1987 (9) TMI 198 - AT - Central Excise

Summary

Issues:
1. Appellants wrongly availed exemption under Notification 46/71.
2. Whether the 2 ply corrugated board qualifies for exemption under the relevant notification.
3. Whether the demand for duty is time-barred.
4. Whether there was suppression of facts by the appellants to evade duty.
5. Upholding the demand for duty and penalty.

Analysis:

The case involved the appellants wrongly availing exemption under Notification 46/71, leading to a demand for duty of Rs. 59,167.68 and a penalty of Rs. 5,000 imposed by the Additional Collector of Central Excise. The appellants initially admitted to using only white pulp board in manufacturing corrugated board but later changed their stance, claiming exemption based on the second proviso to the notification. They argued that the 2 ply corrugated board, exempt from duty, should remain exempt even after pasting white pulp board on it. However, the Tribunal rejected this argument, emphasizing that the final product's entitlement to exemption, not the intermediate product, determines duty liability.

Regarding the exemption criteria, the Tribunal noted that the final products contained inputs not covered by the notification, making their duty liability clear. The appellants' failure to declare their use of white pulp board to the department, despite claiming exemption conditional on specific inputs, constituted suppression of facts to evade duty. The argument about the small percentage of inadmissible inputs was dismissed, upholding the demand for duty and penalty based on the appellants' deliberate evasion.

The Tribunal also addressed the issue of whether the demand for duty was time-barred. Despite the appellants' argument that they were only obligated to declare major raw materials, the Tribunal rejected this defense, emphasizing that the suppression of facts regarding the use of non-exempt inputs invalidated the time bar defense. Consequently, the Tribunal upheld both the demand for duty and the penalty, ultimately dismissing the appeal and affirming the decision of the Additional Collector of Central Excise.