1999 (1) TMI 314 - AT - Central Excise

Issues Involved:
1. Classification of the product as laminated paper or coated paper.
2. Eligibility for exemption under various Notifications.
3. Applicability of extended period of limitation for demand of duty.
4. Validity of demands on base paper and LDPE.

Issue-wise Detailed Analysis:

1. Classification of the Product:
The primary issue was whether the product manufactured by the appellant was laminated paper or coated paper. The Department argued that the product was coated paper, while the appellant maintained it was laminated paper. The Tribunal examined dictionary meanings, technical literature, and commercial parlance to determine the correct classification. The dictionary definitions suggested that lamination involves placing layers over each other, whereas coating involves applying a single layer of substance. Technical literature supported the appellant's claim, indicating that the process used by the appellant, including extrusion coating, is a form of lamination. The Tribunal concluded that the product was laminated paper.

2. Eligibility for Exemption under Notifications:
The appellant sought exemption under several Notifications (46/82, 63/82, 64/82, and 65/82) which provided excise duty exemptions for laminated paper used for packaging milk. The Tribunal found that the product, being laminated paper, was eligible for these exemptions. The Tribunal noted that the exemptions were granted specifically for the laminated paper manufactured by the appellant, as there was no other unit in the country producing such paper for milk packaging.

3. Applicability of Extended Period of Limitation:
The Department issued a show cause notice alleging deliberate intent to evade duty by misdeclaring coated paper as laminated paper. The Tribunal examined whether the extended period of limitation under Section 11A of the Central Excises Act was applicable. The Tribunal found that the appellant had declared the manufacturing process and product description in all relevant documents and had a bona fide belief that their product was laminated paper. The Tribunal concluded that there was no suppression or misdeclaration with intent to evade duty, and thus, the extended period of limitation was not applicable.

4. Validity of Demands on Base Paper and LDPE:
The Department confirmed demands on base paper and LDPE used in the manufacture of the disputed product, invoking Rule 196 of the Central Excise Rules. The Tribunal held that even if Rule 196 was applicable, demands must be raised within a reasonable period. The Tribunal noted that the relevant date for computing the period of limitation should be the date of cancellation of the bond furnished under Rule 192. However, due to the lack of information on the bond cancellation date, the Tribunal did not remand the matter, as it found that the base paper and LDPE were used in the manufacture of laminated paper, making the demands unsustainable on merits.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, holding that the product was laminated paper eligible for exemption under the relevant Notifications. The demand for duty was also found to be time-barred. Separate judgments were delivered by the members, with the Vice President concurring with the decision to allow the appeal based on the time-barred nature of the demand.

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