Custom, Excise & Service Tax Tribunal
Chemopulp Tissues Limited vs Ghaziabad on 29 November, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
REGIONAL BENCH : ALLAHABAD
COURT No. I
APPEAL No.EX/70584/2016-EX[DB]
(Arising out of Order-in-Original No.37-38/Comm/CEx/GZB/2015-16
dated 30/03/2016 passed by Commissioner, Customs, Central Excise &
Service Tax, Ghaziabad)
M/s Chemopulp Tissues Limited ... Appellant
Vs.
Commissioner, Central Excise & Service Tax, Ghaziabad
...Respondent
Appearance:
Shri Vineet Kumar Singh (Adv.) for Appellant Shri Pawan Kumar Singh, Superintendent (AR), for Respondent CORAM:
Hon'ble Mrs. Archana Wadhwa, Member (Judicial) Hon'ble Mr. Anil G. Shakkarwar, Member (Technical) Date of Hearing : 27/09/2018 Date of Pronouncement : 29/11/2018 FINAL ORDER NO.72714 / 2018 Per: Anil G. Shakkarwar, Present appeal is directed against Order-In-Original No.37-38/Comm./CEx/GZB/2015-16 dated 30.03.2016 passed by Commissioner, Central Excise & Service Tax, Ghaziabad.
2. Brief facts of the case are that appellants were engaged in the manufacture of „Paper Board‟ falling under Chapter 48 of Schedule to Central Excise Tariff Act, 1985. They were paying concessional rate of duty as per Entry No.163 of Notification 12/2012-CE dated 17.03.2012. During the audit of records of the appellants for the period from 2011-12 to 2 APPEAL No.EX/70584/2016-EX[DB] 2013-14 it appeared to the representatives of the Revenue that appellants were not eligible for benefit of concessional rate of duty of 6% on the paper board manufactured by them. The said exemption of effective rate of duty of 6% ad-valorem was available for paper board manufacture by starting from the stage of pulp and if such pulp contains not less than 75% by weight of pulp made from materials other than bamboo, hard woods, soft woods, reeds or rags. Therefore, further inspection was undertaken and during the further inspection and scrutiny of records it was noticed by Revenue that the only raw material used by appellant was old cotton fabric. It appeared to Revenue that it was very clear that exemption was applicable only when the pulp made out of various ingredients like waste paper etc. should be 75% or more by weight. Further during the inspection it was noticed by Revenue that in the factory of appellant old cotton clothes were cut into small pieces and the same were fed into the digester through conveyor belt. Subsequently they were converted into pulp and the said pulp was further, used for the manufacture of paper board. It appeared to Revenue that unless waste paper is more than 75% by weight, the appellants were not eligible for benefit of concessional rate of duty. It was also noticed by Revenue that they did not find "hydropulper" in the factory of appellant and that hydropupler was essential requirement for processing of waste paper. It also appeared to Revenue that old cotton 3 APPEAL No.EX/70584/2016-EX[DB] clothes were cut into rags and since rags was mentioned in the said notification, therefore, appellants were not eligible to avail benefit of said Notification No.12/2012 dated 17.03.2012. Therefore, by denying the said benefit by invoking extended period appellant were called upon to show cause as to why differential duty of Rs.1,44,20,958/- should not be demanded form them for the period from February, 2010 to December, 2014. Further on similar lines for subsequent period another show cause notice in the form of statement was issued for the period from January, 2015 to March, 2015 demanding differential Central Excise duty of Rs.5,35,351/-. On contest both the show cause notices were adjudicated through impugned Order-In-Original wherein the learned Original Authority confirmed the demand of Rs.1,49,56,309/- and imposed equal penalty. Aggrieved by the said order appellant is before this Tribunal.
3. Heard the learned counsel for appellant. He has submitted that in the past appellant had submitted classification list to the jurisdiction Assistant Commissioner availing similar benefit under Notification No.8 of 1996-CE dated 23.07.1996 and said classification list was approved . He has further submitted that appellant was using old clothes as raw material and old clothes were different than rags. He submitted that word rags has been used in the said Notification No.12/2012-CE, however, said notification has 4 APPEAL No.EX/70584/2016-EX[DB] not defined the word "rags". He submitted that Textile (Consumer Protection) Regulation 1988, vide Notification No.CER/18/88-CLB(Textile) dated 07.03.1988 has defined rag as cut piece of cloth of length more than 23 cms, but less than 45 cms, where width of the fabric is 1 mtr. or more and cut piece of cloth of length more than 23 cms. but less than 65cm where width of the fabric is less than 1mtr. He has further submitted that the Revenue has presumed that unless waste paper is used in making pulp the benefit of said Notification No13/2012 is not admissible. He further submitted that the show cause notice has very clearly mentioned that appellant was using old cotton clothes. It is further mentioned that the cotton clothes were cut into rags. The learned counsel has drawn our attention to definition of rag in Textile (Consumer Protection) Regulation 1988 and emphasizes that that rags has been defined as one which is coming out of fabric and not out of old cotton clothes and therefore, he argued that the appellant never used rag and used old cotton clothes and therefore was eligible for benefit of Notification No.12/2012.
4. Heard learned AR who has submitted that in normal parlance small pieces of textile are referred to as rags and therefore appellant was not eligible for said benefit.
5. Having considered submissions from both the sides and on perusal of record particularly the contends of the show 5 APPEAL No.EX/70584/2016-EX[DB] cause notice it is very clearly emerging from para 8 of show cause notice dated 23.02.2015 that Revenue had an impression that unless waste paper is used for making pulp, the appellant is not eligible for concessional rate of duty provided under Notification No.12/2012. We find from the definition of rags as submitted by the learned counsel for the appellant and as contained in Textile (Consumer Protection) Regulation 1988, that rag emerge out of fabric and they do not emerge out of old cotton clothes. We also find that it is admitted in the show cause notice that appellant was using old clothes for making pulp. We, therefore, hold that appellants were not using rags for the manufacture of pulp. We, therefore, find that Revenue could not make out a case that appellant was not eligible for the said benefit. To sum up, we find that appellant was eligible for concessional rate of duty as provided at Serial No.163 of Notification No.12/2012- CE dated 17.03.2012 for the period in dispute. We, therefore, set aside the impugned order and allow the appeal. The appellant shall be entitled for consequential relief as per law.
(Pronounced in Court on 29/11/2018)
Sd/- Sd/-
(Anil G. Shakkarwar) (Archana Wadhwa)
Member (Technical) Member (Judicial)
Nihal