1. The captioned appeals were initially filed as a Revision Application before the Central Government which, under Section 131B of the Customs Act, 1962, has come as transferred proceedings to this Tribunal for disposal as if they were appeals filed before it.
2. The two appeals involve common issues and are, therefore, disposed of by this common order, a copy of which shall be placed in each file.
3. The facts of the case, briefly stated, are that the appellants imported two consignments of cellulose acetate scrap (C.A,, Scrap, for short). The Customs authorities charged additional (countervailing) duty of Customs on the goods at 50% ad valorem corresponding to the Central Excise duty leviable under Item No, 15A(2) of the First Schedule to the Central Excises and Salt Act, 1944 (CET, for short).
After clearance of the goods on payment of the duty so assessed, the appellants preferred claims for refund of the whole of the additional duty paid on the ground that scrap falling under Item 15A(2) Central Excise Tariff was exempt by virtue of Customs Notification No. 228, dated 2-8-1976. As an alternative, it was urged that in terms of Tariff Advice No. 48/78, dated 4-9-1978 read with Notification No.5/80-Central Excise, dated 27-2-1980, the goods were eligible to be assessed at the concessional rate of additional duty of Customs of 40% ad valorem. The Assistant Collector allowed the claims on the second ground but rejected the claims on the first ground for refund of the whole of the additional duty of Customs. The Appellate Collector upheld the Assistant Collector's orders. The Appellate Collector held that the C.A. Scrap fell under Item 15A(1) Central Excise Tariff.
4. The Appellate Collector said that articles of plastics cut to small pieces so as to have no identity with anything else but be fit only for recycling the plastic content thereof could not be deemed to be articles of plastics. Such scrap, he held, fell under Item 15A(1) Central Excise Tariff. In the result, the Appellate Collector rejected the appeals.
5. Before us, Shri T.V. Krishnamoorthy, the learned Consultant for the appellants, sought to introduce certain certificates from the Vice-President, the All-India Plastic Manufacturers' Association, Bombay, M/s. Rajasthan Plastics, Bombay and Shri S.B. Deshpande, a Technologist of Bombay, concerning the nature of C.A. Scrap. The learned Departmental Representative, however, opposed the introduction of the additional evidence at this stage of the proceedings which were not produced before the lower authorities. We considered the matter and decided against allowing the introduction of the additional evidence.
6. Shri Krishnamoorthy contended that the imported C.A. Scrap could not be directly moulded but had to be first sorted, ground, granulated, plasticised and made into moulding powder. The Tribunal, in its order dated 5-1-1983 in Mysore Industrial Plastic Corporation v. Collector of Customs, Madras - 1983 (12) ELT 845, held that acrylic plastic sheet crushed scrap which could not be directly moulded did not fall under Item 15A(1) of Central Excise Tariff since it could not be deemed to be plastic material within the ambit of the said item. The position of C.A. Scrap was similar and deserved the same treatment. That scrap of plastic Article is not the same thing as plastic material was borne out by Central Excise Notification No. 23/73, dated 12-2-1973. It was also not an Article of plastics falling under Item 15A(2) Central Excise Tariff.
7. Shri Krishnamoorthy then referred to the Tribunal's decision in Modella Textile Industries Pvt. Ltd., Bombay v. Collector of Customs, Bombay 1983 (13) ELT 1020] and submitted that, as in the case of woollen rags in that decision which were fit only for recovery of wool, so with the present goods which were fit only for recovery of plastic material, there was no manufacturing activity involved and, hence, no excise duty would be leviable on similar indigenous scrap and, therefore, no countervailing duty on imported scrap. Shri Krishnamoorthy next placed reliance on the Tribunal's Order No.590-597/ 83-C dated 27-12-1983, in Paresh Products, 3amnagar v.Collector of Customs, Bombay [Appeals Nos. CD(SB)(T) 184/77-C and Ors.
= 1984 (16) ELT 438], by which it was held that crushed acrylic scrap was not liable to countervailing duty under Item 15A(1) Central Excise Tariff. The ratio of the decision applied to the present matters. Next, reference was made to the Tribunal's decision in 1983 (14) ELT 2054 - Ruby Products v. Collector of Customs, Bombay, in which it was held that cellulose acetate film scrap was eligible for the concessional rate of duty under Customs Notification No. 227/76, dated 2-8-1976. The present goods were covered by Notification No. 228/76.
8. On behalf of the Respondent, Shri Sunder Rajan, DR, referred to the Tribunal's Order No. 223-229/83, dated 20-5-1983 in Appeal No.CD(SB)(T) A.No. 397/79-C - Pla-Age Industries, Bombay v. Collector of Customs, Bombay. The Tribunal held therein that crushed C.A. sheet scrap fell under Item 15A(1) of Central Excise Tariff. The ratio of the decision squarely applied to the present case. The Departmental Representative maintained that C.A. Scrap was directly mouldable. The Tribunal's decisions cited by Shri Krishnamoorthy have all been appealed in the Supreme Court. There was no tenable distinction between prime material and defective material [1983 TLR (NOC) 28]. Thus scrap was, for assessment purposes, to be treated on the same footing as the prime material. In the end, he urged that the decision in Order No.223-229/83-C, which was of direct relevance, should be followed.
9. In his rejoinder, Shri Krishnamoorthy submitted that CEGAT Order No.590-597/83-C, supported his stand. C-A. Scrap was not directly mouldable and no evidence to the contrary was produced by the Department. In the case decided by Order No. 223-229/83, the issue was different. The order did not consider Customs Notification No. 228/76 nor the duti-ability of scrap as plastic material. The classification decided therein 15A(1) Central Excise Tariff was contrary to the later decision and should be ignored. If, however, the Bench felt that this decision could not be deviated from, it might consider referring the issue to a larger Bench.
10. We have carefully considered the submissions of both sides. The issue of classification of acrylic sheet scrap has been discussed at great length in the Tribunal's Order Nos. 590 to 597/83-C, dated 27-12-1983 in the case of M/s Paresh Products v. Collector of Customs, Bombay. In that case, the Department's contention that acrylic sheet crushed scrap, could be directly moulded like any other plastic materials, to form articles, was rejected by the Tribunal since the authorities produced before the Bench did not bear out the contention.
It was observed by the Tribunal that while it is a fact that formed articles made of thermoplastic resins are susceptible of having their mouldable resins recovered by such processes as depolymerisation, no authority was cited to show that crushed scrap obtained from formed articles could be directly moulded to form new articles even with the aid of heat and pressure. (No evidence has been produced to show that C.A. Scrap - in the present case - could be directly moulded to form articles). It was further noted in the said Order that Item No. 15A(1) Central Excise Tariff was enlarged only in 1982 so as to specifically include waste and scrap and that, before the amendment, waste and scrap were not so included. The suggestion of the Departmental Representative that the 1982 amendment did not make any difference because waste and scrap were already covered by the item was not accepted. The decision in the Paresh Products case is one later in point of time to the one in Pla-Age Industries case and it has gone into the issue at great length on the basis of the arguments addressed. We would, therefore, prefer to follow this decision. Applying the ratio of this decision, C.A. Scrap did not fall under either Item No. 15A(1) or 15A(2) Central Excise Tariff. It has also to be remembered that, scrap came to be included in Item 15A Central Excise Tariff for the first time by the amendment of 1982. It is, therefore, reasonable to conclude that scrap was not excisable before the amendment under the said item and, therefore, on import, not liable to be charged with countervailing duty with reference to that item.
11. The above conclusion would also gain support from a reference to Central Excise Notification No. 23/73, dated 12-2-1973 which exempts all plastic materials in any form falling under Item No. 15A(1) reprocessed from or produced out of scrap or waste of (i) plastic material and (ii) articles of plastic.
12. In the circumstances, we set aside the impugned order and allow the appeals with consequential relief to the appellants.