TaxTMI 
TaxTMI 
2019 (3) TMI 790
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.... Waste paper is unconventional raw material for manufacture of paper and paper-boards classified under Chapter heading 4707 of the Customs Tariff. The appellant imports this material and uses it to manufacture paper. When the waste paper is imported it often contains some non-paper content like plastic and metal waste and scrap. The question as to how such material should be classified and charged to customs duty was considered by the Hon'ble Tribunal-Chennai in the case of ITC Ltd [2016 (336) ELT 365] and it was held that non-paper waste contained in the imported material is chargeable to merit rate of duty under the respective under the respective Chapter headings in Chapter 39 and 72. The Tribunal also held that non-paper waste is liable....
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.... cause notice proposed to deny amount on credit proportionate to the quantity of the nonpaper waste content found on segregation of imported consignments at premises of the assessee's job worker. The other three notices related to the period January, 2006 to November, 2007 covering both bills of entry assessed under heading 4707 as waste paper before the dispute with regard to the non-paper waste content arose and also bills of entry provisionally assessed in terms of Asst. Commissioner's direction dated 01.03.2005 holding 83% of consignment as waste paper, 12% as plastic waste and 5% as metallic waste. 4. Learned counsel for the appellant submits that there is no dispute that the waste paper content of the consignments imported by them ....
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....n of inputs into waste paper, plastic waste and metallic waste should be considered as part of the manufacturing process and not as a process which precedes manufacturing. He relies on the judgment of the Hon'ble Supreme Court in the case of Collector Vs Rajasthan State Chemical Works [1991 (55) ELT 444 (SC)] wherein it was held that the process of segregation of raw material, though a preliminary one, is an integral part of the manufacturing process. He would argue they cannot be denied the credit of the CENVAT taken on the entire consignment. 5. In respect of those consignments where the assessment was done provisionally classifying the imported material as waste paper, plastic waste and metallic waste, classifying them under different....
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....dit as is equal to the additional duty of customs paid on the raw material used in or in relation to manufacture. The question whether entire mixture which is imported should be considered as waste paper or it should be treated as three different forms of waste classifiable under different headings as already been decided by the Tribunal Chennai in the assessee's own case (supra) and this decision has not so far been reversed by the Hon'ble Apex Court . Therefore, the ratio would apply. 8. Once the assessment is under three different headings they cannot take credit of such material which evidently is not waste paper and is in no way concerned with the manufacture of their final product but is of some other material. Therefore, the appea....
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....rol, shall not be treated as an input for any purpose whatsoever. Explanation 2- Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer; but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods" 10. As is evident from the term "input" what matters is which material has gone into the process of manufacture. It is true if some element of the input goes into waste, credit cannot be denied on that count. What is important is, what does the input invoice/ bill of entry say....
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.... in the manufacture at the time of input will not entitle them to credit. The case of Rajasthan State Chemical Works (supra) was on a different issue which was with reference to exemption for power used in or in relation to manufacture as per exemption notification. It was held that since the power was used for seperation of raw material without which further process cannot take place the assessee was entitled to the benefit of the exemption notification. Such is not the case here. In the above case, use of power was essential to segregate material for the manufacture of the product so that the materials which go into the manufacture are separated from those which do not. In this case what the assessee is claiming is credit on materials whi....