waste & scrap (both factory generated and made due to cutting etc. of returned rejected goods) was captively consumed to manufacture Reprocessed Granules (RPG). The said granules were either used captively for the manufacture of BOPP films cleared on payment of duty or cleared as such without payment of duty under exemption Notification No.6/2002-CE. In respect of the scrap which was used for the manufacture of reprocessed granules cleared without payment of duty, the appellants paid duty at the scrap stag....
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....acture or not was considered by the Tribunal in the case of Viral Laminates Ltd. Vs. CCE Ahmedabad reported in 2002 (143) ELT 143 (Tri. - Mumbai) and the Tribunal had held in favour of the appellants in that case. Further he also relies upon the decision of the Tribunal in the case of Sundaram Industries Ltd. Vs. CCE Madurai reported in 2006 (202) ELT 538 (Tri. -Chennai) wherein it was held that reprocessing of rejected goods if yielded only scrap, process would amount to manufacture. In that case it was held that the scrap is removable on payment of duty. In that case it was the argument of the appellant that they were not liable to pay duty on scrap. Reprocessing resulted only in scrap and this cannot be said to be a manufacture. Similar ....
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....reproduced below. 4. We do not find it possible to accept the contention that because the appellant did not engage in the manufacture of BOPP film, the scrap of such film that emerged at its factory is not the result of manufacture. We do not see how the fact that the appellant did not manufacture BOPP film leads to the conclusion that it could not manufacture scrap of such film. Scrap of plastic can arise in one place out of plastic which has been manufactured elsewhere. It is not correct to say that the waste scrap of plastic or any other substance arise coterminously with the arising of that material itself. The fact that the appellant did not set out to manufacture plastic is again irrelevant. We are concerned with the physical emer....
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....efore, even if the rejected film when it was cut and slit and used in the manufacture of granules can be set to have resulted only in scrap, the decision of the Tribunal in the case of Sundaram Industries Ltd. would apply. As regards the decision of the Tribunal in Hindalco Industries Ltd. case cited by the learned DR I find that in that case, before I proceed it would be appropriate to re-produce relevant portion of para 2 and para 5 of the decision. 2. The relevant facts that arise for consideration are appellant is engaged in the manufacture of Aluminium Foils as per specification given by the customers. The appellants cleared the said Aluminium Foils on payment of appropria....
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....t and confirmed the demand and also imposed penalties. On an appeal Commissioner (Appeals) also concurred with the views of the adjudicating authority on the very same ground. 5. It can be noticed from the above reproduced rule that the said rule carves out an expectation to bring back the duty paid goods to the factory premises and permits the assessee to avail credit of such duty paid goods and utilize the same according to the rules. The provisions of Rule 16(2) very clearly indicate that, if the process to which the goods are put to, does not amount to manufacture than the amount of credit availed under Sub-Rule 16(1) has to be reversed. In the case before us, it is seen that the appellant avails credit of the entire amount of the du....