2002 (10) TMI 592 - AT - Central Excise

Appellate tribunal exempts paper waste from duty, allows CENVAT credit, and overturns personal penalties.

The appellate tribunal ruled in favor of the appellants, holding that paper waste and scrap, as well as wrapping paper exceeding exemption limits, were ... Bleach liquor - Marketability - Burden of proof Issues:1. Duty liability on paper waste and bleached liquor under Central Excise Tariff.2. Duty liability on wrapping paper exceeding exemption limit.3. Imposition of personal penalties on the appellants.Issue 1: Duty liability on paper waste and bleached liquor under Central Excise TariffThe appellants, engaged in paper manufacturing, were issued a show cause notice for duty demands on paper waste and bleached liquor consumed captively. The appellants argued that bleach liquor was an intermediate product with no marketability, relying on legal precedents and Supreme Court decisions. They contended that paper waste, known as 'Broke,' was continuously recycled in the manufacturing process and not a finished commodity. The Commissioner confirmed duty demands, but the appellate tribunal disagreed. The tribunal cited previous judgments stating that brokes are not excisable goods and cannot be subjected to duty. Additionally, a circular clarified that waste paper used in manufacturing paper attracts exemption. The tribunal found no merit in the duty demands on paper waste and scrap.Issue 2: Duty liability on wrapping paper exceeding exemption limitIn the case of M/s. Kanoi Paper & Industries Ltd., duty demands were raised for exceeding the exemption limit on wrapping paper consumed. The appellant agreed to pay duty on the wrapping paper but claimed CENVAT credit on inputs used. The Commissioner's order did not address the credit issue. The tribunal ruled that the appellants are entitled to credit for inputs used in manufacturing wrapping paper, provided they present evidence of duty payment on inputs and their utilization in production.Issue 3: Imposition of personal penalties on the appellantsThe Commissioner imposed personal penalties on the appellants, which the tribunal found unjustified. The tribunal noted that the disputes were bona fide legal questions and not indicative of any malicious intent by the appellants. Consequently, the penalties were set aside.In conclusion, the appellate tribunal disposed of all three appeals by ruling in favor of the appellants on the duty liability issues related to paper waste, bleached liquor, and wrapping paper, while also overturning the imposition of personal penalties.