2000 (7) TMI 432 - AT - Central Excise

Summary

Issues Involved:
- Whether the exemption under Notification No. 48/91-C.E. is available to the writing and printing paper manufactured by the Appellant.
- Whether the Appellants are eligible for the exemption under Notification No. 60/88-C.E.
- Whether the penalty imposed on the Appellants is justified.

Analysis:

Issue 1: Exemption under Notification No. 48/91-C.E.:
The Appellants, a paper manufacturer, claimed exemption under Notification No. 48/91 for their writing and printing paper. The Collector imposed duty and penalty, alleging the Appellants removed 'newsprint' not declared, as they were classified as a newsprint-producing mill. The Appellants argued their product met the Notification's requirements, having been classified as writing and printing paper. They contended the end use does not determine classification, and the product was not known as newsprint in the market. The Tribunal found no evidence of process change post-declaration, and noted the Appellants continued manufacturing writing and printing paper. As per Note 3 to Chapter 48, 'newsprint' is paper for newspapers, and the Appellants' product was rightfully classified under heading 48.02. The impugned order was set aside, and the appeal allowed.

Issue 2: Exemption under Notification No. 60/88-C.E.:
The Appellants sought exemption under Notification No. 60/88, submitting certificates and letters. The Department disputed the certificate acceptance, suggesting a remand for verification. The Appellants argued they complied with requirements, and the delay in submission was unjustly penalized. They claimed no intent to evade duty and sought Modvat credit. The Tribunal found the Appellants eligible for the Notification, having submitted the necessary documents. The penalty was deemed excessive, and the Appellants were entitled to the benefit under Notification No. 60/88.

Issue 3: Penalty Imposition:
The Collector imposed a significant penalty on the Appellants for alleged duty evasion. The Appellants contended they acted in good faith, believing their product classification was correct. They highlighted their consistent classification under Heading 48.01 and claimed the penalty was unwarranted. The Tribunal, considering the circumstances, found no evidence of mala fide intent by the Appellants. The penalty was deemed harsh and unjust, leading to its setting aside.

In conclusion, the Tribunal upheld the Appellants' claim for exemption under Notification No. 48/91, acknowledged their eligibility for the benefits under Notification No. 60/88, and deemed the penalty imposed as excessive and unwarranted, ultimately allowing the appeal in their favor.