1999 (5) TMI 368 - AT - Central Excise

Summary

Issues:
1. Entitlement for the benefit of Notification No. 139/86, dated 1-3-1986.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal granting the benefit of Notification No. 139/86-C.E. to the respondents, who were engaged in the manufacture of paper and paperboard. The respondents claimed exemption under the said notification for "other uncoated paper and paper-board" made from materials other than bamboo, hardwood, softwood, reeds, or rags. The Revenue contended that the paper and paperboard manufactured by the respondents were ultimately made from pulp of bamboo, hardwood, etc., and thus, they were not entitled to the notification's benefit. The respondents argued that the notification did not prohibit the use of waste paper/broke and that their plant setup complied with the conditions of the notification.

The main issue revolved around the interpretation of Notification No. 139/86, which provided concessional rates of duty for paper and paperboards made from unconventional raw materials. The notification specified conditions such as the percentage of pulp made from non-excluded materials and the requirement of a plant attached for making bamboo pulp or wood pulp. The adjudicating authority found that the respondents' factory had separate plants for making wood pulp or bamboo pulp and for making paper and paperboard, with pulp supplied between them through a pipeline. The Revenue's argument that the waste paper used in the pulp plant contained pulp from bamboo, hardwood, etc., was not a ground mentioned in the show cause notice, leading to the rejection of the appeal.

The President clarified that the initial dispute was about the eligibility for the notification, and the department's grievances about the verification of raw material ratios and classification under specific headings were raised at the appellate stage. The Collector (A) upheld the respondents' compliance with maintaining records and claiming benefits only for specific paper types. He considered waste paper as an "other material" under the notification and concluded that as long as the paper and paperboards were manufactured from pulp containing over 50% of non-excluded materials, the benefit could not be denied. The department's contentions remained unsubstantiated, leading to the dismissal of the appeal by the Collector (A), which was upheld by the Tribunal.

In conclusion, the Tribunal rejected the Revenue's appeal as the grounds raised were not consistent with the show cause notice, and the respondents' compliance with the conditions of Notification No. 139/86 was found satisfactory. The judgment emphasized the importance of adhering to the grounds raised in the initial notice and the necessity of meeting all conditions specified in the notification for availing benefits.