2000 (3) TMI 152 - AT - Central Excise

Summary

Issues:
1. Correctness of Order-in-Original No. 9/CE/COMMR/99
2. Classification of reinforced paper for duty payment
3. Benefit of Notification No. 1/93 for small scale industrial unit

Analysis:

Issue 1: Correctness of Order-in-Original No. 9/CE/COMMR/99
The appellant, a small scale industrial unit manufacturing envelopes, challenged the order passed by the adjudicating officer demanding duty on the reinforced paper used in the manufacturing process. The adjudicating authority imposed duty and penalty on the appellant, totaling Rs. 16,43,239.00. The appellant contended that the intermediate product, reinforced paper, should also benefit from Notification No. 1/93. The Tribunal analyzed Explanations II and VI of the notification to determine the aggregate value of clearances under the Central Excise Act, 1944.

Issue 2: Classification of reinforced paper for duty payment
The Tribunal examined Explanation II of Notification No. 1/93, which states that the value of excisable goods chargeable to nil rate of duty should not be considered for calculating the aggregate value of clearances. Since the envelopes manufactured by the appellant were chargeable to nil rate of duty, their value should not be included in determining if the aggregate value exceeded the duty exemption limit of Rs. 30 lakhs. Additionally, Explanation VI exempted the value of specified goods used as inputs for further manufacturing within the factory from the aggregate value calculation, supporting the appellant's position regarding the reinforced paper.

Issue 3: Benefit of Notification No. 1/93 for small scale industrial unit
The Tribunal found that the reinforced paper, being an input for the envelopes manufactured by the appellant, should be excluded from the aggregate value calculation as per Explanation VI of the notification. The adjudicating authority erred in not considering the provisions of Explanations II and VI while passing the impugned order. The Tribunal referred to previous decisions to support its conclusion and set aside the order in favor of the appellant, allowing the appeal.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the appellant and setting aside the impugned order entirely.