Paper exemption under Central Excise Tariff Chapter 48 sustained where test reports supported eligibility and duty demands failed.

The impugned varieties of paper were found to fall within the exemption for all sorts of paper under Chapter 48 of the Central Excise Tariff Act, 1985, based on the test reports. As a result, the denial of benefit under Notification No. 138/86-C.E., as amended, could not sustain the duty demands. The alternate plea on provisional assessments did not change the outcome because the supporting classification position was not accepted. The exemption therefore applied to the paper varieties, and the consequent duty demands were liable to be set aside in favour of the assessee.

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Issues: Whether the impugned varieties of paper were entitled to the benefit of exemption under Notification No. 138/86-C.E. as amended and, consequently, whether the duty demands could be sustained.

Analysis: The test reports for the impugned varieties of paper showed that they fell within the scope of the exemption available to all sorts of paper under Chapter 48 of the Central Excise Tariff Act, 1985. In view of that eligibility, the demands based on denial of exemption could not be upheld. The alternate plea regarding provisional assessments did not alter the result, as the supporting classification view was not accepted.

Conclusion: The exemption was available to the impugned paper varieties and the duty demands were liable to be set aside, in favour of the assessee.

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