1987 (9) TMI 165 - AT - Central Excise

Summary

Issues:
- Interpretation of Notification No. 142/82 regarding exemption of corrugated board cartons made from duty paid kraft paper.
- Classification of bituminised kraft paper and its eligibility for exemption under the notification.
- Impact of lamination process on the classification of corrugated board cartons.
- Consideration of bitumen as an additional material under the notification.

Analysis:
1. The appeal concerned the interpretation of Notification No. 142/82 related to the exemption of corrugated board cartons made from duty paid kraft paper. The dispute arose when the authorities demanded duty due to the use of bituminised kraft paper by the respondents, which was not explicitly covered by the notification.

2. The Collector (Appeals) allowed the respondents' appeal based on a precedent where bituminised kraft paper was considered as kraft paper for classification purposes. The Tribunal held that bituminising duty paid kraft paper did not change its classification and the exemption under the notification applied to cartons made using bituminised kraft paper.

3. The appellant collector argued that bituminised paper was a distinct product from kraft paper, citing a different Tribunal decision. They contended that the use of bituminised paper was not covered by the earlier notification, which led to the issuance of a successor notification explicitly mentioning bituminised paper.

4. The respondents' consultant defended the use of bituminised kraft paper, stating it was still kraft paper and eligible for the exemption. They emphasized that the lamination process was essential for carton production and did not alter the classification of the end product. Additionally, they highlighted the permissible use of other materials under the notification.

5. The main issues for determination included whether bituminised kraft paper retained its classification as kraft paper, the impact of the lamination process on carton classification, and whether bitumen could be considered an allowable material under the notification.

6. The Tribunal analyzed the processes involved in carton manufacturing, noting that the transformation of duty paid kraft paper through bonding and lamination was necessary. While an intermediate product emerged during manufacturing, it did not disqualify the end product from the notification's benefit. The Tribunal cited precedents where the use of specified inputs for end-products retained exemption benefits, even if intermediary products were produced.

7. Ultimately, the Tribunal upheld the decision of the Collector (Appeals), ruling that the cartons manufactured by the respondents using bituminised kraft paper were eligible for exemption under Notification No. 142/82. The appeal was dismissed based on the classification and processing of materials in compliance with the notification's provisions.