ORDER
V.K. Agrawal, Member (T)
1. The issue involved in this appeal filed by M/s. Amrit Paper Ltd. (A Division of M/s. Amrit Banaspati Co. Ltd.) is whether the exemption under Notification No. 48/91-C.E., dated 25-7-1991 is available to the writing and printing paper, manufactured by the Appellants.
2. Briefly stated the facts are the Appellants manufacture, inter alia, Writing and Printing Paper falling under sub-heading 4802.99 of the Schedule to the Central Excise Tariff Act. They filed two classification lists during 14-8-1993 to 28-7-1994 classifying their product under sub-heading No. 4802.99 claiming nil rate of duty under Notification No. 48/91. The Collector, Central Excise, under the impugned order dated 15-3-1995, confirmed the demand of excise duty amounting to Rs. 52,68,282.70 paise and imposed a penalty of Rs. 10 lakhs, holding that they had removed ‘newsprint’ during the period 14-8-1993 to 28-7-1994 which was not declared by them; that they were declared as ‘mills producing newsprint’ by Department of Industrial Development vide order dated 3-8-1993; that it showed that every mill could not produce newsprint and similarly each and every kind of paper could not be used for printing of newspapers; that Notification No. 48/91-C.E. did not exempt paper falling under Heading No. 48.01. The Collector also denied them the exemption under Notification No. 60/88-C.E., dated 1-3-1988 as the Appellants had not claimed the same and moreover they had not produced the certificate from the Registrar of Newspaper of India within one month from the date of clearance to the effect that such quantity of newsprint was authorised by the said Registrar.
3. Shri N. Khaitan, learned Advocate, submitted that Notification No. 48/91, exempts Writing and Printing paper, falling under heading 48.02 provided that the paper contains not less than 75% by weight of pulp made from jute, jute waste, mesta, rice straw, wheat straw or baggase or mixture thereof or mixture of two or more of the pulps of these materials; that the Appellants have been manufacturing Writing and Printing paper since 1980 and all material times the paper satisfied the requirement of Notification 48/91; that the Department had allowed the benefit of Notification to them immediately prior to 14-8-1993; that the Central Government vide order No. S.O. 590(E) under Section 3 of the Essential Commodities Act, 1955 read with Clause 2(e) of the Newsprint Control Order, 1962 notified, amongst other, the Appellant as a mill producing newspaper; that in persuance to this order, they supplied their product to various customers who used the same as newsprint; that there was no change whatsoever in the nature of the product which continued to be writing and printing paper; that as there was no change in the paper, they continued to classify the paper as Writing and Printing paper in the classification list; that the goods were described in the gate passes as ‘Amrit News Print Reels’ and these gate passes were filed with the Department alongwith RT 12 Returns. The learned Advocate further submitted that due to shortage of newsprint, the Central Government, under the provisions of a totally different statute, decided to treat their product as newsprint and the fact that their product was used as newsprint by various customers cannot affect classification under the law pertaining to excise; that even after 14-8-1993, the same product was sold by them to customers who used the same as writing and printing paper and not as newsprint; that in the case of such sales, the Department itself has treated the product as writing and printing paper; that end use of a product cannot determine the classification of the product; that there is no evidence that the impugned product is known or dealt within the market as newsprint; that the term writing and printing paper is wider in scope and covers in its scope newsprint which as per Note 3 to Chapter 48 means paper intended for the printing of newspapers; that the words ‘intended for use’ have been used in normal sense; that a perusal of Notification 43/86 and 167/86 make it amply clear that writing and printing paper include within its fold newsprint also.
4. The learned Counsel, further, mentioned that if the impugned product is classified as newsprint, the Appellants are eligible to Notification No. 60/88 dated 1-3-1988; that under their letter dated 29-12-1990 they had sent to the Department requisite certificate for verification; that the certificates were verified and found to be in order except for three gate passes involving excise duty amounting to Rs. 59,442/- that after having verified the certificates and having found the same to be in order, the Department arbitrarily refused to condone the delay in submissions of the certificate; that further Notification No. 60/88 contemplated only certificate from the Registrar of Newspaper which was duly produced; that in addition they had produced confirmatory letters from their purchasers. He finally submitted that there was no suppression or misstatement as they were under the bona fide belief that since there was no change in the paper, there was no question of maintaining a separate RG-1 and for filing a separate classification list; that they had mentioned the fact of newsprint in the gate passes; that there could be no mala fide on their part in not classifying the goods under heading 48.01 as they were entitled to full exemption under Notification No. 60/88; that they have been classifying the product under Heading 48.01 since 1-3-1994 and availing the exemption under Notification No. 60/88. The learned Counsel also claimed the Modvat credit in case the duty is payable by them as they had filed necessary declaration under Rule 57G on 31-3-1993; that in the alternative, benefit of Notification No. 138/86-CE dated 1-3-1986 was available to the Appellants as the ceiling was not 24000 tonnes as observed by the Collector but 33000 tonnes in the preceding year; that penalty is exhorbitant and harsh and that there was no intent to evade payment of duty.
5. Opposing the appeal, Shri H.K. Jain, learned SDR, reiterated the findings of the Collector in the impugned order and, further, submitted that Note 3 to Chapter 48 of the Tariff clearly provides that ‘newsprint’ means paper intended for the printing of newspapers and once the mill of the Appellant has been declared as a mill producing newsprint, the paper manufactured by them was Newsprint in respect of which Notification No.48/91 is not applicable. Regarding availability of Notification No. 60/88, the learned S.D.R. mentioned that the certificate produced by the Appellants were not accepted by the Department; that letter dated 16-1-1995 from the Inspector merely makes a mention that the Appellants had not even given the end use certificate in respect of three gate passes; that it cannot be presumed from such a letter that the certificate given by them had been accepted by the Department for the purpose of Notification No. 60/88-CE. He finally mentioned that if the Tribunal decides to extend the benefit of Notification No. 60/88, the matter may please be remanded for examining the certificates.
6. We have considered the submissions of both the sides. It is not disputed by the Revenue that the Appellants, before they were declared as mill producing newsprint, were manufacturing printing and writing paper which was eligible for the exemption from payment of duty under Notification No. 48/91. The Appellants have also claimed that even after 14-8-1993, the same product has been sold by them to customers who have used the same as writing and printing paper and not as newsprint. We find that no evidence has been brought on record to show that the Appellants had changed the process of manufacture of the paper after declaration was issued by the Government under Essential Commodities Act read with News Print Control Order. There is no averment by the Revenue that the Appellants have stopped manufacturing printing and writing paper and they were not satisfying the condition specified in Proviso to Notification No. 48/91-CE. Note 3 to Chapter 48 does not advance the case of the Revenue as it only provides that ‘newsprint’ means paper intended for the printing of newspapers as Note 7 to Chapter 48 also provides that Paper answering to a description in two or more of the heading Nos. 48.01 to 48.11 are to be classified under that one of such headings which occurs last in the numerical order in the Schedule. Certainly heading 48.02 occurs after 48.01 only. In view of these facts and circumstances, we set aside the impugned order and allow the appeal.