2009 (11) TMI 292 - HC - Central Excise

Paper- Packing grade paper- the assessee was availing benefit of concessional rate of duty in respect of packing grade paper classified under sub heading No. 4805.90 in terms of Notification No. 138/86/CE., dated 1-3-1986. A detailed show cause notice was issued to the assessee by the Col lector, Excise. According to the revenue, though the asessee had shown that it had received 1522301 kgs of waste paper and white cutting from 14 different par ties and out of this, 144091 Kgs were shown to have been purchased from 11 parties and balance 81,710 kgs was their own waste paper and while cutting received back from three parties to whom the paper had been sent for cutting on job work, it was alleged that in fact only 63555 Kgs were actually received out of the total quantity of 1522301 Kgs and, therefore, according to the revenue, 1458746 Kgs were not actually received during the period 16-5-1986 to 7-7-1989. Held that findings of fact in impugned order on quantity received and quantity manufactured cannot be set aside in writ proceeding

Summary

Issues involved:
1. Interpretation of Notification No. 138/86/CE regarding concessional rate of duty for packing grade paper.
2. Allegations of using imported wood pulp exceeding 50% and false entries by the assessee.
3. Challenge against penalties imposed by the assessing officer.
4. Appeal against the Tribunal's decision reducing penalties.
5. Validity of writ petitions as a remedy.

Issue 1: The judgment involves the interpretation of Notification No. 138/86/CE, which provides for a concessional rate of duty for packing grade paper manufactured from non-conventional materials. The assessee claimed this benefit but was alleged to have used imported wood pulp exceeding the permissible limit of 50%. The court analyzed the conditions of the notification and the actual raw materials used by the assessee, ultimately concluding that the assessee did not qualify for the exemption due to using more than 50% of imported wood pulp.

Issue 2: The revenue authorities accused the assessee of manipulating records and making false entries to evade duty payments under the notification. The court upheld the findings of fact by the revenue authorities, emphasizing that such findings cannot be set aside in writ proceedings. The court also dismissed the argument that the amount of waste paper should be considered towards total output, affirming the authorities' conclusion that the assessee used less than 50% of pulp from non-conventional materials.

Issue 3: The assessing officer imposed substantial penalties on the assessee and key personnel for the alleged violations. The Tribunal upheld the penalties but reduced the amounts. The court, after reviewing the penalties and the circumstances, found no reason to further reduce the penalties, except for the penalty imposed on a deceased individual, which was set aside.

Issue 4: The assessee challenged the Tribunal's decision on penalties, leading to the present appeal. The court analyzed the arguments presented by the assessee's counsel, ultimately upholding the penalties imposed by the revenue authorities and the Tribunal, with the exception of the penalty on the deceased individual, which was rightfully set aside.

Issue 5: The court noted that writ petitions were not the appropriate remedy for the assessee, who could have pursued other legal avenues. However, due to the long pendency of the writ petitions, the court decided to address the merits of the case. The court emphasized the limited scope of interference in writ petitions, focusing on the correctness of the decision-making process rather than the merits of the case.

Overall, the court dismissed the writ petitions, upholding the penalties imposed on the assessee and key personnel, except for the penalty on the deceased individual. The judgment provides a detailed analysis of the factual and legal aspects of the case, emphasizing compliance with the notification requirements and the consequences of non-compliance with excise duty regulations.