1998 (10) TMI 318 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 61/88 and applicability of exemption Notification No. 217/86 on wrapper paper used for packing exempted varieties of paper.

Analysis:
The appeal involved a dispute regarding the interpretation of Notification No. 61/88 and the applicability of exemption Notification No. 217/86 on wrapper paper used for packing exempted varieties of paper. The appellants, engaged in the manufacture of paper falling under Chapter 48 of the CETA, were availing Modvat credit facilities. The issue arose when the Superintendent of Central Excise demanded duty on the wrapper paper used for packing reams/reels of book printing paper, stating that the exemption under Notification No. 61/88 applied only to book printing paper and not the wrapper paper. The Assistant Collector and the Collector (Appeals) upheld the demand for duty.

Upon perusal of the notifications in question, it was found that Notification No. 217/86 granted exemption to goods manufactured in a factory and used within the factory for the manufacture of final products specified in the notification. On the other hand, Notification No. 61/88 exempted certain varieties of paper for use in printing if they met specific criteria. The dispute centered around whether the exemption under Notification No. 61/88 applied to the wrapper paper used for packing reams of book printing paper. The appellants argued that both book printing paper and mill wrapper paper should be covered under the exemption Notification No. 61/88 as they fell under the same chapter and the mill wrapper paper was an integral part of the content paper.

The Tribunal considered the submissions and referred to a previous decision by the Apex Court, which held that wrapping paper used for other paper should be treated as a raw material or component part for other varieties of paper. Relying on this precedent, the Tribunal concluded that both book printing paper and mill wrapper paper used for packing book printing paper were eligible for exemption under Notification No. 61/88. Therefore, no duty could be demanded on the wrapping paper.

Consequently, the Tribunal allowed the appeal, setting aside the impugned order and granting consequential benefits to the appellants in accordance with the law.