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Issues Involved
1. Inclusion of Broke in Total Clearances 2. Eligibility of Art Paper and Chromo Paper for Exemption 3. Classification of Ledger Paper (above 85 GSM) for Excise Duty 4. Eligibility of Art Board or Chromo Board for Exemption Detailed Analysis 1. Inclusion of Broke in Total Clearances The primary issue was whether the quantity of "broke" consumed within the factory should be included for computing the total quantity of various types of paper and paper boards cleared from the factory. The appellants argued that broke is not goods, much less excisable goods, and not a variety of paper or paper board. They cited various case laws, including Modi Rubber Ltd. v. Union of India and Indian Aluminium Co. v. A.K. Bandopadhyaya, to support their argument. The appellants also contended that broke is classified under Chapter 47 along with pulp, not under Chapter 48 with paper and paper board, and that it is not "cleared from the factory" as per Notification No. 25/84-CE. The respondents countered that the notification does not refer to excisable goods or dutiable goods but to "all varieties of paper and paper board," arguing that broke is indeed paper. They referenced Aruna Industries v. Collector of Central Excise, Guntur and Sheshasayee Paper and Boards v. Collector of Central Excise to support their stance. The Tribunal examined the nature of broke, citing technical literature and concluded that broke is not used for writing or printing and is not sold as paper. Therefore, broke cannot be considered a variety of paper or paper board for the purpose of computing clearances under Notification No. 25/84. 2. Eligibility of Art Paper and Chromo Paper for Exemption The second issue was whether art paper and chromo paper qualify for the exemption under Notification No. 25/84. The appellants argued that these papers are varieties of writing and printing paper and should be exempted. They referred to the doctrine of "NOCITERASOCIIS" and other judgments to support their claim. The respondents argued that the second proviso to the notification excludes coated paper, and art paper and chromo paper are coated papers. The Tribunal agreed with the respondents, stating that the proviso clearly excludes coated paper, and thus, art paper and chromo paper are not eligible for exemption under Notification No. 25/84. 3. Classification of Ledger Paper (above 85 GSM) for Excise Duty The third issue was whether ledger paper (above 85 GSM) attracts excise duty as writing and printing paper. The appellants contended that ledger paper is used for writing accounts in banks and commercial organizations, and thus, it should be classified as writing and printing paper. The Tribunal agreed with the appellants, noting that the very name "ledger paper" indicates its use for writing and printing. Therefore, ledger paper (above 85 GSM) qualifies as writing and printing paper. 4. Eligibility of Art Board or Chromo Board for Exemption The final issue was whether art board or chromo board would be eligible for exemption under Notification No. 25/84. The appellants argued that the second proviso excludes only coated paper and not coated boards. The Tribunal found that the exclusion in the proviso is indeed only for coated paper and not for coated boards. Therefore, art board and chromo board qualify for the exemption under Notification No. 25/84. Conclusion The appeals were allowed in part: - Broke: Not includible in the computation of clearances of paper and paper board. - Ledger Paper: Classified as writing and printing paper. - Art Board/Chromo Board: Eligible for exemption. - Art Paper/Chromo Paper: Not eligible for exemption. Both appeals were disposed of accordingly.
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