2011 (7) TMI 351 - AT - Central Excise

Tribunal upholds excise duty on waste pulp and paper sweepings, rejects extended limitations

The Tribunal upheld demands within the normal limitation period for clearing 'waste pulp' under Central Excise Rules, considering it as excisable goods ... Demand of amounts u/r 57AD CE Rules, 1944 / Rule 6(3)(b) of CCR and imposition of penalties as they cleared 'waste pulp' without payment of duty and without maintaining separate accounts for inputs and invoking period of extended for it - demand of duty on waste paper has been made on the ground that the said goods are excisable goods. Regarding demand of duty u/r 57AD. Held that:- The appellants are manufacturing dutiable products.As manufacturer of dutiable paper and exempted pulp, in the absence of maintaining the separate accounts for inputs attributable to such exempted products, they were rightly held to be liable to pay amounts u/r 57AD CE Rules & Rule 6(3)(b) CC Rules. appellants have indicated clearance of waste pulp in the returns. Therefore, invoking the extended period of limitation for raising demands and imposition of penalties are not justified. decided against Assessee but demand only for normal period and no penalty. regarding demand of duty on 'waste paper sweepings. Held that:- goods have been sold as waste paper, obviously, at a lower price compared to that of good quality of paper. It has not been disputed that the buyers have purchased them as paper and for using the same as paper.That being the case, the demand of duty on waste paper under Chapter Heading 470290 cannot be faulted. There was a SCN issued in Nov. 2001 itself seeking to demand duty on waste paper. It cannot be held that appellants have suppressed any relevant information regarding emergence of waste paper and that the department was not in knowledge of relevant facts. Therefore, invocation of extended period for demand of duty and imposition of penalties are not justified. decided against Assessee but duty demanded only normal period without penalty. Issues involved:1. Challenge to demand of amounts under Central Excise Rules and Cenvat Credit Rule for clearing 'waste pulp' without payment of duty and separate accounts maintenance.2. Challenge to demand of duty on 'waste paper sweepings' cleared during a specific period.3. Interpretation of waste pulp as excisable goods and imposition of penalties.4. Invocation of extended period of limitation for demands and penalties.5. Treatment of waste paper as excisable goods and imposition of duty.6. Dispute over maintaining separate accounts for exempted products.7. Justification for invoking extended period of limitation and penalties.8. Final disposal of appeals with respect to demands, penalties, and limitations.Detailed Analysis:1. The first set of appeals challenges the demand of amounts under Central Excise Rules and Cenvat Credit Rule for clearing 'waste pulp' without payment of duty and separate accounts maintenance. The appellant argued that waste pulp should not be considered excisable goods, citing various legal precedents. The Tribunal noted that the waste pulp, although of inferior quality, was used by buyers for manufacturing inferior paper and boards, thus justifying its classification as excisable goods. The demand within the normal limitation period was upheld, but demands beyond the normal period were set aside.2. The second set of appeals contested the demand of duty on 'waste paper sweepings' cleared during a specific period. The appellant claimed that waste paper sweepings should not be subject to excise duty as they were not a result of manufacturing. The Tribunal disagreed, stating that the waste paper had undergone manufacturing processes and was sold as paper, justifying the duty demand. However, demands beyond the normal limitation period were set aside.3. The Tribunal analyzed the classification of waste pulp as excisable goods and the imposition of penalties. It concluded that the waste pulp, despite being of inferior quality, was considered excisable goods as it was used by buyers for manufacturing. The penalties were set aside due to the appellant's proper declaration of waste pulp in returns and the absence of misstatement.4. The issue of invoking the extended period of limitation for demands and penalties was discussed. The Tribunal found that demands and penalties beyond the normal limitation period were not justified in certain cases where relevant information was not suppressed, leading to the setting aside of penalties in those cases.5. The treatment of waste paper as excisable goods and the imposition of duty were examined. The Tribunal upheld the duty demand on waste paper sweepings, considering them as excisable goods that underwent manufacturing processes and were sold as paper. However, demands and penalties beyond the normal limitation period were set aside.6. The dispute over maintaining separate accounts for exempted products was addressed. The Tribunal found that the appellant, as a manufacturer of dutiable paper and exempted pulp, was liable to pay amounts under Central Excise Rules and Cenvat Credit Rule due to the absence of separate accounts. However, penalties were set aside in cases where waste pulp clearance was properly declared.7. The justification for invoking the extended period of limitation and penalties was thoroughly reviewed. The Tribunal concluded that demands and penalties beyond the normal limitation period were not justified in cases where relevant information was not suppressed, leading to the setting aside of penalties in those instances.8. The final disposal of appeals resulted in setting aside demands beyond the normal limitation period in certain cases, upholding demands within the normal period, and setting aside penalties in specific cases, providing a detailed analysis and rationale for each decision.