Tribunal exempts appellants from double paper cess, citing Ministry clarification.

The Tribunal ruled in favor of the appellants, holding that the paper cess should not be collected again on converted paper if the base paper had already been subject to cess. The Tribunal relied on a Ministry clarification stating that cess is not leviable on converted paper if the base paper was previously subject to cess. Consequently, the appellants were exempted from paying cess on their coated paper, based on the understanding that cess is payable only once on paper and its products.

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Issues:
1. Whether the appellants are liable to pay paper cess on converted paper after purchasing base paper on which cess was already paid.
2. Whether the exemption from Central Excise duty automatically exempts the goods from payment of paper cess.
3. The applicability and interpretation of Notification No. 63/82 and Notification No. 49/87 in relation to the exemption of paper cess.
4. The persuasive value of the clarification provided by the Department of Industrial Development regarding the levy of cess on paper products.

Analysis:
1. The appellants contended that since they purchased base paper after paying cess, the cess should not be collected again when the base paper is converted into coated paper. The lower authorities confirmed the demand for duty on nine show cause notices, except one due to being time-barred. The appellants argued that the Ministry's clarification stated that cess is not leviable on converted paper if base paper was already subject to cess, thus exempting their coated paper from cess duty.

2. The Department argued that the exemption from Central Excise duty, as per Notification No. 63/82 and Notification No. 49/87, does not automatically exempt the goods from paper cess. They emphasized that the legal position is that paper cess is levied separately under the Industries (Development and Regulation) Act, 1951, and exemption from excise duty does not extend to cess unless expressly mentioned.

3. The Tribunal analyzed the notifications and found no explicit mention of the exemption of paper cess under Notification No. 63/82 and Notification No. 49/87. The appellants relied on the interpretation of S.O. 862(E), dated 27-10-1980, by the Department of Industrial Development, arguing that cess paid on base paper exempts converted paper from further cess. The Tribunal considered a clarification provided by the Ministry in 1990, stating that cess is not leviable on converted paper if base paper was previously subject to cess, applying this clarification retrospectively to the appellants' case.

4. The Tribunal accepted the persuasive value of the Ministry's clarification, holding that cess is payable only once on paper and its products. Relying on the retrospective application of the clarification and the interpretation of S.O. 862(E), the Tribunal set aside the impugned order, allowing the appeal in favor of the appellants. The decision was based on the understanding that the appellants should not be liable to pay cess again on the converted coated paper, given the prior payment of cess on the base paper.

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