BHANSALI ENGINEERING POLYMERS Vs. COMMR. OF C. EX.

JUDGEMENT

(1.) BRIEFLY stated, the facts of the case are that the appellant is a manufacturer of ABS Polymers (Acrylo -nitrile Butadiene -Styrene -Terpolymers) falling under CET sub -heading 3906.30. During the process of manufacture, ABS waste is generated which is reprocessed to manufacture granules known as reprocessed granules. They had been filing classification lists/declarations under Rule 173B of the Central Excise Rules wherein they had classified reprocessed granules under CET subheading 3903.30. However, in Declaration No. 18/95 -96 w.e.f. 9 -5 -1995, they classified the item under CET sub -heading 3915.20 attracting duty at the rate of 25% ad valorem. Subsequently, in the Declaration No. 21/95 -96 w.e.f. 19 -5 -1995, they classified reprocessed granules under CET sub -heading 3903.30 and claimed nil rate of duty under Notification No. 111/95 -C.E., dated 6 -9 -1995. In these two declarations, they classified ABS waste under CET sub -heading 3915.20 and claimed nil rate of duty under Notification No. 67/95.

(2.) A show cause notice dated 14 -2 -1996 was issued to the appellants charging them with changing classification of the reprocessed granules in violation of Rule 173B wrongly claiming nil rate of duty under Notification No. 111/95 and wrongly claiming benefit of captive consumption under Notification No. 67/95 for ABS waste, as it was captively used for manufacturing reprocessed granules on which they claimed nil rate of duty. They were asked to show cause as to why goods removed under Declaration No. 21/95 -96 should not be treated as removal without payment of duty and the notice proposed recovery of duty and imposition of penalty. The goods in question were ordered to be provisionally assessed under order dated 10 -4 -1996. In addition to the notice dated 14 -2 -1996, the following six show cause cum demand notices were issued:

(3.) THESE six show cause notices were adjudicated by the Assistant Commissioner who accepted the classification claimed made in the Declaration No. 21/95 -96 under GET sub -heading 3903.30 and extended the benefit of exemption under Notification No. 111/95 which inter alia exempted goods falling under Chapter Headings 39.01 to 39.14 provided that they are reprocessed or produced in India out of scrap or waste of goods falling under Chapters 39, 54, 55 or 59. However, he confirmed a duty demand on ABS waste on the ground that it was used in the manufacture of reprocessed granules which were not exempt from the whole of the duty of excise in terms of Notification No. 111/95 and hence waste did not satisfy the condition of Notification No. 67/95 which is available to specified inputs manufactured in a factory and used within the factory of production in or in relation to manufacture of specified final products, provided that those final products are not exempt from the whole of duty of excise or are not chargeable to nil rate of duty. As a result of denial of benefit of Notification No. 67/95, the Assistant Commissioner held that the assessees were liable to pay duty on the entire quantity of waste/scrap used in the manufacture of reprocessed granules which were cleared at nil rate of duty and confirmed a duty demand of Rs. 27,55,500/ - on 551.1 M.T. of ABS waste used to manufacture quantity of 501 MTs of reprocessed granules cleared under Notification No. 111/95 -CE. during September, 1995 to March, 1996. He modified the declarations filed by the assessees in the light of the above findings, finalised the assessment provisionally made under Rule 9B of the Central Excise Rules and also imposed a penalty of Rs. 25,000/ - under Rule 173Q of the Rules.