CX - Notifns 6/2002 & 4/2006 - Manufacture of paper in same factory - When it is appellant who is liable to pay duty on paper and not job worker who converted pulp into paper rolls on job work basis, exemption under these notifications cannot be denied: CESTAT
By TIOL News Service
NEW DELHI, MAY 02, 2015: THE appellants are manufacturers of printing and writing paper.They manufacture pulp containing not less than 75% by weight of the pulp made from the materials other than bamboo, hard wood, soft wood, reeds (other than Sarkanda) or rags. Some of such pulp is also purchased from outside. After manufacture of the pulp in their factory or procuring such pulp from outside, they sent such pulp to M/s Anmol Paper (operating under job work notification no. 214/86-CE), who converted the pulp into paper rolls on job work basis and the paper rolls were returned to the appellant's unit. For this purpose the appellant hasgiven the required declaration that the paper rolls received from M/s Anmol Papers would be used by them for manufacture of the finished products which would be cleared on payment of duty.
The appellant, thereafter, subjected the paper rolls to further process of cutting and trimming and cleared the printing and writing paper in sheets on payment of duty at concessional rate by availing duty exemption under notification no. 06/02-CE dated 01.03.2002 (Sl. No. 86 &86A) and subsequently 4/06-CE dated 01.03.2006 (Sl. No. 90 and 91).
The subject notification is a conditional one and the only objection of the Department for denial of the exemption is that the paper has not been manufactured in the same factory.
Two SCNs were issued and confirmed by the CCE demanding a total CE duty of Rs.1,41,89,683/- for the period from September 2005 to January 2007 along with interest and penalty of Rs.40 lakhs. For the subsequent period, the Jt. Commissioner has confirmed a CE duty demand of Rs.27,71,823/- along with interest and imposed an equivalent penalty.
An appeal was filed against the order passed by CCE and another appeal against the order of Commissioner (Appeals) who upheld the order of the lower authority.
Both these appeals were heard by the CESTAT recently.
After considering the submissions made by both sides, the Bench narrated the facts involved and concluded thus -
++ The Department seeks to deny the exemption on the ground that for availing of these exemptions, the conversion of pulp into paper must be done in the same factory from which the paper is cleared, and that since, in this case the conversion of pulp into paper rolls has been outsourced and has done in the factory of M/s Anmol Papers, the exemption would not be available.
++ There is no dispute that the paper has been manufactured from the pulp of the specified specifications and the other two conditions of the notification [viz. papers/ paper board cleared for home consumption from factory in any financial year up to first clearances of aggregate quantity does not exceed3500 MT and that this exemption shall not be applicable to a manufacturer of the said goods who avails of exemption under notification no. 8/03-CE dated 01.03.2003] are also satisfied.
++ In our view when in this case it is the appellant who is liable to pay duty on the paper and not the job worker who converted pulp into paper rolls on job work basis, the exemption under these notifications cannot be denied to them.
Holding that the impugned orders passed are not correct, the same were set aside and the appeals were allowed.
(See 2015-TIOL-784-CESTAT-DEL)
