1997 (2) TMI 298 - AT - Central Excise

Summary

Issues:
Determining excess clearances computation method under Notification No. 116/84 for paper and paper board; Whether captively consumed goods should be included in base clearance calculation; Whether Broke arising from paper manufacture is excisable goods exigible to duty.

Analysis:
The appeals challenged the order-in-appeal regarding the computation of excess clearances under Notification No. 116/84 for paper and paper board. The main contention was whether waste paper repulped within the factory for captive consumption should be considered in computing the base clearance. The Appellants argued that captively consumed goods should not be included in base clearance calculation as it would lead to double accounting and distort the actual quantity cleared. They relied on the case of Rohit Pulp and Paper Mills Ltd. v. C.C.E. to support their position. On the other hand, the Respondent argued that captively consumed goods must be considered as cleared from the factory, citing the case of Rainbow Industries v. C.C.E.

The Tribunal analyzed the relevant notifications and previous judgments to resolve the issue. They noted that the term "home consumption" in the notifications should be understood as consumption within the country, regardless of the place or method of consumption. The Tribunal held that goods removed for captive consumption should be considered as goods cleared for home consumption, in line with the legislative intent. They emphasized that if goods removed for captive consumption were not considered goods for home consumption, duty would not be levied on such goods.

Furthermore, the Tribunal considered the nature of Broke arising from paper manufacture. They referred to the case law and expert opinions to determine that Broke, which does not leave the machine room as saleable paper or board, should not be considered excisable goods exigible to duty. They highlighted that Broke, even if it has some value, cannot be classified as excisable goods as specified in the relevant notification. Therefore, the quantity of waste paper captively consumed only for repulping, not for conversion into a final product, should not be included in the clearance calculation for determining the base clearance.

In conclusion, the Tribunal allowed the appeals, holding that waste paper captively consumed for repulping and Broke arising from paper manufacture should not be included in the computation of clearances for determining the base clearance under Notification No. 116/84.