2014 (6) TMI 340 - AT - Central Excise

Duty demand - determination of quantities of quantity of paper and paper products - whether the weight of wrapper (packing paper and paper board) shall be taken into account to determine the quantity cleared in a financial year - Denial of Exemption under Notification 6/2001-CE (S. No. 86) dated 01-03-2001 and Notification 06/2002-CE (S. No.86) dated 01-03-2002 - Difference of opinion - Majority order - Held that - appellants have not disclosed gross weight and net weight in respect of each packet of the paper in any of the documents occasioning clearance during material period. Normally when a container contains contents, the gross weight and net weight are exhibited on the container. In the present reference weight of contents and container was not exhibited conspicuously. Weights and Measures Act has adopted the rationale of gross weight and net weight for cons umer protection and declaration of MRP. This is to save the consumer from exploitation. When the appellants did not challenge manufacture of the wrapper by them and those were cleared and were excisable and to be accounted for, appellant should have come out with clean hands to prove the weight of wrappers cleared. But they have chosen a way to avoid such disclosure - duty stand confirmed along with confirmation of interest against the respondents. However, penalty is reduced to 25% of duty if the duty confirmed is deposited within 30 days of receipt of final order - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Whether the weight of the wrapper paper should be included in the total weight of paper and paper products cleared for exemption under Notification No. 6/2001-CE and 6/2002-CE.
2. Whether the appellants exceeded the exemption limit of 3500 MT by not including the weight of the wrapper paper.
3. Whether the statements of the Managing Directors admitting non-inclusion of wrapper weight in the invoices were correctly interpreted and considered.
4. Whether the Commissioner (Appeals) correctly set aside the demand of duty, interest, and penalty.

Issue-wise Detailed Analysis:

1. Inclusion of Wrapper Paper Weight:
The core issue revolves around whether the weight of the wrapper paper used for packing the final product should be included in the total weight of paper and paper products cleared for claiming exemption under Notification No. 6/2001-CE and 6/2002-CE. The respondents argued that the weight of the wrapper paper was included in the total weight of the final products as reflected in the invoices and that the value of the wrapper paper was included in the value of the finished goods. The Commissioner (Appeals) accepted this argument, stating that there is no practice of showing the weight of the packing material separately and that the total weight in the invoices included the weight of the wrapper.

2. Exceeding the Exemption Limit:
The Revenue contended that the appellants did not include the weight of the wrapper paper in the total weight of the clearances, thereby exceeding the exemption limit of 3500 MT. The Revenue's case was based on the statements of the Managing Directors, who admitted that the weight shown in the invoices was only of the goods and not the wrapper paper. The Technical Member agreed with this view, stating that the invoices should be taken at face value, indicating only the weight of the goods described, and that the appellants had not challenged the records showing the production and weight of the wrapping paper.

3. Interpretation of Managing Directors' Statements:
The statements of the Managing Directors were crucial in this case. The Judicial Member found that the statements were misconstrued and that the total value charged in the invoices included the wrapper paper. However, the Technical Member emphasized that the Managing Directors clearly admitted that the weight of the wrapper paper was not included in the invoices, which was a significant piece of evidence. The Technical Member concluded that the appellants' argument was merely for the sake of argument and not based on factual evidence.

4. Commissioner (Appeals) Decision:
The Commissioner (Appeals) set aside the demand of duty, interest, and penalty, relying on the appellants' argument that the weight of the wrapper paper was included in the total weight of the final products. The Judicial Member supported this decision, stating that the total weight in the invoices, which included the wrapper paper, should be considered for computing the total clearance. However, the Technical Member disagreed, stating that the Commissioner (Appeals) ignored the substantial part of the Managing Directors' statements and that the weight of the wrapper paper was not considered in the total clearance. The Technical Member opined that the order of the original adjudicating authority should be restored.

Majority Decision:
The majority opinion, led by the Technical Member, concluded that the appellants did not include the weight of the wrapper paper in their total clearances, thereby exceeding the exemption limit of 3500 MT. The impugned order of the Commissioner (Appeals) was set aside, and the duty, along with interest, was confirmed against the respondents. However, the penalty was reduced to 25% of the duty if paid within 30 days of the receipt of the final order. The appeals were disposed of accordingly, favoring the Revenue.