JUDGMENT
Jyoti Balasundaram, Vice President
1. The benefit of exemption in terms of Notification No. 4/97-CE dated 1.3.97 has been disallowed on waste including noil yarn waste and guaranteed stock of manmade fabrics of polyester on the ground that the conditions stipulated in S. No. 110 of the Table thereto have not been fulfilled. Under S. No. 110 exemption is available to “all goods produced in a factory other than a factory producing manmade staple fibres or manmade filament yarns of organic polymers by manufacturing processes, either by polymerisation of organic polymers………” The finding of the department is that the waste arose in the course of manufacture of manmade staple/fibres by polymerisation of organic polymers and hence excluded from the benefit of the notification is based upon the report of the Chief Chemist, CRCL.
2. We have heard both sides. The Chief Chemist, CRCL vide his report dated 4.8.97 has opined as under:
Sub:- Production of Polyester Fibre using Dimethyl Taraspthlate (DMT) and monoethylene Glycol (MEG) Mechanisam of Reaction opinion — Reg.
Please refer to your letter C.No. V(1) Audit/Misc/3/92/pt/2070 dated 4.4.97 on the above subject.
The issue involved is whether the Notification No. 8/96 dated 23.7.96 is applicable to the waste like “Solid waste”, “Crimped Uncut Waste”, “Undrawn Waste”, “Drawn Waste”, “Process Waste”, etc. as mentioned in Annexure A (Production process indicating waste generation places M/s. Swadeshi Polytex Ltd.) enclosed with your above-mentioned letter, generated or obtained during the manufacture of polyester staple fibre by polymerisation of a reaction product of Dimethyl Terephthalate and monoethylene glycol and further extrusion to filaments and cutting to staple fibres.
According to technical literature D.M.T. and ethylene glycol are the raw materials used for the manufacture of polyester ploymer which is used in the process described in the said “Annexure A” for manufacturing finally polyester fibres.
Based on the information in the technical literature and process adopted by the factory for the manufacture of polyester fibres it is clear that the factory is manufacturing polyester fibres by polymerisation process starting from the raw materials.
In view of the above, I am of the opinion that polyester waste arising at different stages as described in Annexure A enclosed with your letter obtained during the manufacturing process involving polymarisation is not covered by the Notification No. 8/96 dated 23.7.96.”
There is no categoric finding that the polymerisation is of organic polymers and the Chief Chemist has only stated that polyester fibres are manufactured by polymerisation process starting from raw materials i.e. DMT and ethylene glycol. On the other hand, the opinion of the Northern India Textile Research Association is that polyester staple fibre is produced by the appellant by using DMT and MEG which are monomers and carrying out the process of polymerisation. The report certifies that the appellants are not producing polyester staple fibre by polymerisation of organic polymers. We also note that in the case of CCE Chandigarh v. Indian Acrylic Ltd. 2000 (122) ELT 477 (Tri) there is reference to the Chief Chemist, CRCL intimating that the process undertaken by the assessees therein of manufacture of acrylic staple fibre, in the course of which waste arises, is by polymerisation of monomers and that it is not technically feasible to polymerise organic polymers. In this view of the matter we accept the contention of the appellants that they are not manufacturing manmade staple fibre by polymerisation of organic polymers and held that the benefit of exemption under Notification No. 4/97-CE is admissible to them. Accordingly, we set aside the impugned order and allow the appeal.