2005 (2) TMI 604 - AT - Central Excise

Summary

Issues:
Classification of Kraft paper under Central Excise Tariff and benefit of Exemption Notification No. 48/89-C.E. Time-barred demand. Calculation of bagasse content in pulp.

Classification of Kraft paper under Central Excise Tariff and benefit of Exemption Notification No. 48/89-C.E.:
The appellants claimed classification under Heading 4804.11 of the Central Excise Tariff and exemption under Notification No. 48/89-C.E. The dispute arose as the Adjudicating authority found that the Kraft paper did not contain 75% by weight of pulp made from bagasse, as required for the classification. The appellants argued that the authority's calculation method was arbitrary and relied on the Tribunal's decision allowing for moisture and additives in determining pulp content. They also cited ISI specifications showing Kraft paper contains 10% moisture. The Trade notice provided guidance on calculating bagasse content based on pulp weight alone, not including paper weight with additives. The Tribunal found merit in the appellants' arguments, setting aside the impugned order and allowing the appeal.

Time-barred demand:
The appellants contended that the demand was time-barred as they regularly filed classification lists approved by the Revenue and maintained records per Trade notice requirements. They argued that no suppression could be alleged against them. The Tribunal agreed, noting the appellants' compliance with record-keeping and classification procedures, thus rejecting the Revenue's claim of suppression.

Calculation of bagasse content in pulp:
The Adjudicating authority calculated bagasse content in pulp based on statements from manufacturers and technical literature, determining a maximum recovery of 29% of pulp from bagasse. The appellants challenged this method, asserting that the authority considered Kraft paper weight, including moisture and additives, which skewed the calculation. They referenced the Tribunal's decision allowing for deductions of moisture and additives in determining pulp quantity. The Tribunal found that the authority's calculation method was flawed, as it did not adhere to Trade notice guidelines and the Tribunal's previous decision. Additionally, the absence of sample testing by the Chemical Examiner was noted as a missed opportunity to accurately determine the product composition. The Tribunal sided with the appellants, concluding that the percentage of pulp should be calculated per Trade notice instructions and the Tribunal's decision, deducting moisture and additives.