2002 (7) TMI 653 - AT - Central Excise

Summary

Issues:
1. Entitlement of the assessee under exemption Notification No. 6/2000
2. Duty exemption for broke paper consumed in the manufacture of paper

Entitlement under Exemption Notification No. 6/2000:
The first issue in the appeal pertains to the entitlement of the assessee under exemption Notification No. 6/2000, dated 1-3-2000, leading to a duty demand of over Rs. 2 crores and imposition of penalties. The dispute revolves around the interpretation of the condition stipulated in the notification regarding the aggregate quantity restriction of 3500 Metric Tonnes for paper and paperboard cleared for home consumption. The Commissioner interpreted the term "first clearances of an aggregate quantity" to encompass all varieties of paper cleared by the appellant, not just those produced from non-conventional raw materials. The appellants argued that the restriction should apply only to the exempted varieties of paper, as per the terms of the notification and in line with a Supreme Court decision. The Tribunal concurred with the appellants, stating that the Commissioner's interpretation rendered the notification unworkable and led to unintended consequences, thereby setting aside the duty demand and penalties.

Duty Exemption for Broke Paper:
The second issue concerns the duty exemption for broke paper used in the manufacture of wood pulp, subsequently utilized in paper production. The appellants contended that the broke paper recycled within the factory for the production of wood pulp falls under the purview of Notification No. 10/96, dated 23-7-96, which exempts goods consumed in the manufacture of specified items, including wood pulp. The Ministry of Finance's clarification further supported this position. The Tribunal acknowledged that the appellants rightfully claimed this exemption, as the broke paper was recycled within the factory for wood pulp production, thus overturning the denial of exemption and duty demand related to this issue. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellants, granting them consequential relief.

In conclusion, the Appellate Tribunal CEGAT, New Delhi, in its judgment, addressed the issues of entitlement under exemption Notification No. 6/2000 and duty exemption for broke paper consumption in a detailed manner, providing a thorough analysis of the disputes and legal interpretations involved, ultimately ruling in favor of the appellants on both issues and granting them relief from the duty demands and penalties imposed by the department.