1999 (1) TMI 105 - AT - Central Excise

Summary

Issues:
1. Duty demand on non-conforming newsprint.
2. Duty demand on unregistered clearance of newsprint.
3. Interpretation of newsprint classification criteria.
4. Exemption under Notification 8/96 for newsprint.
5. Tolerance limit for duty calculation.
6. Liability to penalty based on the outcome of issues.

Analysis:
1. The Commissioner confirmed a duty demand of approximately Rs. 3.64 crores on the appellant for non-conforming newsprint and unregistered clearance. The appellant argued that newsprint need not conform to Indian Standard Specifications as per tariff and was intended for newspaper printing. The appellant's registration as a newsprint manufacturer and reliance on previous orders supported their claim. The Departmental Representative relied on a test report indicating non-conformance to IS 11688-1986 for thickness and roughness as the basis for the charge.

2. The classification of newsprint was contested, with the appellant asserting that classification should be based on intended use for newspaper printing, not specific parameters. The HSN Explanatory Notes and Customs Tariff supported this interpretation, emphasizing end use over technical specifications. The appellant also claimed exemption under Notification 8/96 for newsprint clearance.

3. The appellant contended that the entire quantity of goods was cleared under Notification 8/96, exempting newsprint supplied to registered newspaper publishers. The Commissioner was directed to reevaluate if evidence of supply to newspaper publishers was provided within a month. Compliance with notification conditions would determine the classification as newsprint.

4. The appellant argued against a tolerance limit for duty calculation, stating that duty is based on the weight of newsprint during removal. The Board's circular on classification based on weight was deemed irrelevant. Compliance with exemption conditions would negate duty demand, pending verification of purchase orders and quantity supplied to publishers.

5. The liability to penalty was contingent on the resolution of duty demand issues and compliance with exemption conditions. The impugned orders were set aside, pending further assessment by the Commissioner. The appeals were allowed, emphasizing the need for evidence of supply to newspaper publishers for classification as newsprint and exemption under Notification 8/96.