2008 (5) TMI 389 - AT - Central Excise

Paper and paperboard or articles made there from - exemption under Notification No. 6/2002-C.E., as amended by Notification No. 48/2004-CE., dated 10-9-04 (S. No. 86A) - Central Pulp & Paper Research Institute and IIT, Roar in their separate opinion have opined that the appellant s plant appears to be suitable for pulping agricultural residues - unit of the appellants are eligible for the benefit of exemption.

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 6/02-C.E. as amended by Notification No. 48/04-C.E.
2. Interpretation of the condition regarding the existence of a plant for making bamboo or wood pulp.
3. Technical capability of the digesters to process wood pulp.
4. Relevance of expert opinions and previous judgments.

Issue-Wise Detailed Analysis:

1. Eligibility for Exemption under Notification No. 6/02-C.E. as Amended by Notification No. 48/04-C.E.
The core issue was whether the appellants, M/s. Satia Paper Mills and M/s. Shreyans Inds. Ltd., were entitled to the concessional rate of duty at 12% ad valorem for paper and paperboard manufactured from pulp containing not less than 75% by weight of non-wood materials, as per Notification No. 6/02-C.E. and its amendment. The exemption was contingent upon the factory not having a plant for making bamboo or wood pulp.

2. Interpretation of the Condition Regarding the Existence of a Plant for Making Bamboo or Wood Pulp
The Revenue argued that since the units used wood chips of Safeda (Eucalyptus) waste and veneer waste, and their digesters were capable of processing wood chips, they should be considered as having a plant for making wood pulp. Consequently, they would not qualify for the exemption.

3. Technical Capability of the Digesters to Process Wood Pulp
The appellants contended that their plants were primarily designed for processing non-woody fibrous materials. Expert opinions from the Indian Institute of Technology, Roorkee, and the Central Pulp & Paper Research Institute supported this claim, stating that the digesters were suitable for agro waste and not wood. The Commissioner, however, rejected these opinions without substantial reasoning.

4. Relevance of Expert Opinions and Previous Judgments
The Tribunal considered expert opinions which indicated that the plants lacked the necessary equipment for wood pulping, such as wood debarking and chipping machines. The Tribunal also referenced the judgment in Ballarpur Industries Ltd. v. CCE, New Delhi, which held that a plant must be designed and used for making bamboo pulp to disqualify from exemption. The Tribunal found this judgment applicable, distinguishing it from the Supreme Court's decision in Central Pulp Mills Ltd v. CCE, Surat, where a complete wood pulp plant was temporarily decommissioned.

Conclusion
The Tribunal concluded that the appellants' plants could not be considered as having a plant for making bamboo or wood pulp. The digesters, though technically capable of processing wood, were not designed for that purpose and primarily processed agro residues. Therefore, the appellants were eligible for the exemption under Notification No. 6/02-C.E., as amended by Notification No. 48/04-C.E. The orders denying the exemption and demanding duty were set aside, and both appeals were allowed.