9911796707
TMI Blog1992 (12) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... arding computation of differential duty payable in terms of Order-in-Original No. 3/MP/84 dated 17-5-1984 passed by the Collector of Central Excise, Baroda where the Collector of Central Excise, Baroda has held that the paper in question being more than 225 gsm should be taken as 'Board' and excise duty is to be calculated on that basis. In this connection, the appellant had contended that in terms of the order passed by the Gujarat High Court, the Supdt. of Central Excise and the representative of appellant had jointly worked out the difference in terms of the order of the Collector. The appellants had disputed the calculation of duty in terms of the earlier order-in-original dated 17-5-1984 passed by the Collector of Central Excise, Baroda and, therefore, in terms of the order passed by the Gujarat High Court, the Asstt. Collector recalculated the duty and passed the order-in-original confirming the duty which was appealed before the Collector (Appeals) who has passed the impugned order issued on 20-3-1990 which is appealed in this case. However, it has to be noted that the entire original proceedings has arisen from the Order-in-Original No. 3/MP/84 dated 17-5-1984 passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that in the manufacture of above variety of paper, paper made out of 100% under conventional raw materials, such as, waste paper, paddy straw bagasse, jute stock etc. were used. In the different classification list filed by them from the commencement of their business till 12-7-1979 under provision of Rule 173-B of the Central Excise Rules, 1944. They gave the classification of mill board, grey board and packing and wrapping paper etc. in various classification lists. The details furnished in the said classification lists are noted herein below: " (i) Classification list No. PL/38/77 Under this classification list, the assessee declared only one product vis. mill-board (i.e. unbleached homogenous board of thickness exceeding 0.5 mm made out of mixed waste paper without adding any colouring matter). The assessee claimed exemption on this variety of product under Notification No. 70/76 C.Ex. dated 16-3-1976. (ii) Again the assessee filed a fresh classification list No. 207/77 for mill-board and in this classification list gave the description of the product as "paper and paper board," all sorts (including paste board, millboard, straw board, card board and corrugated board), in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional raw materials such as waste papers, paddy straw, bagasse, Jute stalks etc. packing and wrapping paper substance 100 Gsm to 270 Gsm and claimed exemption of duty under Notification Nos. 127/77 and 128/77 both dated 18-6-1977.' (xi) Again on 7-2-1978, the assessee got approved a fresh classification list No. II/6/78 revising the description of the product is used pulp made out of 100% unconventional raw materials such as waste paper, paddy straw, bagasse, Jute stalk etc. packing and wrapping paper substance 100 Gsm and above. They claimed exemption of duty this time under Notification Nos. 15 /78 dated 24-1-1978 and 128/77 dated 18-6-1977. (xii) Assessee preferred one more classification list bearing No. II/18/78 dated 4-3-1978 and gave the description of the product as 'M.S. Kraft paper (i.e. packing and wrapping paper substance 100 Gsm and above)'. In this classification list the duty exemption is claimed under Notification No. 15/78 dated 24-1-1978 and 128/77 dated 18-6-1977. (xiii) Under No. Cl/Vapi/78-79 dated 3-3-1979 the party replaced the above classification list describing the product as 'MG Kraft paper, i.e. commonly known as packing and wrapping paper, kraft line ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturing process grammage raw materials used and merely stated that paper is smooth on one side and rough one on the other and also stated that it is a stiff paper. He also disclosed that the other products manufactured by the appellant MG Kraft paper 225 Gsm to 330 Gsm made with rice straw, jute stalks and kraft cuttings and the said paper is also smooth on one side and rough on the other. The statement of Shri Ravjibhai Patel, Administrative Officer of the first appellant was also recorded who have also given the details of the goods manufactured, raw materials and their percentage used in the final product. 6. The Order-in-Original recorded in great detail about the raids carried out in the other appellants factories and the recovery of the said paper supplied by the first appellant to them. The statement given by the other appellant's employees is also elaborated in great detail running into several pages in the Order-in-Original. From this it can be gathered that M/s. Tabulor Packings Pvt. Ltd. were purchasing the said paper from the first appellant with grammage from 225 Gsm to 300 Gsm and that they were used in the manufacture of 'Cones' and 'Tubes' which was used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealed that they were purchasing raw material from the first appellant herein. Likewise the statement of Managing Director of M/s. Polycone Papers Pvt. Ltd. was also recorded, who disclosed that they were purchasing mill board, grey board, cone board, beam board, P & W board were used by them from the first appellant herein and it was of a substance ranging from 260 Gsm to 370 Gsm received in bundle size of 18" X 61". The factory of M/s. Colour Carbon Ltd. was also raided and the goods were seized. The seized goods revealed that they had already been purchasing from the first appellant herein and it had different grammages viz. 240 Gsm, 260 Gsm, 235 Gsm and 225 Gsm. The investigation revealed the same pattern of manipulation of record and sale of goods by different names adopted by the first appellant herein. Investigation also revealed that mis-declaration regarding grammage in the invoices of the first appellant herein. Regarding Kraft liner of 235 Gsm and 225 Gsm compared with corresponding gate-passes and delivery challans. It was cross checked and compared with purchase order. All this revealed clear mis-declaration of the grammage and description of the final product. The inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant herein. Details of purchase, grammage, quantity and all other documents were also seized and recorded. 7. On 6-9-1980, the officers of DRI, Anti-Evasion detained the alleged P&W Paper cleared by the first appellant herein from Polycone Paper Pvt. Ltd. and six representatives samples from the said goods were sent to Dy. Chief Chemist, Bombay for test and obtained his opinion. The report indicated that the samples had the grammage from 289 Gsm to 355 Gsm and thickness from 0.45 mm to 0.60 mm. The results in respect of samples seized from Colour Carton, Bombay also revealed the grammage between 237 to 304 Gsm and thickness from 0.36 mm to 0.46 mm. The test report of 13 samples drawn from the seized goods from the first appellant's factory also revealed the Grammage ranging from 186 Gsm to 331 Gsm and thickness from 0.27 to 0.47 mm. The test results gave an opinion that definition of Board as given by ISI may be valid. The ISI glossary of term relating to paper and pulp based packaging materials published in 1975 on page 4, board is defined as paper of substance not below 180/gm.2 (generally above 250 gm/2), characterised by its rigidity and on page 10 paper is defined as "A sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B Rule 173G) read with Rule 52A and Rule 173G(4) read with Rules 53 and 226 of the Central Excise Rules, 1944, in as much as they had made the following contraventions as stated herein below : (i) They, as discussed above, by reasons of fraud and wilful misstatement of facts filed false classification lists from time to time. (ii) They failed to determine their liability to duty and removed the goods manufactured by them from their manufacturing premises without paying duty at the appropriate rate leviable thereon, i.e. (a) 40,90,555 kgs. of 'boards' cleared in the guise of so-called packing and wrapping paper, kraft liner A&B, M.G. kraft paper, corrugated media, deluxe and super kraft paper etc., as detailed in the chart enclosed with the show cause notice (Form C-2). (b) they entered incorrect particulars in the gate-passes issued by them, which they had reason to believe to be false, in respect of goods mentioned at (ii)(a) above. (c) they wrongfully availed of the concessional rate of duty provided for in Notification No. 45/73 dated 1-3-1973 as amended by Notification No. 11/73-C.E., dated 30-4-1973, Notification No. 19/74-C.E. dated 1-3-1974 and Notification No. 128/77-C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The other parties namely M/s. Tubular Packaging Pvt. Ltd., Vapi (2) M/s. Industrial Paper Convertors, Vapi (3) M/s. Supertex Paper, Surat, (4) M/s. Polycone Paper Pvt. Ltd., Bombay, and (5) M/s. Colour Cartons Ltd., Bombay were also called upon to show cause against confiscation of goods seized from their possession, custody or control as detailed below respectively. (i) 7 reels weighing 1,683 kgs. and valued at Rs. 5,863 (ii) 3 reels weighing 6,25 kgs. and valued at Rs. 1,835 (iii) 10 reels weighing 15 kgs. and valued at Rs. 6134.32 (iv) 20 reels and 376 packets weighing 12,901.6 kgs. valued at Rs. 54,106.60 (v) 111 reels weighing 26,739.00 kgs. valued at Rs. 1,45,804.12. 11. The parties herein filed a detailed written replies and contested the proceedings. They were also given opportunity to cross examine the witnesses in a very detailed and protracted proceedings. In the meanwhile the parties having approached the Gujarat High Court and also succeeded in getting directions. Ultimately, the proceedings were concluded and the learned Collector after a very detailed examination of the charges, replies made and after giving entire extracts of the evidence in his order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2,000, (iv) Rs. 10,000, (v) Rs. 60,000 in lieu of confiscation respectively, within one month from the date of the receipt of the order by each of them. 12. The appellants had been contesting the commencement of these proceedings by filing Special Civil Application No. 857/81 before the Hon'ble Gujarat High Court which was pending and in the meantime when the impugned Order-in-Original was passed, they amended the application and challenged the same. The Hon'ble High Court set aside the penalty and confiscation order passed by the Collector with regard to the quantum of duty to be demanded. Based on this order, the appellants and the department were directed to have a joint sitting to issue the same. The department accordingly demanded an amount of Rs. 28,72,391.18 vide order dated 10-5-1988. The first appellant again challenged the method of computation adopted by the department and contended that only an amount of Rs. 12,96,221.56 can be demanded in terms of the order of the Collector. The first appellant paid an amount of Rs. 15 lacs in terms of the High Court Interim Order dated 25-9-1984. The first appellant aggrieved by the method adopted by the department determined the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence used by DGS&D wherein kraft paper was specified to be grammage upto 250 Gsm. The main ground of attack on the part of the first appellant is that the appellants were barred by time, inasmuch as they had been filing classification list from time to time claiming that the kraft paper manufactured by them would be eligible for exemption under Notification No. 128/77. These classification lists were duly approved by the proper officer even though the first appellant has furnished that the grammage of their kraft paper would be in the range within more than 300 Gsm. The monthly RT-12 returns had been duly approved. Under these circumstances, the department alleged suppression of facts not to invoke extended period of limitation. 14. The first appellant have also taken the ground that quantification of duty demanded in the impugned order is contrary to the provision of Section 4(4)(d)(ii) of the Act. It is pleaded that this section provides for deduction in pursuance of effective duty payable to arrive at the assessable value. In computing the differential duty, the authorities have not given deduction for the excise duty now being demanded. It is pleaded that there is a fundamenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bata Shoe Co. (P) Ltd. v. CCE, reported in 1985 (21) E.L.T. 9 (S.C.) and in the case of Asstt. Collector of Central Excise v. MRF Ltd., reported in 1987 (27) E.L.T. 553 (S.C.). 15. The first appellant has also relied upon several rulings of High Court and that of the Tribunal. They further contended that in view of the foregoing grounds no differential duty need be paid by them and hence imposition of penalty and confiscation of goods ordered is not correct. 16. The other appellants have also challenged the order and confiscation of goods made from their respective factories. M/s. Colour Carbon Ltd. contended that the charges levelled against them are not established and they have not colluded in any of the offence, hence they cannot be penalised. They have relied on the rulings rendered in the case of M/s. Merck Spears v. CCE - reported in 1983 (13) E.L.T. 1261. M/s. Polycon Paper Pvt. Ltd. in their appeal have also challenged the confiscation of goods seized from their factory and imposition of fine of Rs. 10,000. They have also, inter alia, taken similar grounds as that of the first appellant and M/s. Colour Carbons. The grounds made out by M/s. Tubular Packings and M/s. Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant cannot be covered by serial No. 1 of the table of the said Notification. Thus the duty payable for the product in question is only 30% ad valorem. Based on the correct rate of duty to 30% and redetermination of assessable value in accordance with Section 4(4)(d)(ii) the first appellant had worked out the duty liability jointly with the Supdt. and it worked out to Rs. 12,96,221.56 lacs and as against this, the first appellant has already deposited Rs. 15 lacs. Therefore, he submitted that the quantum of duty has to be re-worked out by giving the benefit of the rulings cited by him in which it has been held that grammage upto and inclusive of 225 Gsm is paper. The department has proceeded to even confirm duty for 224 Gsm, the duty liability has to be again worked out. He further contended that the assessable value has also to be worked out in terms of Section 4(4)(d)(ii) of the Act and if re-working of the quantification and redetermination of duty is done then the liability would not be more than Rs. 12,96,221.56 lacs. This he contended is on the event of the Bench holding that there has been mis-declaration and suppression on the part of the first appellant in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to mis-declaration in the classification list and, therefore, the mere fact of mentioning the grammage in the classification list by itself would not be sufficient to come to conclusion that they are not liable to be proceeded for extended period. He pointed out that the appellant were clearing Boards of a higher grammage in the guise of kraft paper. There has been manipulation of records and in the face of the entire evidence and the charges having been proved and admitted, the extended period is available and the Collector's order in this aspect of the matter is sustainable in law. He pointed out that the party was under SRP Procedure and claiming the benefit of the notification and, therefore, they were required to furnish correct details and establish their claim. In this case, the party had clearly mis-declared the board as kraft paper and the department has proceeded only on the basis of this portion of the declaration. It is only after a detailed and cumbersome investigation, it came to light about the modus operandi adopted by the first appellant in misusing the benefit of the notification. In any event of the matter the extended period is available. In this regard he furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self on these three aspects of the matter, as in view of the admitted position it is not necessary for us to go into the various aspects of the matter concerning merits and the evidence which has been enormously collected, analysed and discussed by the learned Collector to come to his conclusion in the impugned order-in-original. Taking the first submission first the aspect pertaining to the grammage 'which determines between paper and paper board has now been settled in the light of the rulings of the High Court of Madras in the case of Hark Chand v. Union of India (supra) as in the case of CC v. Kamal Traders (supra) and in the later unreported rulings noted above. The Hon'ble Madras High Court ruling has taken into account the order of the Tribunal rendered in the case of Sunrise Agencies v. CC and has laid down that grammage beyond 225 Gsm would be paper board and less than that would be paper. 22. In Kamal Traders v. CC, the Tribunal went into very aspect of the matter and has taken into consideration Indian Standard (IS. 4661/1968) glossary of terms used in paper trade and industry and other literature defining the various terms and has come to conclusions in para 2.2 at p. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll knowledge that it is a board. The learned Collector has summarised in Order-in-Original on this aspect of the matter in great detail in paragraphs 31 to 37 of this order. Paragraphs 32 to 36 concerns about the evidence and also the test results in respect of the goods seized. Para 37 deals about time bar and other contentions raised by the first appellant. Para 31 and para 36 is extracted herein below: "31. The issue involved in the case is about, assessment of substance described variously as paper by M/s. Vapi Paper Mills Ltd., Vapi, in their classification lists as mentioned in die show cause notice for which exemption has been claimed under Notification No. 45/73 dated 1-3-1973as subsequently superseded by Notification No. 128/77 dated 18-6-1977. The duty under Central Excise Tariff 17(2) was 40% ad valorem during the relevant period which was the tariff rate. Initially exemption to paper all sorts other than "paper board" and certain types of paper as specified therein was available under Notification No. 45/73 dated 1-3-1973 as amended to the extent of 75% of the duty leviable on the first 1000 M. tonnes, 25% of the duty leviable on the next 1000 M. tonnes and 15% of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are given above. The definition of "board" as given in Indian Standards is that "it is a paper of substance not below 180 gsm. (generally above 250 gsm) characterized by its rigidity. So far as rigidity is concerned, we have seen that since the material of 225 gsm, and above is used for cartons and boxes etc., it is rigid in nature. It has also been stated as thick in some of the test paper reports. This material has also been stated to be "grey unbleached board" or "brownish grey coloured board" by the Deputy Chief Chemist, Bombay. It was noticed from the samples drawn from the seized goods, that the grammage shown of the material was lower than actually found. In the case of M/s. Colour Cartons Ltd. Bombay, it was described in the documents as of 225 gsm. and above and whereas on test it was found of 335 gsm. and above. The same type of variation has been reported by M/s. Metal Box India (P) Ltd., Bombay. Kraft liner includes "paper" as also "board". Kraft liner therefore does not restricted only to paper. In view of the above discussions, and so far as the material supplied by M/s. Vapi Paper Mills Ltd., Vapi, to their customers with grammage 225 and above, which in ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct. The customers had clearly placed order and given specifications for supply of board for the purpose of manufacture in cartons, cones, boxes. The first appellant was also fully aware of the manner in which it was being put to use. In the classification list the product is clearly mis-declared as kraft paper and with a view to suppress the material facts and this has been deliberately done with a intention to defraud and evade duty. Therefore, there is absolutely no force in the plea of the learned advocate and it deserves to be rejected. In a similar case coming up before the Tribunal in the case of Venus Paper Mills v. CC, the Bench rejected the similar plea and has held that there was a clear case of suppression as held in paras 18 to 23. The relevant paras 20 to 23 are reproduced, "The appellants replied to this letter on 10-7-1980 stating that the quantity declared in the AL-4 application filed earlier was only an estimated quantity whereas the actual production never exceeded 1800 MT per annum. The endorsement dated 11-7-1980 on the AL-4 application dated 26-11-1979 reads as "AL-4 renewed for 1980-83 subject to confirmation of installed capacity. We have already reache ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eft the factory premises. Since 1980 a self removal scheme was introduced. Commensurate with that scheme Section 11A(1) in the Central Excises and Salt Act, 1944 was enacted. With the introduction of the self removal scheme producers were free to remove goods by assessing themselves. The manufacturer is required to file a classification list. When the classification list is approved, the manufacturer is required to assess the duty himself and deposit them in an account meant for that purpose. To meet the situation, Section 11A(1) was enacted which laid down that when any duty of excise has not been levied or paid or has been short-levied or short-paid, an Officer of the Central Excise department may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid. It thus followed that Steps for, realisation of duty, not paid, had to be taken within six months from the relevant date. A proviso, however, was added to it which reads as follows: 'Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts are in the case of Jai Shree Engineering Co. (P) Ltd. v. CCE (supra) in para 10. "10. Therefore, we have to find out whether there was any fraud, collusion, wilful mis-statement or suppression of facts for the Department to be justified to claim duty beyond a period of six months. This is a question of fact. It was found by the Tribunal that it was not possible for the appellant to contend that the appellant had made a correct statement. The Tribunal noted that the appellant could hardly contend that it discharged the onus of making correct declaration if it had withheld the description which was commonly used in respect of the goods not only by itself, but also by those from whom it bought or to whom it sold the products. The appellant itself was both buying and selling these nuts and as such there was no conceivable reason why these nuts were described as end-fittings in the declaration to the Department. It may be noted that in the declaration it was so described. The Tribunal was of the view, and it cannot be said not without justification that these goods should have been described as nuts because the appellant itself had treated these as nuts. Therefore, from this cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng out the said exercise in the light of the plea taken by the learned Advocate and the citations noted. In any case, the appellants have clearly admitted that they are liable to pay Rs. 12,96,221.50. Therefore, the differential duty is required to be worked out by granting the benefit of clearances of paper up to and inclusive of 225 Gsm. in the light of the observations made by us. 32. As regards the personal penalty imposed on the first appellant, there has been no serious argument made by the learned Advocate in this regard. Taking into consideration the seriousness of the case and the manner in which the first appellant has gone about to evade duty, we do not think that the imposition of personal penalty of Rs. 1,55,000 to be on the higher side and we confirm the same. As regards the confiscation, a fine of (i) Rs. 1500 (ii) Rs. 450 (iii) Rs. 2000 (iv) Rs. 10,000 and (v) Rs. 60,000 in lieu of seized goods on the various premises of the other appellants imposed under Rule 173Q(1) and Rule 9(2) of the Central Excise Rules, 1944. We do not see any infirmity in this order. They are all offending goods on which duty has not been paid and there is no denial that these goods were no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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