1999 (9) TMI 908 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for the benefit of Notification No. 163/67 for Newsprint manufactured by the appellant.
2. Whether the demand for duty is time-barred due to alleged misstatement or suppression of facts.

Detailed Analysis:

1. Eligibility for the Benefit of Notification No. 163/67:

The primary issue was whether the Newsprint manufactured by the appellant was eligible for the benefit of Notification No. 163/67. The Department contended that the Newsprint did not contain mechanical wood pulp amounting to not less than 50% of the fibre content, as required by the notification. They alleged that the appellants used 70% Chemi-mechanical Pulp and 30% Sulphate Chemical Pulp, which did not qualify as mechanical wood pulp.

The appellants argued that Chemi-mechanical pulping and Chemi-thermo mechanical pulping processes are essentially mechanical processes. They supported their argument with certificates from the Central Pulp and Paper Research Institute and other technical literature. The Department, however, maintained that the pulp obtained through Chemi-mechanical processes could not be considered mechanical wood pulp, especially after the introduction of the new tariff on 1-3-1986, which made a clear distinction between different types of wood pulp under Tariff Heading 47.01.

The Tribunal examined the classification and found that the new tariff heading clearly separated Mechanical Wood Pulp from Chemi-mechanical and other types of pulp. Therefore, the benefit of Notification No. 163/67 was not admissible to the Newsprint manufactured by the appellant using Chemi-mechanical pulp.

2. Time-barred Demand for Duty:

The second issue was whether the demand for duty was time-barred due to alleged misstatement or suppression of facts by the appellants. The Department argued that the appellants had misdeclared the nature of the pulp and the process employed, thus suppressing facts and evading duty. They invoked the extended period of limitation under Section 11A.

The appellants countered that they had disclosed all relevant details in their correspondence with the Department, including a letter dated 7-3-1981, which clearly stated the use of Chemi-mechanical pulp. They also pointed out that their Classification Lists were approved by the Department, and they had regularly submitted R.T.12 returns.

The Tribunal noted that the process of manufacture was communicated to the Department, and there was no suppression of facts. The Tribunal referred to the case law, including the decisions of the Apex Court in Pushpam Pharmaceuticals and Cotspun Ltd., which emphasized that approved Classification Lists and proper disclosures negate the allegation of suppression. Consequently, the Tribunal held that the demand for duty beyond six months was not sustainable.

Conclusion:

The Tribunal concluded that the benefit of Notification No. 163/67 was not admissible to the Newsprint manufactured by the appellant using Chemi-mechanical pulp post 1-3-1986 due to the clear distinction in the new tariff. However, the demand for duty was time-barred as there was no suppression of facts, and the extended period of limitation could not be invoked. The appeal was allowed, and consequential relief was granted to the appellants in accordance with the law.