LAWS(CE)-2002-10-214

GUJARAT POLYWEAVE LTD. Vs. CCE AND C, VADODARA

Decided On October 18, 2002
Gujarat Polyweave Ltd. Appellant
V/S
Cce And C, Vadodara Respondents

JUDGEMENT

(1.) THE appellant was licensed in the 100% export oriented unit for the manufacture and export of woven sacks of high -density polyethylene or high density polypropylene. The sacks were woven out of strip of the plastic material, which were manufactured from granules of polyethylene or polypropylene. In the course of manufacture of this strip and of the sacks, some waste of plastic emerged.

(2.) The appellant had imported and installed in its factory a waste regranulating machine, which processes the waste into granules of the plastic material which could be used afresh. Notice issued to the appellant demanded excise duty on the waste that arose in the manufacture of the scrap, which the appellant utilized in the manufacture of granules, and on that part of the granules that the appellant cleared into the domestic tariff area and demanded customs duty on the regranulating machine. Confiscation of that machine and imposition of penalty were also proposed. In his order, the Commissioner has confirmed the duty on the scrap, the granules and the machine, ordered the confiscation of the machine and imposed a penalty on the appellant. Hence this appeal. The counsel for the appellant says that the excise duty on the scrap is exempted by notification 125/84. This notification exempts from duty "all excisable products produced or manufactured in a 100% export oriented unit undertaking" making it inapplicable to such goods if allowed to be sold in India. It is not the department's case that any part of the waste is allowed to be sold in India. It is contended that the waste was recycled by being converted into granules which were used in the manufacture of the finished product. Nor is it contended by the departmental representative that any of the waste was allowed to be sold in India. Therefore, the benefit of the exemption contained in notification would appear to apply. However, this point has been raised before us for the first time, and it is not possible to say with any degree of certainty that the conditions subject to which the exemption was granted had been complied with. We therefore accept the suggestion, that the departmental representative makes that this matter may be remanded to the Commissioner. We do so with the direction that if the conditions, subject to which the exemption is available, are not shown to have been contravened, the benefit of the exemption would be available.

(3.) THE contention with regard to the demand for customs duty on regranulating machine is that since it has been used in connection with the production of exported goods, the benefit of the exemption contained in notification 13/81 would be available. The show cause notice demanded duty on the machine on the ground that the entire quantity of granules manufactured by it have been cleared for home consumption. The counsel for the appellant relies upon a statement dated 12.7.1990 of Shri G.K. Bhatnagar, the project development manager of the appellant. In this statement, Bhatnagar states "In this connection. I have to state that granule machine was imported for the purpose of recycle manufacturing wastage to effect cost saving in the sale of export of the product. The wastage which cannot be used for recycling along with this virgin material for reasons of not achieving required properties such as elongation, density, strength etc. As per the specification of the export of the product, that raw material is diverted to home consumption as deemed as permissible wastage under section 68 Customs Act 1962." It is the contention of the appellant that since some part of the quantity of granules manufactured by this machine has been used in the manufacture of the exported product, the fact that remainder has been cleared in the domestic market should not exclude the availability of exemption contained in notification 13/81. The decisions of the Tribunals in CC v. Shefali Arts, 1994 (114) ELT 928 and Supreme Industries Ltd. v. CC, 2001 (47) RLT 361 are cited in support.