TMI Blog2005 (2) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... .According to the assessee, manufacture of yarn consisted of different stages; that after the granules emerged from the granulators they were required to be bagged (which was one of the stages in the manufacture); and that in the process of bagging some "chips" fell off and were collected as "sweeping wastes". 4.The short point which arises for determination, therefore, is - whether the spilled chips termed as "sweeping wastes" by the assessee was classifiable as "waste" under Chapter Heading 39.15, as urged by the assessee. 5.On 1-9-1994, show cause notice was issued by the department in which it was alleged that polyester chips emerged from the granulators after they were completely produced and, therefore, on account of their spill over, they cannot be treated as a manufacturing waste. According to the show cause notice, such sweeping/spillage of "chips" did not make them "waste" classifiable under Heading 39.15. By the said show cause notice, the department invoking the extended period of limitation called upon the assessee to pay duty amounting to Rs. 3,98,302.29 for clearance of polyester chips as "wastes" during the period 25-7-1991 to 27-2-1994 without cover of gate pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the assessee has fulfilled all the conditions stipulated in the said notification. Subject to above, the appeal of the assessee was dismissed by the Tribunal. Hence, this civil appeal by the assessee. 10.Shri Jaideep Gupta, learned senior advocate on behalf of the assessee submitted that "sweeping wastes" took place during the process of manufacture and it did not emerge at the end of the process; that the activity of feeding raw-material into hoppers is a part of the manufacturing activity and the spillage and rejection of raw-material at that stage resulted in some waste which cannot be classified under sub-heading 3907.60 as "polyethylene terephthalate". He submitted that classification is indicated by the manner in which the goods are known and dealt with in the trade. Learned senior advocate invoked the test of common parlance. He relied upon the statement of buyers who purchased from the assessee the said "chip waste". He submitted that the end-use by the ultimate buyer was not relevant as waste was capable of use. Learned senior advocate also placed reliance on the explanatory notes to Harmonized System of Nomenclature (for short "HSN") under Entry 39.15 and submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Duty 1 2 3 4 PRIMARY FORMS I. 39.07 Polyacetals, other polyethers and epoxide resins, in primary forms, polycarbonates, alkyd resins, polyallyl esters and other polyesters, in primary forms. 3907.10 Polyacetals 60% 3907.20 Other polyether 60% 3907.30 Epoxide resins 60% 3907.40 Polycarbonates 60% 3907.50 Alkyd resins including maleic resins and fumeric resins 60% 3907.60 Polyethylene terephthalate 60% 3907.70 Diallylphthalate resins 60% 3907.80 Polybutylene terephthalate - other polyesters : 60% 3907.91 Unsaturated 60% 3907.99 Other 60% WASTE, PARINGS AND SCRAP; SEMI-MANUFACTURES; II. ARTICLES. 39.15 Waste, parings and scrap, of plastics. 3915.10 3915.20 Of polymers of ethylene Of polymers of styrene 60% 60% 3915.30 Of polymers of vinyl chloride 60% 391 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, does not apply to materials regarded as textile materials of Section XI. 6. In heading Nos. 39.01 to 39.14, the expression "primary forms" applies only to the following forms :- (a) Liquids and pastes, including dispersions (emulsions and suspensions) and solutions; (b) Blocks of irregular shape, lumps, powders (including moulding powders), granules, flakes and similar bulk forms. 7. Heading No. 39.15 does not apply to waste, parings and scrap of a single thermoplastic material, transformed into primary forms (heading Nos. 39.01 to 39.14). EXPLANATORY NOTES Plastics : The expression "plastics" is defined in Note 1 to this Chapter as meaning those materials of Headings 39.01 to 39.14 which are or have been capable, either at the moment of polymerization or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or plasticizer) by moulding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence. Throughout the Nomenclature, the expression "plastics" also includes vulcanized fibre. The expression, however, does not apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the weight of the solvent exceed 50% of the weight of the solution, are excluded from this Chapter and fall in Heading 32.08. (see Note 2(d) to this Chapter). Liquid polymers without solvent, clearly identifiable as being intended for use solely as varnishes, (in which the formation of the film depends on heat, atmospheric humidity or oxygen and not on the addition of a hardener), are classified in Heading 32.10. When not so identifiable, they fall in this Chapter. (2) Powder, granules and flakes. — In these forms they are employed for moulding, for the manufacture of varnishes, glues, etc. and as thickeners, flocculants, etc. They may consist of the unplasticised materials which become plastic in the moulding and curing process, or of materials to which plasticizers have been added; these materials may incorporate fillers (e.g., wood flour, cellulose, textile fibres, mineral substances, starch) colouring matter or other substances cited in Item (1) above. Powders may be used, for example, to coat objects by the application of heat with or without static electricity. (3) Blocks of irregular shape, lumps and similar bulk forms, whether or not containing fillers, colourin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be "goods", provided they were known in the market as distinct and separate articles having separate uses during the short life span. Thus, the goods with even unstable character can be marketable, if during the short period, they were capable of being known or sold in the market. 19. In the case of Chemicals and Fibres India Limited v. Union of India and others reported in [1982 (10) E.L.T. 917], one of the questions which arose for determination was question of interpretation of tariff items. It was held by the Bombay High Court that the rule that the words should be construed in a popular sense is not applicable in all cases. The said rule is a qualified rule. Where the nature of the product in question is highly technical and scientific in character, the words used in the item will have to be given technical or scientific meaning. The different chemical processes like condensation, polymerization is not capable of being construed in a popular sense. Indeed, it can be construed only in a scientific and technical sense. Incidentally, it may be mentioned that in Chemicals and Fibres India Limited (supra), an affidavit was filed on behalf of the assessee by one Dr. Patel, who int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be bagged and in that they spilled over as "chips". In the entire case, there is no evidence that such "chips" ceased to be "chips". On the contrary, the invoices produced by the assessee show that the said "chips" were bought and sold as polyester chips in the market. Lastly, impurity in the chips is a relevant circumstance for valuation and not for classification, unless the contamination is so heavy that the nature of the product ceases to be polyester chips. In the present case, there is no evidence that alleged unusable chips had ceased to be chips. 22. In the case of M/s. O.K. Play (India) Ltd. v. Commissioner of Central Excise, Delhi-III, Gurgaon reported in [2005 (1) Scale 732], this Court has observed that the scheme of Central Excise Tariff is based on HSN and the explanatory notes thereto. Therefore, HSN along with the explanatory notes provide a safe guide for interpretation of an entry. Further, equal importance is required to be given to the Statutory Rules of Interpretation given to the Excise Tariff. Under Rule 3(a), it is provided that the heading which provides a specific description shall be preferred to a heading having general description. In the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-9-1994 invoking the extended period of limitation under the proviso to Section 11A(1) was erroneous as the assessee had filed their classification list and price-list on 20-11-1991 [including the purchase orders of the buyers]; that no inspection, audit or investigation was carried out before approving the classification list and the price-list and, therefore, the department was not entitled to invoke the extended period of limitation. 26. We do not find any merit in these arguments. Firstly, no such arguments were advanced before the Tribunal. The only argument advanced before the Tribunal was on excisability and nil rate of duty vide notification dated 1-3-1992. Secondly, in the reply to the show cause notice, the assessee submitted that wastes had emerged at various stages. However, in the classification list, they have not spelt out the various stages at which the so called "wastes" had emerged. In the present case, the department had alleged misdeclaration of polyester chips as wastes. According to the assessee, chips, which spilled over during bagging were unusable and, therefore, "waste". However, no such details have been mentioned in the classification list particular ..... X X X X Extracts X X X X X X X X Extracts X X X X
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