Customs duty exemption for imported waste paper used in paperboard manufacture was clarified for the specified period.

Imported waste paper used in the manufacture of paperboard during the specified period was covered by the concessional customs regime under Notifications No. 17/2001-Cus. and 109/2001-Cus., read with Notification No. 56/2002-Cus. issued under the Customs Act. The later notification clarified that customs duty was not required to be paid on such imports when used in paperboard manufacture within the defined period. On that basis, the duty demand and penalty were treated as unsustainable for imports within the notified benefit.

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Issues: Whether waste paper imported during the relevant period was liable to customs duty when used in the manufacture of paperboard, and whether the demand of duty and penalty could be sustained.

Analysis: Notification No. 17/2001-Cus. granted concessional duty for goods under Heading 47.07 used in the manufacture of paper or paperboard. The subsequent amendment by Notification No. 109/2001-Cus. extended the benefit to use in paperboard as well. Notification No. 56/2002-Cus. issued under Section 28A of the Customs Act clarified that customs duty on such imported goods used in paperboard manufacture during the specified period was not required to be paid.

Conclusion: The imported waste paper used in manufacture of paperboard during the relevant period was not liable to duty, and the demand of duty and penalty was unsustainable.

Final Conclusion: The appeal succeeded and the demand as well as the penalty were set aside.

Ratio Decidendi: Where a later notification issued under the customs law grants or clarifies non-payment of duty for specified imports used in a particular manufacturing process during a defined period, the duty demand cannot be sustained for imports covered by that benefit.

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