AQUA-VIN PIPES PVT. LTD. Vs. CCE

JUDGEMENT

(1.) IN this appeal filed by M/s. Aqua -Vin Pipes Pvt. Ltd., the appellants were engaged in the manufacture of plastic pipes and fittings classifiable under sub -heading 3917.00 of the Central Excise Tariff. They had availed of the modvat credit on the raw materials granules used in the manufacture of such pipes and fittings. During the course of manufacture of such pipes and fittings, some waste and scrap -end bits, cutting bits, rejects etc. were generated on which the appellants paid the excise duty. Thereafter, before removing such waste and scrap to their job workers, they took credit of the same paid by them by way of excise duty on their waste and scrap. They availed of the modvat credit equivalent to the amount of duty paid on such waste and scrap by raising invoices on themselves. It was alleged in the three show cause notices issued that the appellants irregularly availed of the modvat credit. After making a reference to Rule 57F(5)(a) of the Central Excise Rules, 1944 (hereinafter referred to as the 'Rules'), the Asstt. Commissioner of Central Excise disallowed the credit of Rs. 8,19,586/ - on the ground that the assessee had availed the credit of duty paid by them on the waste and scrap in violation of the provisions of Rules. A penalty of Rs. 40,000/ - was also imposed. The Commissioner of Central Excise (Appeals) agreed with the view taken by the adjudicating authority.

(2.) THE matter was heard on 23.1.2001, when Shri R. Raghavan, advocate, submitted that the appellants had paid central excise duty on waste and scrap and at that stage no objection was raised by the Department. They paid duty and then took equivalent credit. The same waste and scrap were sent to their job workers for converting the same into granules. Accordingly to the learned advocate, it was permissible under the provisions of Rule 57F(3) of the Rules. The granules, on receipt back, were used for manufacturing pipes and fittings which were cleared on payment of duty. It was his submission that the matter was covered by the Tribunal's Larger Bench decision in the case of Wyeth Laboratories Ltd. v. CCE, Bombay .

(3.) WE have carefully considered the matter. The appellants were engaged in the manufacture of plastic pipes and fittings (final products) and were using duty paid plastic granules (inputs) in the manufacture of said final products. They were availing of the benefit of modvat credit in respect of the central excise duty having been paid on their inputs. In the course of manufacture of final products, certain waste and scrap of plastics was generated. Modvat credit had already been availed of in respect of the inputs used in the manufacture of final products (out of which the waste and scrap arose). For duty liability on the resultant waste and scrap, in such circumstances (which were otherwise dutiable under Heading 39.15 of the Central Excise Tariff) reference may be made to the Tribunal's decisions in the case of Siemens Ltd. v. CCE, Calcutta and Bajaj Tempo Ltd. v. CCE, Pune 1995 (10) RLT 107 (T).