COLLECTOR OF C. EX. Vs. GUJARAT POLYWEAVES LTD.

JUDGEMENT

(1.) THE issue involved in these two appeals arising out of a common order and filed by Revenue is whether Central Excise duty is payable on the granules made out of waste of plastic arising during the manufacture of HDPE/PP woven sacks out of imported granules, by M/s. Gujarat Polyweaves Ltd., an 100% Export Oriented Undertaking.

(2.) BRIEFLY stated the facts are that M/s. Gujarat Polyweaves Ltd. imported granules which were exempted from import duty; that during the process of manufacturing HDPE/PP woven sacks, wastage was generated which was subjected to the process of granulation; that they were manufacturing under Section 65 of the Customs Act. They cleared the granulated waste on payment of customs duty as well as central excise duty for home consumption. Subsequently, while finalizing the assessment, the Assistant Collector, under order dated 12 -6 -1989 held that Central excise duty was not payable as countervailing duty was also paid by the Respondents. On appeal preferred by the Revenue the Collector (Appeals) also upheld the Adjudication order, holding that duty of excise could not be charged again on the waste granules removed for home consumption, once they were charged to C.V. duty; that waste granules were regenerated from the waste material; that there was no case of assessment of waste material separately since they were not removed as such from the factory.

(3.) SHRI V.S. Nankani, learned Advocate submitted that the Assistant Collector had rightly held in adjudication order that since C.V. duty was charged in lieu of central excise duty, paying equivalent to central excise duty on similar goods manufactured within the country, under Section 3 of Customs Tariff Act, question of charging central excise duty on such goods did not arise because in would amount to double taxation. He, further, submitted that the Respondents are liable to pay duty only on granulated waste. He relied on the decision in the case of C.C.E., Coimbatore v. SIV Industries Ltd. -, 1998 (25) RLT 82 (T) wherein it was held by the Tribunal that the goods manufactured in the EOU are being treated as if the same are imported into India; that the special provision, therefore, for charging of duty is to take care of the advantage that accrues in respect of the goods which are manufactured in the EOU; that the goods produced by EOU and cleared to domestic tariff area on its withdrawal from EOU and cleared to domestic tariff area on its withdrawal from EOU scheme are to be assessed to duty in terms of proviso to Section 3 of the Central Excise Act and not under the main provisions of that Section. The learned Advocate also mentioned that the granulated waste was permitted to be cleared under Section 65 of the Customs Act as waste/refuse subject to the condition as if it was imported into India and duty under Section 3 of the Central Excise Act was to be charged; that accordingly basic Customs duty, auxiliary duty and countervailing duty were to be paid, and as such question of payment of basic excise duty once again does not arise. The charging Section 3 of the Central Excise Act provides for a single levy; there cannot be both the duties leviable: Proviso to Section 3 is mutually exclusive of Sub -section (1) of Section 3 of the Central Excise Act.