1992 (12) TMI 142 - AT - Central Excise

Issues Involved:
1. Computation of differential duty payable.
2. Mis-statement or suppression of facts by the appellant.
3. Classification of the product as 'paper' or 'board'.
4. Applicability of exemptions under various notifications.
5. Extended period of limitation for demand of duty.
6. Proper assessment of value and rate of duty.
7. Imposition of penalties and confiscation of goods.

Issue-wise Detailed Analysis:

1. Computation of Differential Duty Payable:
The Collector (Appeals) confirmed the differential duty amounting to Rs. 28,72,391.18 calculated by the department. The dispute centered around the classification of the product as 'board' instead of 'paper,' leading to a higher duty rate. The appellant argued that only Rs. 12,96,221.56 could be demanded, and they had already paid Rs. 15 lacs as per the Gujarat High Court's interim order. The Tribunal directed the recalculation of duty in terms of Section 4(4)(d)(ii) of the Act, considering the assessable value and proper rate of duty.

2. Mis-statement or Suppression of Facts by the Appellant:
The department alleged that the appellant willfully mis-stated or suppressed facts to evade duty. The investigation revealed that the appellant declared their products as 'kraft paper' while supplying 'board' with higher grammage. The Tribunal upheld the Collector's findings of suppression and mis-statement, confirming that the appellant deliberately mis-declared the nature of the goods to evade duty.

3. Classification of the Product as 'Paper' or 'Board':
The Collector classified the product with grammage above 225 gsm as 'board' based on ISI definitions and trade usage. The appellant contended that grammage alone should not determine the classification and that the product's rigidity should also be considered. The Tribunal, referencing various rulings, concluded that grammage up to and inclusive of 225 gsm should be considered as 'paper,' and beyond 225 gsm as 'board.'

4. Applicability of Exemptions Under Various Notifications:
The appellant claimed exemptions under Notification Nos. 128/77 and 15/78, arguing that their product was 'kraft paper.' The Collector denied these exemptions, stating that the product was 'board.' The Tribunal noted that the exemptions were not applicable to 'board' and upheld the Collector's decision, except for the portion of the product classified as 'paper' (up to 225 gsm).

5. Extended Period of Limitation for Demand of Duty:
The department invoked the extended period of limitation under the proviso to Section 11A(1) of the Act, citing fraud, collusion, and willful mis-statement or suppression of facts. The Tribunal agreed with the department, referencing Supreme Court rulings that established the applicability of the extended period in cases of deliberate mis-declaration and suppression of facts.

6. Proper Assessment of Value and Rate of Duty:
The appellant argued that the duty was not calculated correctly as per Section 4(4)(d)(ii) of the Act, which provides for deduction of excise duty to arrive at the assessable value. The Tribunal found merit in this argument and directed the lower authorities to reassess the duty, ensuring compliance with the statutory provisions and relevant judicial precedents.

7. Imposition of Penalties and Confiscation of Goods:
The Collector imposed a penalty of Rs. 1,55,000 on the appellant and confiscated goods from various parties, offering an option to pay fines in lieu of confiscation. The Tribunal upheld the penalties and confiscation orders, noting the seriousness of the appellant's actions in evading duty. The fines imposed on other parties were also confirmed, as the goods were found to be offending and duty had not been paid.

Conclusion:
The Tribunal modified the Collector's order to classify products with grammage up to 225 gsm as 'paper' and beyond 225 gsm as 'board.' It directed the reassessment of duty as per Section 4(4)(d)(ii) of the Act and upheld the penalties and confiscation orders. The appeals were disposed of accordingly.

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