2006 (12) TMI 318 - AT - Central Excise

Summary

Issues involved: Classification of waste and scrap arising during the manufacturing of coated paper and paper board under Chapter Heading 48.10 u/s Chapter Heading 47.02 of the Central Excise Tariff Act, 1985.

Classification of waste and scrap: The appellant, a manufacturer of coated paper and paper board, faced a show cause notice for clearing trimming and cuttings without duty payment, which the authorities claimed should be classified under Chapter Heading 4702.00. The appellant argued that Chapter sub-Heading 4702.00 applies to basic paper and paperboard, not coated paper. The Tribunal noted that the manufactured products fell under Chapter Heading 48.10, and since there was no specific heading for waste and scrap in Chapter 48, the waste and trimmings arising during the manufacturing process of coated paper could not be charged duty.

Interpretation of Chapter Headings: The revenue contended that the waste and scrap should fall under Chapter Heading 47.02, but the Tribunal disagreed. Chapter Heading 47.02 pertains to "Waste and scrap, paper or paperboard," without clear indications on what to exclude or include. The Tribunal held that waste and scrap arising during the manufacture of products under Chapter sub-heading No. 4810.10 should not be classified under Chapter Heading 47.02. The Tribunal emphasized that once paper is coated, it falls under the category of coated papers, and the waste and trimmings from such manufacturing should be covered under Chapter 48, not Chapter 47.02, to avoid excise duty imposition.

Decision and Conclusion: Considering the facts presented, the Tribunal concluded that trimming and cutting arising during the manufacturing of coated papers falling under Chapter Heading 48.10 should not be classified under Chapter Heading 47.02. Therefore, the impugned order demanding duty was set aside, and the appeal filed by the appellant was allowed. The Tribunal highlighted that duty cannot be imposed solely because waste and scrap are marketable, especially when they arise from the manufacturing process of coated papers.