2007 (3) TMI 499 - AT - Central Excise

Summary

Issues:
1. Eligibility of Cenvat credit for news-print manufacturers.
2. Interpretation of Chapter Note 3 regarding newsprint definition.
3. Applicability of nil duty rate for newsprint products.
4. Effect of notification on the status of newsprint producer.

Analysis:

Issue 1: Eligibility of Cenvat credit
The appellants, news-print manufacturers, applied for registration after commencing production. The dispute arose regarding availing Cenvat credit on capital goods and inputs during the period when they were not registered. The original authority denied the credit, citing nil duty rate for news-print under Chapter 4801. The appellants argued they were not eligible for Cenvat credit as news-print producers only after registration. The Tribunal upheld the appellants' contention, allowing the appeals and granting consequential relief.

Issue 2: Interpretation of Chapter Note 3
Chapter Note 3 defines 'newsprint' as specified by the Central Government. The appellants contended that their products supplied to unregistered customers did not meet the newsprint definition criteria, thus not attracting nil duty rate. They argued that their clearances did not qualify as newsprint under the relevant notification. The Commissioner (Appeals) accepted this argument, determining that the appellants were not newsprint producers for the earlier period.

Issue 3: Applicability of nil duty rate
The Tribunal considered the appellants as newsprint producers only from the notification date. Therefore, clearances made before registration could not be treated as falling under Chapter 4801 for nil duty rate. The appellants correctly paid duty at 8% during the period in question, as per Notification No. 6/2003, based on the non-applicability of nil duty rate to their products supplied to unregistered customers.

Issue 4: Effect of notification on producer status
The notification dated 23-2-99 designated the appellants as newsprint producers. Prior to this notification, they did not meet the criteria specified in the Newsprint Control Order for newsprint producers. The Tribunal differentiated this case from precedents, emphasizing that the appellants were not seeking retrospective exemption. As the notification came into effect on 23-2-99, the appeals were allowed based on the specific circumstances of the case.

In conclusion, the judgment clarified the eligibility of Cenvat credit, interpretation of newsprint definition, applicability of duty rates, and the impact of the notification on the appellants' status as newsprint producers.