2005 (4) TMI 137 - AT - Central Excise

Summary

Issues:
1. Whether the value of Kraft Papers cleared on payment of duty should be included for the first clearance of 3500 MTs under Central Excise Notification No. 3/2001.
2. Whether the assessee is liable for differential duty, penalty, and interest under Section 11AC of the Central Excise Act.
3. Whether the goods and vehicle seized by the Revenue should be confiscated.

Analysis:
1. The main issue in these appeals is the inclusion of the value of Kraft Papers cleared on payment of duty for the first clearance of 3500 MTs under Central Excise Notification No. 3/2001. The appellant, a paper manufacturer, had initially faced doubts from the Revenue regarding the exemption eligibility of Kraft Paper made from waste paper. Subsequently, the Department revised its stance and confirmed that Kraft Paper made from waste paper qualifies for exemption. The Department initiated proceedings against the appellant for not including the value of Kraft Paper cleared on payment of duty in the first clearances of 3500 MTs. The Tribunal held that the value of Kraft Paper made from non-conventional raw materials must be included in the aggregate value of the first clearances. However, as the appellant had paid duty on Kraft Paper due to the Department's earlier stance, no penalty was imposed under Section 11AC as there was no suppression of facts.

2. The Tribunal considered the Ministry's clarification and the correct interpretation of the relevant notification, concluding that the appellant is liable to pay the differential duty for the relevant period by adjusting the duty already paid on Kraft Paper. The Tribunal found no contumacious conduct by the appellant and dismissed the Revenue's appeal against the impugned order of the Commissioner, as there was no wilful suppression of facts by the assessee. Therefore, the appellant is required to pay the differential duty by including the value of Kraft Paper clearances in the first 3500 MTs for the purpose of exemption under Notification No. 3/2001.

3. Regarding the confiscation of seized goods and the vehicle, the Tribunal held that since there was no wilful suppression of facts by the assessee, there was no justification for confiscation. Therefore, the Revenue's appeal for confiscation was dismissed. In conclusion, the appellant is liable to pay the differential duty by including the value of Kraft Paper clearances in the first 3500 MTs for exemption, while the Revenue's appeal for confiscation was deemed not maintainable.