1985 (2) TMI 282 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Maplitho paper under Central Excise Tariff Item No. 17(1) or 17(2).
2. Whether the show cause notice issued by the Central Government was barred by limitation.
3. Admissibility and relevance of trade enquiries and other evidence presented by both parties.
4. The burden of proof in fiscal or taxing statutes.

Detailed Analysis:

1. Classification of Maplitho Paper:
The primary issue was whether Maplitho paper of grammage ranging from 140 GSM to 179 GSM should be classified as "printing and writing paper" under Item No. 17(1) or as "other kinds of paper" under Item No. 17(2) of the Central Excise Tariff (CET). The Tribunal noted that the Tariff item 17 does not lay down any demarcating line between printing and writing paper and other kinds of paper dependent on the grammage of the paper. It was held that grammage alone would not constitute the basis for classification. The Tribunal referenced its decision in the Sirpur Paper Mills Ltd. case, which stated that Maplitho paper did not cease to be so because of its grammage.

2. Limitation of Show Cause Notice:
The Respondents raised a preliminary objection that the show cause notice issued by the Central Government was hit by the limitation provided in Section 11-A of the Central Excises and Salt Act, 1944. This objection was overruled by the Tribunal in its Order No. 247/84-C, dated 10-4-1984, holding that the show cause notice was not barred by limitation.

3. Admissibility and Relevance of Evidence:
The Department introduced certain letters from paper dealers in response to trade enquiries, which were not disclosed to the Respondents earlier. The Tribunal held that these documents were not disclosed despite the Respondents' requests, which constituted a breach of the principles of natural justice. Moreover, these letters indicated that the subject Maplitho paper was used for printing and writing, supporting the Respondents' contention. The Respondents also provided affidavits from paper dealers and members of the printing industry stating that Maplitho paper of 140 to 179 GSM is known and accepted in trade circles as printing and writing paper. The Tribunal found these affidavits to be of probative value as they were not effectively rebutted by the Department.

4. Burden of Proof:
The Tribunal emphasized that in a fiscal or taxing statute, the burden is heavily on the Department seeking to recover the revenue or tax. The Department must prove the necessary ingredients to bring goods within a taxing entry. The Tribunal found that the Department had not discharged its burden of proof nor produced satisfactory evidence in rebuttal to the Respondents' claims.

Conclusion:
The Tribunal concluded that the Respondents had adduced sufficient evidence to support their contention that the Maplitho paper was printing and writing paper, while the Department had failed to provide satisfactory evidence in rebuttal. The appeal was rejected, and the show cause notice was vacated.