1985 (3) TMI 278 - AT - Central Excise

Issues Involved:
1. Authority of the Assistant Collector to review his own order.
2. Eligibility of mill board for concessional rate under Notification No. 70/76-C.E.
3. Interpretation of the term "mill board" under the Notification.
4. Validity of demands raised for differential duty.
5. Allegations of suppression of facts by the manufacturer.

Issue-wise Detailed Analysis:

1. Authority of the Assistant Collector to Review His Own Order:
The Appellate Collector concluded that the Assistant Collector did not have the authority to review his own order, which initially approved the concessional assessment for the mill board. The failure to mention the use of chemicals did not amount to suppression, as it was commonly known that chemicals are necessary in paper manufacture. The Appellate Collector cited the Supreme Court ruling in M/s. Anglo Afghan Agencies v. Union of India, asserting that a promise made cannot be changed by the same person. Consequently, the Appellate Collector allowed the appeal, setting aside the Assistant Collector's order.

2. Eligibility of Mill Board for Concessional Rate under Notification No. 70/76-C.E.:
The Central Excise Department argued that the mill board was not eligible for the concession as it contained jute stalk and paddy straw, which were not permitted materials under the notification. The notification required the mill board to be made out of mixed waste paper and mechanical pulp. The department's counsel argued that the use of primary fibers like jute stalk and paddy straw disqualified the mill board from the exemption. The Tribunal agreed with this interpretation, stating that the mill board must be made from the specified materials to qualify for the exemption.

3. Interpretation of the Term "Mill Board" under the Notification:
The definition provided in Notification No. 70/76-C.E. specified that "mill board" should be made out of mixed waste papers with or without screenings and mechanical pulp, without any coloring matter. The Tribunal found that the mill board manufactured by M/s. Nayek Paper & Board Mills did not meet this definition as it lacked mechanical pulp and included jute stalk and paddy straw. The Tribunal emphasized that the exemption must be interpreted strictly, and the claimant must prove their entitlement to it. The presence of jute stalk and paddy straw, which constituted 40% of the furnish, disqualified the mill board from the exemption.

4. Validity of Demands Raised for Differential Duty:
The demands for differential duty were raised by the Assistant Collector after issuing a show cause notice for the proposed modification of the classification. The Tribunal held that demands for past periods are lawful and in accordance with the provisions of the law. The Assistant Collector's actions to recover duty and change the classification were deemed appropriate, provided they followed due process and were not time-barred. The Tribunal rejected the argument that demands cannot be issued once an assessment is approved, stating that such demands are necessary to rectify erroneous assessments.

5. Allegations of Suppression of Facts by the Manufacturer:
The Central Excise Department accused M/s. Nayek Associates of suppression for not declaring the use of caustic soda in the manufacture of the mill board. The Tribunal dismissed this charge as frivolous, noting that the use of caustic soda is a normal technological fact in paper and board manufacture. The Tribunal considered the charge improper and ruled that recoveries of duty should be limited to a period of six months before the date of the demands.

Conclusion:
The Tribunal ordered that duty be paid by M/s. Nayek Associates as demanded, based on the revised classification made by the Assistant Collector. The Tribunal also addressed the contradiction in the Appellate Collector's order, which validated the modification of the classification list from 19-5-1979 after stating that such revision should not have been done by the Assistant Collector. The Tribunal's order superseded all contrary orders of the lower authorities.

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