Custom, Excise & Service Tax Tribunal
M/S Orient Paper Mills vs Cce, Raipur on 1 March, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 10.1.2013
Date of Pronouncement : 01/03/2013
Excise Appeal No. 103 of 2005
[Arising out of Order-in-Appeal No. 276/RPR-I(JBP)/2004 dated 5.10.2004 passed by the Commissioner (Appeals), Central Excise, Raipur)
For Approval & signature:
Honble Ms. Archana Wadhwa, Member (Judicial)
Honble Shri Sahab Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s Orient Paper Mills Appellants
Vs.
CCE, Raipur Respondent
Appearance:
Appeared for Appellant : Shri Rishikesh, Advocate
Appeared for Respondent : Shri S. Jain, D.R.
CORAM: Honble Ms. Archana Wadhwa, Member (Judicial)
Honble Shri Sahab Singh, Member (Technical)
Interim Order No. 137 dated 01/03/2013
FO/ 57346/2013
Per Sahab Singh :
This is an appeal filed by M/s Orient Paper Mills & Industries Ltd. (hereinafter referred to as appellant) against the Order-in-Appeal No. 276/RPR-I(JBP)/2004 dated 5.10.2004.
2. The brief facts of the case are that the appellants filed classification list No. 2/Amlai/94-95 with effect from 1.3.94 claiming exemption under Notification No. 24/94 dated 1.3.94 in respect of other uncoated paper and paper board in rolls or sheets containing not less than 50% by weight of pulp made from material other than bamboo, hard wood, soft wood reeds and rags failing under Chapter Heading 48 of Central Excise Tariff. This classification list was approved by the Assistant Commissioner, Jabalpur. Order of the Assistant Commissioner was reviewed by Commissioner, Central Excise, Raipur vide Order No. III (20)A-RC/CEx/ Collor(A)/100/93/RPR/148 dated 15.5.1995 on the following grounds :-
(i) That the respondent manufacture paper and paper board in their main plant from pulp made out of bamboo, hard wood, rags etc. and no unconventional material are being used. Therefore, whatever waste papers/broke generated during the course of manufacture in their main plant was obviously of pulp made out of bamboo, hard wood, rags etc. These waste paper/broke when repulped cannot be treated as having been made from unconventional material.
(ii) The respondent have another plant namely, pilot plant situated in the same factory premises which also manufactures paper and paper board out of the pulp supplied by the main plant. The pilot plant also simultaneously manufactures pulp out of broke/waste paper supplied by the main plant. Thus, the respondent have never purchased unconventional raw material in the recent past from outside for their pilot plant. Therefore, whatever paper and paper board is manufactured in pilot plant is ultimately made out of the pulp of bamboo, hard wood and rags etc. and the respondent are, therefore, not eligible for the benefit of the Notification No. 24/94 ibid.
In view of the above review order and appeal was filed before the Commissioner, Central Excise (Appeals), Raipur by the Assistant Commissioner of Central Excise, Jabalpur. The Commissioner, Central Excise (Appeals) has allowed the departmental appeal vide their impugned order and the appellants are before this Tribunal against the impugned order.
3. Ld. Advocate appearing for the appellants submits that in their own case the benefit of exemption Notification No. 139/86 was granted to them and the Commissioner (Appeals) is not correct in holding that Notification No. 139/86 and Notification No. 24/94 are different, as there is no material change in the Notification No. 24/94. He submits that the Tribunal in case of CCE, Hyderabad Vs. ITC Bhadrachalam Paper Boards 2003 (160) ELT 1092 has held that the benefit under Notification No. 139/86 is applicable to the appellant and as there is no material change in the basic concept of using unconventional raw material in the Notification 24/94 dated 1.3.94 from the Notification 139/86 dated 1.3.86 benefit is available to them in view of the decision of the Tribunal in the case of ITC Bhadrachalam. He therefore submitted that since the benefit of 139/86 was available to them they are eligible for exemption under Notification 24/94 and as such order passed by the Commissioner (Appeals) is not sustainable and needs to be set aside.
4. Ld. D.R. appearing for the Revenue reiterates the findings of the lower authority.
5. After hearing both the sides, we find that the issue involved in the appeal is whether the appellants are eligible for the notification 24/94 dated 1.3.94. We find that under the said notification the proviso of notification reads as under :-
Provided that the said goods have been manufactured, starting from the stage of pulp, in the said factory, and such pulp contains not less than 50 per cent by weight, of pulp made from materials, other than bamboo, hard woods, soft woods, reeds (other than sarkanda) or rags.
6. From the facts we find that the appellants in their main plant are using the pulp made out of bamboo/hard woods/soft woods/reeds etc. and no unconventional material is being used. The main plant is supplying the pulp as well as the waste paper/broke generated during the course of manufacture in their main plant to their another pilot plant situated in the same factory and pilot plant also simultaneously manufactures pulp out of broke/waste paper supplied by the main plant. Therefore, this is a fact that pilot plant is using the pulp manufactured and supplied by the main plant and also manufacturing the pulp out of broke/waste paper supplied by the main plant. We find that the waste paper/broke supplied by the main plant was made out of bamboo/hard wood/soft wood etc. The waste paper/broke cannot be treated as having been manufactured from any unconventional material as no such unconventional material was used by the main plant. We note that main plant as well as the pilot plant both are situated in the same premises. We find that exemption under Notification No. 24/94 is applicable if the goods have been manufactured starting from the stage of pulp in the said factory and such pulp contains not less than 50% of weight of pulp made from materials other than bamboo/hard wood/soft wood/reeds or rags. This is not disputed that both main plant and pilot plant are located in the same factory and the pulp as well as the waste/broke manufactured in the main plants are made from bamboo/hard wood reeds etc. and not from any unconventional material. Therefore we are of the view that the benefit of the notification would not be applicable to the goods manufactured by the pilot plants as the pulp as well as the waste paper/borke used in the pilot plant were not made out of unconventional material in the main plant. Accordingly we hold that the Commissioner has rightly denied the benefit of Notification 24/94 and rejected their appeal.
7. As regards the reliance of the appellants on the Tribunals decision in the case of ITC Bhadrachalam (supra) we find that the said decision was in respect of benefit of Notification under 139/86 dated 1.3.86. We find that Commissioner (Appeals) in his order has rightly distinguished this case from the facts of the present case after differentiating the conditions in the Notification 139/86 and 24/94. There is no condition in the notification 139/86 that goods should be manufactured starting from the stage of pulp in the said factory. For availing the benefit of Notification No. 24/94 the manufacture of pulp out of more than 50% of unconventional material from the very beginning is a must which is absent in the condition of Notification 139/86. Therefore the conditions in both the notifications are different. Therefore the decision of the Tribunal in the case of ITC Bhadrachalam (supra) is distinguishable from the facts of the present case.
8. In view of the above the appeal filed by the appellant is rejected and impugned order is upheld.
(Pronounced in Court on............................) (Archana Wadhwa) Member (Judicial) (Sahab Singh) Member (Technical) RM Per: Archana Wadhwa:
9. Having gone through the order proposed by my ld. Brother, I intend to differ with the same. As the facts already stand detailed in the order, the same also not being repeated.
10. The issue required to be decided in the present appeal is as to whether the appellant is eligible for exemption under Notification No. 24/94-CE dated 1.3.1994 in respect of paper or paper board manufactured out of pulp of waste paper, which in turn was manufactured out of bamboo, hard wood, soft wood, reeds and rags. As per facts on record the appellants main plant manufactured pulp made out of bamboo, hard wood, rags etc. During the course of manufacture of their final product, waste paper/ broke is generated. The pilot plant situated in the same factory makes pulp out of the said waste, paper/ paper broke.
11. The appellants contention is that the pulp having been manufactured out of the waste paper and paper broke can be said to have been manufactured out of unconventional raw material, thus making them entitled to the benefit of the notification. On the other hand, the Revenues contention is that such waste paper and paper broke was originally manufactured from the pulp using conventional raw material and as such the pulp made out of the waste paper has to be treated as having been made from bamboo, hard wood, soft wood, reeds and rags etc.
12. Ld. Member (Technical) has not accepted the stand of the assessee on the ground that the earlier Tribunals decision accepting the assessees stand were in respect of Notification No. 138/86-CE whereas the disputed notification in the present appeal is 24/94-CE. He has observed that inasmuch as both the notifications are different, the earlier precedent decision cannot be said to be covering the issue. As such I feel it necessary to reproduce both the notifications in extenso:-
Notification No. 139/86-CE dated 01 Mar 1986 Paper and paperboard In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1994, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 26/84-Central Excises, dated the 1st March, 1984, the Central Government hereby exempts paper and paperboards falling within Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from so much of the duty of excise leviable thereon which is specified in the said Schedule as is in excess of the amount calculated at the rate of ten per cent ad valorem plus Rs. 850 per tonne:
Provided that-
(i) the said paper and paperboards are manufactured out of pulp containing not less than 50 per cent by weight of pulp made from materials (other than bamboo, hard woods, soft woods, reeds or rags);
(ii) the exemption contained in this notification shall not apply to paper and paperboards falling under sub-heading No. Or heading No. 4802.91, 48.03, 48.06, 48.09, 48.10, 4811.40, 48.12, 48.13, 48.15 or, as the case may be, 48.16;
(iii) the exemption contained in this notification shall apply only to paper and paperboards cleared from a factory having a plant attached thereto for making bamboo, pulp or wood pulp, or if total quantity of clearances of all varieties of paper and paperboards in the preceding financial year by or on behalf of a manufacturer from one or more factories, or from a factory by or on behalf of one or more manufacturers, had exceeded 24,000 tonnes.
2. This notification shall come into force on the 1st day of April, 1986 (Notification No. 139/86-CE, dated 1.3.1986).
Notification : 24/94-CE dated 01 Mar 1994 Effective rate of duty on paper and paperboard of articles made therefrom by using unconventional raw materials.
In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944) and in supersession of the notification of the Government of India in the ministry of Finance (Department of Revenue) No. 139/86-Central Excises, dated the 1st March, 1986, the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts paper and paperboard or articles made therefrom (hereinafter referred to as the said goods) falling within Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), cleared from a factory (hereinafter referred to as the said factory), from so much of the duty of excise leviable thereon which is specified in the said Schedule, as is in excess of the amount calculated at the rate of 15 per cent ad valorem:
Provided that the said goods have been manufactured, starting from the stage of pulp, in the said factory, and such pulp contains not less than 50 per cent by weight, of pulp made from materials, other than bamboo, hard woods, soft woods, reeds (other than sarkanda) or rags.
13. As is seen from above, Notification No. 139/86 grants exemption to paper and paperboard, subject to specified three conditions as enumerated under the proviso. The condition No. (i) is in respect of pulp containing not less than 50 per cent by weight of pulp made from materials other than bamboo, hard woods, soft woods, reeds or rags. The other two conditions i.e. condition No. (ii) and (iii) are independent conditions not relatable to condition (i). When we compare condition No. (i) with the condition of Notification No. 24/94-CE, as contained in the proviso, we note that the said condition is identical to condition No. (i) of Notification No. 139/86-CE. Inasmuch as the other two conditions are not relatable to condition No. (i) and all the three conditions of Notification No. 138/86-CE are to be treated as independent conditions requiring the satisfaction of all three of them individually and condition No. (i) of Notification No. 139/86-CE dated 1.3.86 being identical to condition of Notification No. 24/94-CE, the difference drawn by the revenue and as accepted by ld. Member (Technical) is not agreeable.
14. As regards the fulfilment of the condition i.e. pulp not containing more than 50% materials such as bamboo, hard wood, soft wood, reeds and rags, I note that the said condition was the subject matter before the Tribunals in the case of Commissioner vs. Associated Pulps & Paper Mills 1999 (107) ELT 631 (T). It stands held in the said decision that the pulp made from waste paper, which in turn stands made out of pulp manufactured from conventional raw materials has to be treated as having been made out of unconventional raw material and the benefit of notification would be available.
15. Admittedly, the pulp made in the pilot plant of the appellant is out of waste paper and not out of the materials specified in the said condition. Whether it is permissible to go further and find out as to from which material such waste material was manufactured at the initial stage or not is the question to be decided. Waste paper is not one of the conventional raw material for the manufacture of pulp and the pulp having been manufactured out of waste paper can be said to have been made out of unconventional raw material. While deciding the identical issue in the case of Associated Pulps & Paper (supra) the Tribunal, while holding in favour of the assessee also referred to the Boards letter F. No. 61/16/97-C. EX.-4, dated 24.9.1997 clarifying that any raw material not covered under the terms of the bamboo, hard wood, soft wood is to be treated as an unconventional raw material for the purpose of granting exemption. The Tribunal observed that the department is bound by the clarification issued by the Board and the use of waste paper in the manufacture of pulp will not make an assessee ineligible to the benefit of the notification. The said decision stand further followed by the Tribunal in the case of Commissioner vs. Sirpur Paper Mills Ltd. Final Order No. 1256/2002, dated 24.9.2002 as also in the case of CCE, Hyderabad vs. ITC Bhadrachalam Paper Boards reported in 2002 (160) ELT 1092 (Tri. Bang.).
16. In fact, I find that identical issue was the subject matter of the Tribunal decision in the case of same appellant reported as CCE, Raipur vs. M/s Orient Paper Mills Final Order No. 378/99-C. Though the said decision was in respect of earlier notification No. 139/86-CE, but as the condition in the said notification is identical, to the condition in the present disputed notification No. 24/94-CE, the settlement of dispute in the earlier case of the same appellant is binding on the revenue.
17. Having held that condition in both the notifications is identical and the presence of two independent additional condition in the earlier notification not making any reference and the relevant condition having been decided in favour of the assessee by the precedent decisions, I am of the view that the appellants appeal is required to be allowed. I order accordingly.
Difference of Opinion Whether the appeal is required to be rejected as held by Ld. Member (Technical) or is to be allowed as held by ld. Member (Judicial).
(Archana Wadhwa) Member (Judicial) Pant The Registry is directed to place the matter before the Honble President of CESTAT for resolving the above difference in opinion between Members.
(Archana Wadhwa) Member (Judicial) (Sahab Singh) Member (Technical) CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. 1 Date of hearing/decision: 26.07.2013 Excise Appeal No. 103 of 2005 M/s Orient Paper Mills Appellants Vs. CCE, Raipur Respondent Appearance: Shri Rishikesh, Advocate for the appellant Ms. Ranjana Jha, DR for the Revenue Per: Justice G. Raghuram:
This reference is pursuant to a difference of opinion recorded by the order dated 01.03.2013. The ld. Member (Technical) rejected the appeal and confirmed the order of the Commissioner (Appeals) dated 05.10.2004, which reversed the order of the adjudicating authority the Assistant Commissioner, Central Excise Division, Jabalpur dated 01.03.1994. The ld. Member (Judicial) would allow the appeal and hold that the appellant herein is entitled to the benefits of Notification No. 24/94-CE dated 01.03.1994 and thus to exemption from the liability to excise duty for having manufactured paper from pulp containing not less than 50% by weight, of pulp made from material other than bamboo, hard wood, soft wood, reeds and rags.
2. Ld. Member (Technical) concluded that since the assessee in its main plant was using pulp made out of bamboo, hard wood, soft wood reeds etc., which were not unconventional material for manufacture of paper and the waste paper/ brokes generated during the course of such manufacture in the main plant was utilised in another plant (of the assessee) situated within the same factory premises wherein paper is manufactured out of such brokes / waste paper supplied by the main plant, the pulp employed in the other plant is derived from paper which is manufactured using conventional material and consequently the assessee is disentitled to exemption from duty under Notification No. 24/1994. Ld. Member (Judicial) concluded that for the purpose of analysis, Notification No. 24/94-CE dated 01.03.1994 is identical to an earlier Notification No. 139/86-CE dated 01.03.1986 and that both Notifications have a similar trajectory in so far as the claim of exemption is concerned; and that a similar exemption Notification also fell for consideration before this Tribunal in other cases and was also subject to a clarification issued by the Board in a letter dated 24.09.1997 and therefore the matter is concluded in favour of the view that where paper is manufactured using pulp made out of brokes/ waste paper, though such brokes / waste paper is in turn manufactured out of conventional material, the benefits of the exemption Notification, would enure.
3. Notification No. 24/94-CE dated 01.03.1994 reads as under:-
Effective rate of duty on paper and paperboard or articles made therefrom by using unconventional raw materials In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 139/86-Central Excises, dated the 1st March, 1986, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts paper and paperboard or articles made therefrom (hereinafter referred to as the said goods) falling within Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), cleared from a factory (hereinafter referred to as the said factory), from so much of the duty of excise leviable thereon which is specified in the said Schedule, as is in excess of the amount calculated at the rate of 15 per cent ad valorem:
Provided that the said goods have been manufactured, starting from the stage of pulp, in the said factory, and such pulp contains not less than 50 per cent by weight, of pulp made from materials, other than bamboo, hard woods, soft woods, reeds (other than sarkanda) or rags.
4. The earlier Notification No. 139/86-CE dated 01.03.1986 reads:
Paper and paperboard In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 26/84-Central Excises, dated the 1st March, 1984, the Central Government hereby exempts paper and paperboards falling within Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from so much of the duty of excise leviable thereon which is specified in the said Schedule as is in excess of the amount calculated at the rate of ten per cent ad valorem plus Rs. 850 per tonne :
Provided that
(i) the said paper and paperboards are manufactured out of pulp containing not less than 50 per cent by weight of pulp made from materials (other than bamboo, hard woods, soft woods, reeds or rags);
(ii) the exemption contained in this notification shall not apply to paper and paperboards falling under sub-heading No. or heading No. 4802.91, 48.03, 48.06, 48.09, 48.10, 4811.40, 48.12, 48.13, 48.15 or, as the case may be, 48.16;
(iii) the exemption contained in this notification shall apply only to paper and paperboards cleared from a factory having a plant attached thereto for making bamboo pulp or wood pulp, or if total quantity of clearances of all varieties of paper and paperboards in the preceding financial year by or on behalf of a manufacturer from one or more factories, or from a factory by or on behalf of one or more manufacturers, had exceeded 24,000 tonnes.
This notification shall come into force on the 1st day of April, 1986.
5. Several similar Notifications were issued granting exemptions from excise duty to paper manufactured using pulp from materials other than specified conventional material. In the earliest of the decisions placed before this Tribunal, in Commissioner vs. Associated Pulps & Paper Mills 1999 (107) ELT 631 (T), a Larger Bench of the Tribunal was considering the issue whether benefits of an exemption Notification could be availed when waste paper is used in the manufacture of paper. The Larger Bench concluded that as the Notification in issue does not exclude the use of waste paper, the same cannot be excluded by Revenue, by implication. Reference was also made in this judgment to the letter to the Board dated 24.09.1997 which clarified that any raw material not covered under the terms of the Notification must be treated as unconventional raw material for the purpose of granting exemption under the Notification specified in the letter.
6. An identical view was reiterated in CCE, Raipur vs. Orient Paper Mills 2000 (124) ELT 469 (Tri (Tri.), CCE, Hyderabad vs. ITC Bhadrachalam Paper Boards 2003 (160) ELT 1092 (Tri. Bang.), Rolex Paper Mills Ltd. vs. CCE, Guntur -2004 (173) ELT 436 (Tri. Bang.) and in Central Pulp Mills vs. CCE, Surat 2005 (189) ELT 242 (Tri. Del.).
7. In the last of the decisions the definition of brokes was also considered and was held to mean waste paper; and in para 7 of the judgment this Tribunal held that since the pulp in question is made from waste paper and not from bamboo and specified conventional products, is entitled for exemption under the Notification in issue.
8. Ld. DR would contend that there is substantive difference between the language in Notification No. 139/86-CE and the Notification in issue i.e. Notification No. 24/94-CE. The contention is that while Notification No. 139/86-CE enjoins that exemption would available if the goods are manufactured out of pulp containing not less than 50% by weight other than the specified material, Notification No. 24/94-CE provides that the goods must have been manufactured, starting from the stage of pulp, in the said factory, and such pulp should contain not less than 50% by weight, of pulp made from materials other than the specified materials, (which are the same materials specified in both the Notifications).
9. In our considered view, occurance of the phrases starting from the stage of pulp and in the said factory, do not alter the intention of the exemption Notification, for the purposes of the present case. That the assessee in the present case had manufactured its paper from the stage of pulp and in its own factory is not in issue or in dispute. Also, not in issue is the fact that not less than 50% by weight of the pulp employed for manufacture of such paper is from brokes/ waste paper. The question in issue is the same as was in issue in other cases, namely whether when waste paper is used for conversion as pulp for eventual manufacture of paper, it could be concluded that conventional material specified, namely bamboo etc. was used, to deny exemption.
10. On a true and fair construction of the relevant provision of Notification No. 24/94-CE, the intention of the exemption Notification is not in any way different from the essential purposes of the other Notifications which were considered in the other judgments referred to.
11. On no principle of interpretation is it possible to contend that pulp made from waste paper/ brokes as in the present case would be amount to pulp made from bamboo, hard wood, soft wood, reeds or rags.
12. On the aforesaid analysis, there are no points of distinction between the ratio enumerated in the other judgments of the Tribunal referred to and the facts of the present case, warranting different conclusion. On the aforesaid analysis, I respectfully agree with the opinion expressed by the Ld. Member (Judicial) and regret my inability, to concur with the view expressed by the ld. Member (Technical). I agree with the opinion expressed by the ld. Member (Judicial) and hold that the appeal must be allowed. This order be placed before the Learned Division Bench, for recording the finding in the appeal.
(Justice G. Raghuram) President Pant Final Order In view of the majority order, the impugned orders are set aside and appeal is allowed with consequential relief to the appellant.
(Archana Wadhwa) Member (Judicial) (Sahab Singh) Member (Technical) Jyoti* ??
??
??
??
2