ORDER
D.M. Vasavada, Member (J)
1. Since common issue is involved in both these appeals we are disposing them of by this common order. Appeal No. E/1012/89-C arises out of order-in-appeal passed by the Collector of Central Excise (Appeals), Madras whereby he set aside the order of adjudication passed by the Assistant Collector of Central Excise, Madras-VIII Division.
2. The respondents are manufacturers of tyres, tubes, flaps and some articles of rubber and they avail of modvat credit for the inputs used in the manufacture of the abovesaid tyres and tubes. In the process certain quantity of tyres or tubes which are not finished or manufactured properly are separated and cut which are known as cut tyres and tubes. These cut tyres and tubes which are classified as finished products falling under sub-heading 4004.00 are cleared without payment of duty by virtue of exemption under Notification No. 76/86 dated 10-2-1986. The respondents were served with the show cause notice contending that the said tyres were first manufactured and only then cut and removed at nil rate of duty and so these tyres would fall within the scope of Rule 57C of C.E. Rules and so the respondents were asked to show cause why the modvat credit taken on the inputs contained in the rejected tyres should not be expunged. Two Show Cause Notices were issued for two different units of the respondents’ company. The Assistant Collector by a common adjudication order directed to expunge the amounts as stated therein from the amounts of credit taken on inputs by the respondents. The appeal preferred by the respondents was allowed and the Collector (Appeals) set aside the adjudication order which has given rise to the present appeal by the revenue.
In appeal No. 3167/88-C Show Cause Notice was issued as to why the set off availed of on duty paid on inputs from 30-4-1988 should not be recovered and in adjudication the Assistant Collector dropped the proceedings. But on direction from the Collector of Central Excise, Madras he filed an application under Section 35E(2) of the Central Excises and Salt Act before the Collector (Appeals) and he by order-in-appeal 143/88(M)(D) dismissed the appeal. The Revenue has come in appeal against this order.
3. We have heard Shri V. Chandrasekaran, S.D.R. for the appellant and Shri S. Ignatius, Corporate Manager of the respondents. It is the contention of the revenue that cut tyres and tubes are not waste but they are a manufactured product as they are covered under sub-heading 4004.00 CET. So under provisions of Rule 57(C) as the said cut tyres and tubes are cleared on nil rate of duty under provisions of Notification No. 76/86, dated 10-2-1986 (as amended by Notification Nos. 227/87-C.E. and 93/89-C.E.) the Modvat credit on the input which goes in the manufacture of this product namely cut tyres and tubes would not be available to the respondents but the question is whether this product can be termed as manufactured product or it is a waste? If it is waste then provisions of Rule 57D will come into play. The respondents have cited following authorities in support of their contention that the product is a waste :-
(i) Modi Rubber Ltd., Modi Nagar and Anr. v. Union of India and Ors. -1987 (29) E.L.T. 502 (Del), wherein it has specifically been held that such tubes and tyres could not be treated as manufactured goods but should be treated as waste.
(ii) C.C.E. v. Dunlop India Ltd. – 1988 (36) E.L.T. 329 (Tri.) : In this order the Tribunal has followed the above judgment of the Hon’ble Delhi High Court where the Hon’ble High Court has held that such tubes and tyres and flaps are not qualifying as ‘manufacture’ and hence not ‘goods’.
4. We see no reason to depart from the above view and so, even though such cut tubes and tyres have been classified under sub-heading 4004.00 CET it does not change the legal position and it continues to be waste and not manufactured product. If that is so then provisions of Rule 57D of the Central Excise Rules would come into play and respondents would be entitled to claim modvat credit on the inputs or rather on part of those which go in the manufacture of these cut tubes and tyres also.
5. So we do not find any impropriety or illegality in the impugned orders and we pass the following final orders :-
E/1012/89
In this appeal impugned order is confirmed and appeal is dismissed with consequential relief to the respondents, if any. The respondents have filed cross objection No. E/Cross/20/88-C but the only prayer therein is that the appeal be dismissed and the impugned order be confirmed. So the cross objections also do not survive and no order is required to be passed thereupon.
Appeal No. E/3167/88-C
This appeal is also dismissed and the impugned order is confirmed with consequential relief to the respondents, if any.