2015 (9) TMI 1488 - AT - Central Excise

Benefit of N/N. 138/1986-C.E. dated 1-3-1986 - concessional rate of duty - pulp made from waste paper as also from imported wood pulp - Held that - the Revenue for denial of the benefit of the said notification has to first allege and prove that more than 50% of pulp used by an assessee has been made out of these listed materials. Admittedly this is not the Revenue s case at all. Nowhere it stands alleged in the show cause notice that the appellant had used the pulp more than 50% by weight made out of the said bamboo hard woods soft woods reeds or rags. The second type of pulp apart from the waste pulp used by the appellant is imported wood pulp. Nobody knows about the constitution of the imported wood pulp or materials used therein. In the absence of any evidence on record that the imported wood pulp used by the assessee was made out of the materials to which exception stands made in proviso (ii) we find no merits in the Revenue s stand. Even at the cost of repetition we would like to observe that the Revenue has neither alleged nor proved that the balance pulp used by the assessee was made out of bamboo hard woods soft woods reeds or rags so as to deny the benefit of the exemption notification to the appellant - Held in favour of the assessee on the point of interpretation of the said proviso we do not feel the need of going into the use of percentage of both the types of pulp in the manufacture of the appellant s final product. Accordingly the assessee s appeal is allowed and Revenue s appeal is rejected.

Summary

Issues Involved:
Interpretation of proviso (ii) of Notification No. 138/1986-C.E. dated 1-3-1986 regarding manufacturing of paper and paperboards for availing concessional rates of duties based on waste paper utilization.

Detailed Analysis:

Issue 1: Interpretation of Proviso (ii) of Notification No. 138/1986-C.E.
The dispute revolves around whether the appellant fulfilled the conditions of the notification regarding the composition of pulp used in manufacturing paper and paperboards. The notification requires that the pulp must not contain less than 50% by weight of pulp made from materials other than bamboo, hard woods, soft woods, reeds, or rags. The intention is to promote sustainable practices and protect forests. The Revenue alleged that the appellant did not satisfy this condition, leading to the initiation of proceedings.

Issue 2: Allegation by Revenue and Legal Interpretation
The Revenue's contention was that if the unconventional pulp used by the appellant is less than 50%, the benefit of the notification would not apply automatically. However, the Tribunal disagreed with this interpretation. The language of the proviso specifies that more than 50% of the pulp should not be from the listed materials to deny the benefit. The Revenue failed to prove that the balance pulp used by the appellant was from the listed materials, namely bamboo, hard woods, soft woods, reeds, or rags.

Issue 3: Analysis of Imported Wood Pulp
The Revenue argued that the use of wood pulp itself falls under the listed materials in the proviso. However, the Tribunal emphasized that the proviso did not specify that the balance pulp should be from Indian Forest wood. The legislative intent was to protect forests, whether Indian or foreign. The appellant's advocate explained that imported wood pulp could be sourced from various waste materials, not necessarily the listed woods. Without evidence that the imported wood pulp contained the listed materials, the Revenue's argument lacked merit.

Conclusion:
The Tribunal ruled in favor of the assessee, stating that the Revenue failed to prove that more than 50% of the pulp used contained the listed materials, thus denying the benefit of the notification. Since the interpretation of the proviso favored the assessee, there was no need to delve into the percentage of different pulps used. Consequently, the assessee's appeal was allowed, and the Revenue's appeal was rejected.