2018 (10) TMI 19 - AT - Central Excise

Concessional rate of duty - paper & paper board manufactured, starting from the stage of pulp, in a factory - denial of exemption on the ground that the assessee had used soft wood pulp, JK pulp, unbleached pulp, JK wet pulp in excess of 25 of the total pulp consumed - Benefit of N/N. 6/02 dt. 01/03/2002 - time limitation. Held that - The show-cause notice proposing to deny the exemption under Notification No.6/2002 was issued for the period August 2003-September 2005. But the adjudicating authority, after proper verification of the reports submitted by the jurisdictional ACCE, has dropped the demand for the year 2004-05 and 2005-06 on the ground that the appellants had maintained proper records showing the details of the issue of raw material during the specific period for manufacture of specific type of paper. Further, the Commissioner(Appeals) has only confirmed the demand for the year 2003-04 on the ground that the said demand was not contested by the assessee whereas the assessee from the very beginning has contested the demand on merits as well as on limitation and for the year 2004-05 and 2005-06, the original authority has dropped the demands after proper verification. Time Limitation - Held that - The entire demand is barred by limitation as there is no allegation of suppression against the appellant as he has maintained the proper records and has also been submitting the monthly RT12 / ER1 returns showing the quantity of paper cleared under concessional rate of duty under Notification No.6/2002-CE - In the absence of specific finding of deliberate suppression of facts with intent to evade payment of duty, the demand confirmed for the year 2003- 04 is barred by limitation. Appeal allowed - decided in favor of appellant.

Issues Involved:
- Appeal against the Order-in-Original upholding the rejection of appellant's appeal.
- Exemption under Notification No.6/02 for paper and paper board manufacturing.
- Demand of duty for specific periods based on raw material usage.
- Contestation of demand by the appellant.
- Allegation of suppression of facts and proper record maintenance.
- Bar on demand for certain periods due to proper record-keeping.
- Legal basis for the demand and limitation period.
- Application of relevant case laws to support contentions.

Detailed Analysis:

1. Appeal Against Order-in-Original:
The appeal was directed against the impugned order passed by the Commissioner(Appeals) upholding the Order-in-Original and rejecting the appellant's appeal. The Commissioner(Appeals) held that the appellant had not contested the demand for a specific period and had voluntarily paid the duty, leading to the rejection of the appeal by the appellant.

2. Exemption under Notification No.6/02:
The case revolved around the appellant's availing exemption under Notification No.6/02 for the manufacturing of paper and paper board. The notification specified conditions for concessional duty rates based on the composition of pulp used in manufacturing, emphasizing the eligibility criteria for the reduced duty rate.

3. Demand of Duty Based on Raw Material Usage:
Show-cause notices were issued for demanding duty amounts for specific periods, alleging non-compliance with the exemption criteria due to the usage of certain types of pulp in excess of the permitted limits. The adjudicating authority confirmed duty amounts for certain years while dropping demands for other periods after verification and investigation.

4. Contestation of Demand:
The appellant contested the demand on various grounds, including challenging the basis of the demand, maintaining proper records of raw material usage, and disputing the findings of the adjudicating authority regarding the unconventional nature of certain pulp materials used in manufacturing.

5. Suppression of Facts and Record Maintenance:
The appellant argued against the allegation of suppression of facts and improper record maintenance, citing the submission of monthly returns and detailed verification reports to support their compliance with duty payment requirements.

6. Legal Basis and Limitation Period:
The appellant relied on legal precedents and case laws to support their contentions regarding the legality of the demand, the limitation period for raising such demands, and the absence of deliberate suppression of facts to evade duty payment.

7. Application of Case Laws:
The Tribunal analyzed relevant case laws, including decisions related to the treatment of waste paper as unconventional raw material for duty exemption purposes, to support their conclusion that the demand for a specific year was not sustainable in law due to lack of suppression of facts and compliance with record-keeping requirements.

8. Conclusion:
After considering submissions from both sides and reviewing the evidence on record, the Tribunal found in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief. The decision was based on the merits of the case, the limitation period for the demand, and the legal precedents cited to support the appellant's arguments.

This comprehensive analysis highlights the key legal issues, arguments presented by both parties, relevant case laws, and the ultimate decision of the Tribunal in favor of the appellant based on the legal and factual considerations presented during the proceedings.

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