1991 (5) TMI 139 - AT - Central Excise

Summary

Issues:
Appeal against duty demand on printing and writing paper made from bagasse, availing exemption under Notification No. 191/80.

Detailed Analysis:

1. Background and Duty Demand:
The appeal challenges a duty demand of Rs. 7,60,821.84 on printing and writing paper produced from bagasse, wrongly availing exemption under Notification No. 191/80. The appellants had been using bagasse pulp for paper production, claiming exemption until a show cause notice was issued proposing duty on 483.8469 metric tonnes of paper produced during a specific period.

2. Contentions and Orders:
The appellants contended that they maintained required records and the Department's calculation method was flawed. The Assistant Collector upheld the duty demand, leading to the current appeal. The period in question saw intermittent compliance issues, but no penalties were imposed. The Trade Notice outlined procedures for availing the exemption, which the appellants argued they followed with Department's acquiescence.

3. Defence and Discrepancies:
The appellants argued that their records showed compliance, with valves adjusted to maintain the required pulp ratio. They highlighted discrepancies in the Department's method of calculation and cited a Supreme Court decision to support their position.

4. Department's Response:
The Department emphasized strict interpretation of the exemption, challenging the appellants' eligibility. They argued that prior letters did not absolve non-compliance with the Trade Notice. The Department's calculations indicated insufficient bagasse pulp content in the paper.

5. Additional Evidence and Compliance:
Post-hearing, the appellants submitted documents supporting their record-keeping practices and production processes. They demonstrated adherence to prescribed ratios and maintenance of necessary records, with no objections raised by the Department for prior or subsequent periods.

6. Log Book Maintenance and Production Process:
The appellants detailed their meticulous record-keeping, including daily consistency checks and valve sealing by Central Excise Officers. They explained the process of calculating pulp content and highlighted inaccuracies in the Department's assumptions and calculations.

7. Decision and Rationale:
The Tribunal found the Department's calculations unfounded and based on erroneous assumptions. Consequently, the impugned duty demand was set aside, and the appeal was allowed with any consequential relief due to the appellants.

In conclusion, the Tribunal's decision favored the appellants, emphasizing the importance of accurate record-keeping and challenging the Department's flawed calculations and assumptions in demanding duty on the printing and writing paper made from bagasse.