P.C. Jain, Member (T)

1. Brief facts of the case are as follows:-

1.1. The appellants are getting duty-paid raw materials covered under Chapter 39 for being used in the manufacture of their final product - polyethylene film - falling under sub-heading No. 3920.32. During the manufacture, some scrap or waste arises. The appellants' plea is that this scrap/waste is exempted from payment of duty under notification No. 222/86 if such waste, parings and scrap, of plastics, arise from goods, falling under Chapter 39 or any other Chapter of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) on which the duty of excise leviable thereon under the Central Excises and Salt Act or the additional duty leviable thereon under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), as the case may be, has been paid. The above condition is obviously fulfilled, according to the appellants, since the inputs are admittedly duty paid under Chapter 39.

2. Department relies on the provision of Rule 57F (4)(a)which states that "(4) any waste, arising from the processing of inputs in respect of which credit has been taken may-

(a) be removed on payment of duty as if such waste is manufactured