Waste paper is not "rags" and paper made wholly from it qualifies for exemption as unconventional raw material.

Paper manufactured wholly from waste paper qualified for exemption as paper made from unconventional raw material under Notification No. 8/96 because the material used was entirely outside the conventional inputs of bamboo, hardwood and softwood. Waste paper could not be treated as "rags", as the notification used that term for cut pieces of sarees and fabrics, showing it was confined to textile material. The Board's circular supported the same interpretation. The appellants therefore satisfied the exemption condition and were entitled to the benefit.

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Issues: Whether paper manufactured wholly from waste paper was eligible for exemption under Notification No. 8/96 dated 23-7-1996 as paper made from unconventional raw material, and whether waste paper could be treated as "rags" for denying the benefit.

Analysis: The exemption notification distinguished "rags" as cut pieces of saree and fabrics, which showed that the expression was confined to textile material. Waste paper used as the sole raw material could not, on that basis, be brought within the meaning of "rags". The clarification in the Board's circular also supported the view that raw material other than bamboo, hardwood and softwood would be treated as unconventional raw material. Since the appellants manufactured paper entirely from waste paper, the condition for exemption was satisfied.

Conclusion: Waste paper was not "rags", and the appellants were entitled to exemption as paper manufactured from unconventional raw material.

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