KAPADIA, J. - (1.) THE issue which arises for determination in this civil appeal filed by the assessee under section 35L(b) of Central Excise Act, 1944 (hereinafter referred to for the sake of brevity as "the 1944 Act") is whether the product, termed by the assessee as "sweeping wastes" is classifiable under chapter heading 39.15 (waste) or whether it is classifiable under chapter heading 39.07 (Primary Form of Plastic) of Central Excise Tariff Act, 1985 (hereinafter referred to for the sake of brevity as "the 1985 Act") as contended by the department.
(2.) DCL Polyester Ltd. (hereinafter referred to for the sake of brevity as "the assessee") is the manufacturer of partially oriented yarn of polyester and polyester chips by using purified terephthalic acid and mono ethylene glycol (raw -materials). 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". 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.
(3.) 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 passes and in contravention of Rules 9, 49, 52A and 276 of the Central Excise Rules, 1944, with intention to evade payment of duty. In reply, the assessee submitted that during the manufacture of polyester filament yarn, "wastes" of different types were generated; that after granulation, the chips pass through a vibrating screen; that during the screening, the standard chips are collected in the silos, whereas the unusable chips waste is separated; and that standard chips collected in the silos are transferred to the bagging silos from where they are bagged. According to the assessee, "bagging" is a part of manufacturing process and in that process, waste is generated which is unusable. This waste is termed by the assessee as "sweeping wastes" and, therefore, it is classifiable under sub -heading 3915.90.;