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TMI Blog1989 (2) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... ase as stated in the impugned order are that the appellants filed the following seven classification lists on different dates under the provision of Rule 173B of the Central Excise Rules claiming exemption of Central Excise duty under various notifications prevailing during the relevant period from 15.9.78 to 31.3.1981:- (i) The mills filed first classification list No.1/78-II/16/78 declaring their product as packing and wrapping paper (kraft paper, poster paper) claiming reduction of duty as admissible under Notification No. 45/73 dated 13.73 as amended and Notification No. 15/78 dated 24.1.78. This classification list were approved by the range superintendent on 29.3.78 after having been verified by the concerned Inspector of Central Excise. (ii) The mill filed another classification list No. II/28/78 dated 1.9.78 describing their product as packing and wrapping paper (kraft/poster paper) containing more than 50% by weight of pulp made from waste paper and declaring annual installed capacity in respect of all varieties of paper and paper boards not exceeding 2000 tonnes and thereby claiming exemption of duty as provided under Notification No. 128/77 dated 18.6.77 and N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er only and that they had not plant attached to their mills for manufacture pulp from bamboo. This classification list verified on 30.12.80 by the Inspector of Central Excise, Nadiad was approved by the Assistant Collector of Central Excise on 2.1.81, Nadiad. (vii) Thereafter, in the year 1981, the mills filed classification list No. III/2/81 dated 2.2.81, without change in the description of their product declared in previous classification list No. II/10/80 dated 30.12.80 adding millboard also claiming therein the rate of duty applicable as 30% less 25% up to-8 lakhs plus 5% special excise duty. Under Notification No. 15/78 dated 24.1.78 as amended read with Notification No. 69/80 dated 19.6.80 applicable to special excise duty. This classification list was approved by the Assistant Collector Central Excise, Nadiad on 28.2.81." 3. Acting on information that the appellants were evading Central Excise duty payable on millboard/greyboard manufactured by them by mis-declaring the products as packing and wrapping paper, the Central Excise Officers searched the premises of the appellants on 25.7.81 and seized documents. In course of investigation of the case, the officers recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Rules, 1944, as it stood before being omitted vide Notification No.177/80 dated 12.11.80, read with Rule 9(2) of the said rules should not be recovered from them. The adjudication proceeding culminated in the impugned order which has been challenged in the appeal before us. 4. We have heard Shri N.I.Mehta, learned advocate for the appellants and Shri V.M. Doiphode, learned S.D.R. for the Respondent. 5. Shri Mehta has argued that the appellants filed seven classification lists which were approved during a period of 2-1/2 years. The Central Excise Officers visited the factory and registered a case on 25.7.81. But the show cause notice was issued to the appellants on 15.10.82 demanding differential duty relating to the period from 15.9.78 to 31.3.81. The demand is time-barred. He has also argued that there is no evidence to hold that the appellants removed millboard/greyboard clandestinely after mis-declaring the goods as packing and wrapping paper. There is no evidence that they purchased raw materials suitable to manufacture millboard and greyboard. Some of the dealers to whom the appellants supplied the goods initially stated that those goods could be used as millboard/gre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e usage and classification and not on its substance alone . The argument of the learned advocate is that the C.B.E.C. s instruction does not say that grammage should be the only deciding factor for distinguishing paper from the board. The Collector has based his decision purely on the grammage which is not only contrary to the instruction of Board, but also contrary to the various decisions in which it was held that grammage should not be the deciding factor for distinguishing paper and board. On this point, the learned advocate has relied on the following decisions:- (i) 1984 (15)-E.L.T.-461 (Tribunal). (ii) 1984 (16)-E.L.T.-398 (Tribunal). (iii) 1984 (16)-E.L.T.-91 (Karnataka). (iv) 1987 (29)-E.L.T.-748 (Tribunal). (v) 1987 (30)-E.L.T.-826 (Tribunal). 6. The next contention of the learned advocate is that the approved classification list could not be disturbed except by review proceeding. Classification could not also be re-opened without fresh materials which were not before the original authority. He has further argued that the revised classification should take effect from the date of the show cause notice. In support of this argument, the learned advocate relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification list. They cleared board in the guise of packing and wrapping paper. He has stated that considering the amount of duty evaded (Rs. 4,22,307.30) and the mis-declaration done, penalty of Rs. 1,00,000/- is not excessive. 9. In reply to the arguments of Shri Doiphode, Shri Mehta has stated that the classification list (copy placed vide page 82 of the paper-book) would show that millboard/greyboard was also manufactured by the appellants. Referring to page 92 of the paper book, which is a copy of statement of Shri Pradipbhai L. Mehta, partner of Mehta Tacks, Rajkot, Shri Mehta has argued that the said statement has no nexus with the appellants as the statement says that they purchased board from M/s. Paras Trading Co., Ahmedabad 10. We have considered the records and the arguments of the learned advocate and the learend S.D.R. The main issues which emerge for our decision are:- (i) Whether the appellants manufactured and cleared millboard/greyboard by misdeclaring the products as packing and wrapping paper; (ii) whether the show cause notice dated 15.10.82 issued for the period from 15.9.78 to 31.3.81 was time-barred; and (iii) whether the approved classification l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered for Santaram Mill Board, some of our customers have placed orders for Santaram Boards. While some customers have placed orders for Santaram Cone boards of a substance above 180 GSM. But in all the cases we have delivered them packing and wrapping papers. Thus instead of sending or delivering mill board, cone board or board we have delivered packing and wrapping paper. Again in the statement, vide copy at page 85 (second para) of the paper-book, it is stated that: Today you have visited our factory alongwith your staff and checked our private as well as statutory records and shown me some documents which contains orders placed by our customers for mill boards, cone boards and paper board and for packing and wrapping paper. Against these orders we have cleared packing and wrapping paper of a substance ranging from 90 GSM to 250 GSM." It is hardly creditable that the customers accepted packing and wrapping paper from the appellants as against mill board/cone board/paper board for which they had placed orders. The learned Departmental Representative has drawn our attention to the last paragraph of statement dated 20.11.81 of Shri Arvindbhai C. Sheth, copy of which is plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.12.81 of Shri Rameshbhai Shanabhai Patel, Partner of M/s Tax Cones, Nadiad. Shri Patel has stated that their factory manufactures only paper cone. They purchased raw materials, such as, millboard from M/s Santram Paper Mills. They also purchased millboard from M/s Laxmi Paper Mills, Kalyan (Bombay). It is stated by him that the paper required by them for manufacturing cones were of 180 gsm to 350 gsm. At page 114 of the paper-book, there is a copy of statement dated 1.1.82 of Shri K.P. Krishna Rao, Accountant of M/s. Fibre Foils Pvt. Ltd., Andheri (East), Bombay. It is stated in the said statement that the above company is engaged in the manufacture of Fibre Drums, for the manufacture of which they used millboard/greyboard/strawboard. The following is also stated in the said statement:- Now as regards to purchase of paper board from M/s. Santram Paper Mills of Nadiad, I have to state that we have not placed any order in writing during 1979. We have purchased the following four consignments of paper board from M/s. Santram Paper Mills, Nadiad: Sr. No. GPI No. Date QtyKgs. 1. 74 6.12.79 3360 2. 88 31.12.79 3787 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a number of statements recorded from the buyers/dealers of Board purchased from the appellants. The relevant portions of a few such statements as discussed by the Collector are indicated below :- (i) In his statement dated 26.11.81, Shri B.B. Shah of M/s. Paras Trading Co., Ahmedabad stated that the wrapping paper purchased from M/s. Santram Paper Mills was of about 200 to 250 gsm which was sold to different dealers as well as other customers. (ii) In his statement dated 18.12.81, Shri R.L. Shah, Proprietor of M/s. Jyoti Sparklers, Petlad has stated that he was a manufacturer of sparklers cracakers and the raw material utilised in the manufacture of box for its packing was purchased from M/s. Santram Paper Mills, Nadiad and M/s. Kiran Board Mills, Nadiad. He has stated that only millboard was required for the manufacture of boxes. (iii) Shri S.B. Thakkar, Partner of M/s. Susai Beaming Paper Industries, Surat in his statement dated 21.12.81 has stated that his firm was engaged in the manufacture of Beaming paper in which raw material was only millboard for which they placed orders either telephonically or orally with M/s. Santram Paper Mills, Nadiad. He has further stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Cone Factory, Ujjain, in his statement dated 12.1.82, has stated that his firm was engaged in the manufacture of paper cones utilised in the textile mills and the raw materials for manufacturing these goods were mill/grey/cone boards which were purchased directly from the manufacturing factories, viz., Kiran Board, Bharat Board and Santram Paper Mills of Nadiad in addition to other mills of Bombay. He has further stated that the cones could be manufactured only out of board, the normal grammage ranging from 260 to 360 gsm. He has also stated that the description of goods shown in the documents, viz., invoices, gate passes and other correspondences of M/s. Santram Paper Mills was packing and wrapping papers which description was also entered into their documents or reference, but actually the quality was mill/grey board. It is also stated by him that his firm was not concerned with the description, but with the quality of raw material capable of being used in the manufacture of cones and as such they were not particular about the nomenclature whatever, it may be and that the quality of Santram Paper Mills board was superior to that of Kiran Mills. He has further stated that up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvaiya and B.B. Shah stated during the cross-examination that they had purchased packing and wrapping paper from M/s. Santram Paper Mills and not paper board. Shri Thakkar stated that they had placed order for. millboard, but the goods received were packing and wrapping paper and were not to their satisfaction for use as millboard. He also stated that the goods received were less than 180 gsm. He further stated that since the goods manufactured by them by using the wrapping paper received from M/s. Santram Paper Mills were not to their customers satisfaction, the goods were rejected and returned by their customers. Thereafter they had not placed any order with M/s. Santram Paper Mills. In view of the statement made before the Collector during cross-examination, we ignore the initial statements given by the aforesaid three persons. The learned Advocate has not produced any evidence to show that the other persons mentioned in the preceding 2 paragraphs, who gave statements before the Central Excise Officers during the investigation of the case, were cross-examined before the Collector. Consequently, their statements are acceptable as evidence in support of the Department s case. Tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied on by the learned Advocate, viz., those reported in 1984 (15) E.L.T. 461 (Tribunal), 1984 (16) E.L.T. 398 (Tribunal), 1984 (16) E.L.T. 9l (Kar.), 1987 (29) E.L.T. 748 (Tribunal), 1987 (30) E.L.T. 826 (Tribunal) in support of his argument that grammage could not be the sole basis for classification, are not, therefore, applicable to the facts of the present case. 16. The next point for consideration is whether the demand is time-barred. The show cause notice proposing recovery of appropriate differential duty of Central Excise was issued on 15.10.82 covering the period from 15.9.78 to 31,3.81. The Collector has invoked longer period of limitation of five years relying on the proviso to Section 11-A(1) of the Central Excises and Salt Act and Rule 9(2) or the Central Excise Rules, 1944. The Collector has invoked longer period of limitation in view of the deliberate suppression of facts and the mis-declaration of material facts relating to classification and assessment. In the classification lists filed .by the appellants, they did not declare millboard/greyboard. In the RG-1 register also they did not account for the production and clearance of millboard/greyboard although t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, acceptable in the facts and circumstances of this case. New facts came to light in course of investigation warranting modification of the classification lists for the period of mis-declaration. 18. In the case of West Coast Paper Mills, Dandeli v. Superintendent of Central Excise, Dandeli and Others, reported in 1984 (16) E.L.T. 91 (Kar.), it has been held by the Hon ble Karnataka High Court that res judicata is not applicable to adjudications made by revenue authorities in a quasi-judicial manner. In the decision reported in 1987 (28) E.L.T. 483 (Tribunal) in the case of Collector of Central Excise, Pune v. Weikfiend Products Co. (India) Pvt. Ltd., Pune, it was held by this Tribunal that the demand contrary to approved price list was permissible by the same or successor authority if the earlier approval was found to be erroneous due to non-consideration of the material facts or provisions. This decision supports the case of Revenue as the material fact that the goods were millboard/greyboard and not tide packing and wrapping paper, was not disclosed at the time when the classification lists were approved by the Central Excise Officer. In the decision reported in 1987 (31 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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