TaxTMI 
TaxTMI 
2018 (11) TMI 1363
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....Polypropylene Granules (SH No. 3902.10) but cleared waste and scrap of plastics, arising from processing of such inputs, without payment of Central Excise Duty. In terms of Notification No. 14/92 dated 1/3/1992 waste, paring and scrap of plastics falling under sub heading No. 39.15 are chargeable to nil rate of duty, if such waste arises from goods under Chapter 39 of CETA, 1985 on which duty has been paid, and if this condition is not fulfilled such waste is chargeable to Central Excise duty. Again, under Rule 57 F (4)(a) of the Central Excise Rules 1944, any waste material arising from processing of input in respect of which credit has been taken may be removed on payment of duty, as if such waste is manufactured in the factory. But....
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....edit. 3. Ld. Advocate on behalf of the notice, among other things, submitted that the similar issue has been decided by the Hon'ble CESTAT West Zonal Bench,(Mumbai) in case of Commissioner of Central Excise and Customs, Aurangabad vs. Cosmo Films Ltd. 2014 (307) ELT 967 (Tri-Mum), wherein it is held that the benefit of Notification No. 53/88 cannot be denied on waste and paring of plastic manufactured from the duty paid products. And also plastic waste of scrap arising in the course of BOPP films cannot be considered as final product and thus credit was rightly taken under the provisions of Modvat Rule. It was held that in this case there was no production of waste and scrap of plastic but the same has arisen as a byproduct of manufactur....
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....uty not to be allowed if final products are exempt.- No credit of the specified duty paid on the inputs used [in the manufacture of a final product] (other than those cleared either to a unit in a Free Trade Zone or to a hundred per cent Export-Oriented Unit) ] shall be allowed if the final product is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty. 7. In this case the assessee took the credit on the PPG granules and used the same in relation to manufacture of BOPP Films. During the manufacturing process of BOPP Film western scrap is generated. A part of the waste and scrap captivity consumed for the manufacture of re-processed Polypropylene granules, a part of which is used along with th....
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.... fact cannot be erased or obliterated on what happens subsequently. Therefore, as rightly observed by this Tribunal in the case of MRF Ltd. (supra) and Supreme Industries-2002 (148)ELT 484, affirmed by the Apex Court [2003 (153) ELT A 91(SC)] by taking credit, the inputs do not become non-duty paid. The very fact that the credit has been allowed itself it a proof that duty has been paid on the inputs and without payment of duty, no credit can be taken. Therefore, benefits of Notification No. 53/88 cannot be denied on waste and scrap of plastic manufactured from duty paid inputs. 5.2 As regards the question, whether waste and scrap is a final product or a by-product, this issue has been settled by the Hon'ble High Court of Allahabad [2013....
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....ther, we also find that the similar view has been taken by the Tribunal in case of Commissioner of Central Excise and Customs, Aurangabad vs. Prime Plastic Pvt. Ltd. 1999(112) ELT 337(Tribunal). The relevant paragraph of the aforesaid order is reproduced as under: "However, we find on consideration of the submissions that the reliance placed by the Commissioner (Appeals) in the Tribunal decision in the case of M/s Anil Starch Products (supra) is well founded. In that case also the department sought to reverse the duty on the Mother Liquor which was drawn on and there was the emergence of Hydrol which was not chargeable to duty. The department's case was, that portion of the Modvat credit contains in the Hydrol which is subject to 'nil' r....