CX - When appellant sold printing paper to a known publisher of educational textbooks, it is apparent that they are aware of usage of paper - Benefit of notfn. 49/2003-CX inadmissible: CESTAT
By TIOL News Service
NEW DELHI, NOV 13, 2017: THE appellants are engaged in the manufacture of writing and printing paper falling under Ch. 48 of the CETA, 1985.
They were availing area based exemption in terms of Notification no.49/2003-CX dated 10.06.2003.
The exemption notification as amended by 12/2006-CE had a negative list and S.No.19 of the list covered "Writing or printing paper for printing of educational textbooks" heading 4802. These products are not eligible for area-based exemption availed by the appellant.
The Revenue conducted an enquiry and learnt that the appellants had cleared writing or printing paper for printing of educational textbooks and, therefore, are liable to pay Central Excise duty on the same.
SCN was issued for the clearances made of the impugned goods during the period 01.03.2011 to 28.02.2014 and in adjudication, the original authority confirmed the CE duty demand of Rs.1,39,19,828/- and imposed equivalent penalty.
The appellant-assessee is before the CESTAT and while contesting the demand submitted that -
a) They cleared the goods to various dealers and in some cases directly to the customers. They have no control over the use of the goods sold by them.
b) The duty calculation has not been made correctly. Not all the clearances made to 11 publishers are to be considered as liable to Central Excise duty as not all these papers have been used for publication of education text-books. Some of the buyers have clearly mentioned that they are also engaged in publication of various other books and materials which will not fall under the category of educational textbooks.
c) The demand notice is dated 12.02.2015 is hit by limitation as the appellants have been availing the exemption from 2006 onwards and they are filing regular monthly returns.
The AR supported the impugned order and submitted that the original authority restricted the demand only to the sales of paper made directly to the publishers of educational textbooks, therefore, there is no error in the duty calculation.
The Bench observed -
++ Admittedly, the entry in the negative list of the exemption notification is based on end use of the manufactured paper. There is no other technical specification to identify the writing or printing paper which will fall under the excluded category for exemption. The exclusion is based on end use, namely, for printing of educational textbooks. Admittedly, the paper can be used for printing of books of any kind. The bar of exemption will operate only when the paper is used for printing of educational textbooks.
++ The appellants pleaded that the books published by the CBSE/ICSC/State Education Textbook Corporation alone can be considered as textbooks. We find no support for such contention. There is no statutory definition of educational textbooks. It should be understood as per common parlance.
++ The appellants contended that they have no control on the end use of the goods cleared by them. Such argument will have limited merit only. While they are claiming the exemption for the excisable goods with certain conditions of usage, it is imperative that such conditions are fulfilled.
++ When the appellant had received purchase orders and sold the paper directly to the publishers of education textbook, it is clear that they are running the risk of losing the exemption under Notification No.49/2003. There can be no contest on the grounds that the end use is not in their control. When they sold the paper to a known publisher of educational textbook, it is apparent that they are aware of the usage of paper. They cannot take a plea that they have no control on them when end use is recognizable.
Nonetheless, as regarding quantification of the CE duty liability, the CESTAT observed that it was necessary to categorically establish and calculate the duty liability only with reference to paper for printing educational textbooks.
Therefore, while upholding the grounds for duty demanded, the matter was remanded to the original authority for re-quantification upon the appellant submitting the records and additional details. Penalty was also to be quantified accordingly.
The ground of limitation taken by the appellant was also held as untenable by holding that the fact of clearance of printing paper to publishers/printers of educational textbooks was in the knowledge of the appellant only.
The appeal was disposed of.
(See 2017-TIOL-3979-CESTAT-DEL)
