2007 (5) TMI 451 - AT - Central Excise

Paper, paper waste - Notification No. 4/97-C.E. - Evidence - Manipulation of records by Public Sector Undertaking

Summary

Issues:
Manufacture of printing and writing paper, denial of exemption under Notification No. 4/97-C.E., demand of duty, imposition of penalty, composition of pulp, manipulation of records, interpretation of Notifications, inclusion of "broke" in pulp composition, evidence of manipulation.

Analysis:
The appellants, manufacturers of printing and writing paper, contested a demand of duty and penalty due to the denial of exemption under Notification No. 4/97-C.E. The dispute arose from the composition of pulp used in manufacturing paper during the period Jan '98 to Sept '99. The department alleged that some paper was manufactured using less than 75% pulp from specified materials, leading to the demand. The appellants argued that the exclusion of "broke" from the pulp composition was incorrect as it was considered non-conventional pulp based on previous tribunal decisions and CBEC clarifications.

The Senior Advocate for the appellants detailed the manufacturing process, highlighting the use of different pulp streams, including conventional and non-conventional pulps like chemical bagasse and "broke." They argued that the department's scrutiny did not consider "broke" in the pulp composition, leading to the incorrect determination of duty liability. Referring to tribunal decisions and CBEC clarifications, the appellants contended that "broke" should be treated as non-conventional pulp for the Notifications' purposes.

The appellants, a State Govt. Undertaking, denied manipulation of records, emphasizing that no evidence supported such claims. They criticized the lack of inquiry into alleged manipulations and the absence of oral evidence from relevant personnel. The appellants urged for the appeal's allowance, disputing the findings of record manipulation and duty liability.

Upon review, the tribunal found that "broke" should be included in the pulp composition determination, as settled by previous tribunal cases and CBEC circulars. Insufficient evidence of record manipulation by the appellants was noted. The tribunal emphasized the need for convincing evidence to challenge the presumption of a Public Sector Undertaking's integrity. Consequently, the impugned order was set aside, and the appeal was allowed for further examination by the Commissioner to determine the appellants' eligibility for the exemption under the relevant Notifications after affording them a fair hearing.