2005 (9) TMI 396 - AT - Central Excise

Summary

Issues:
Classification of waste paper for duty payment under Chapter 48 or Heading 47.02 of CETA 1985.

Analysis:
The case involved the appellants engaged in manufacturing "paper tubes" and "cones" falling under Chapter 48 of the Schedule to the CETA 1985. During the manufacturing process, waste paper emerged, which was cleared without duty payment. The department contended that the waste paper should be classified under Heading 47.02, attracting duty @ 20% ad valorem. The original authority and the first appellate authority upheld the duty demand, considering waste paper as a marketable commodity under Heading 47.02.

The appellant's Chartered Accountant relied on a Tribunal decision in Wimco Ltd. v. CCE, where waste and scrap of paper and paperboard were held non-dutiable. The Senior Departmental Representative (SDR) supported the lower authorities' findings. Upon careful consideration, the Tribunal referred to a previous decision involving small pieces of paper and paperboard in the manufacture of matchboxes, concluding that charging duty on such waste and scrap would amount to double taxation on the same product. The Tribunal determined that no duty was leviable on waste and scrap of paper or paperboard generated during manufacturing processes, aligning with the earlier decision and rejecting classification under SH 4702.90.

In the absence of contradictory decisions on the issue, the Tribunal set aside the impugned order and allowed the appeals, holding that the waste and scrap of paper and paperboard cleared by the assessee were not dutiable. The operative part of the order was pronounced in open court on 12-9-2005.