1997 (5) TMI 127 - AT - Central Excise

Tribunal grants stay in duty demand case for newsprint manufacturer under specific notifications.

The Tribunal granted a stay application in a case involving a demand of duty, penalty, and confiscation by the Collector of Central Excise, Cochin against ... Stay/dispensation of prior deposit Issues: Stay application regarding demand of duty, penalty, and confiscation; Interpretation of Notification No. 163/67 and 79/86; Classification of wood pulp process; Financial hardship; Suppression of facts in classification list.The judgment pertains to a stay application filed concerning a demand of duty, penalty, and confiscation by the Collector of Central Excise, Cochin. The appellant, a newsprint manufacturer using the mechanical wood pulp process, claimed benefits under Notification No. 163/67 and its amendment 79/86, allowing benefits for mechanical wood pulp constituting at least 50% of the fiber content. The Collector confirmed a demand of Rs. 11,51,30,192.92 for the post-1986 period, imposed penalties, and confiscated assets invoking a longer limitation period, despite dropping the pre-1986 demand portion. The appellant argued compliance with licensing requirements, renewal, and submission of technical literature supporting their process as a variety of mechanical wood pulp. The Department's sample analysis post-1986 confirmed the mechanical wood pulp content. The Collector's reliance on Tariff Heading and HSN for post-1986 period was contested, citing a Tribunal's unconditional stay in a similar case and emphasizing financial difficulties due to newsprint imports.Regarding the classification of wood pulp process, the Department contended that post-1986 changes required detailed classification lists distinguishing between mechanical, chemical, and semi-chemical wood pulp, accusing the appellant of suppressing facts by not providing such details. The Collector's order referred to a Board's Circular accepting the appellant's proposition only for the pre-1986 period and differentiating post-1986 periods based on HSN classifications. The Department argued that the demand, penalty, and confiscation were justified based on the HSN Heading and Explanatory Notes distinguishing between pulps made by different methods.In terms of financial hardship, the Department highlighted the appellant's substantial revenue and depreciation figures, suggesting that the pre-deposit waiver would not cause undue hardship. The appellant offered to furnish bonds, but the Department argued against their acceptance based on Supreme Court observations. The appellant referenced an order from the Government of India to support their contention that their process was recognized as a variety of mechanical pulp process, emphasizing their bona fides.The Tribunal, after considering the submissions, noted similarities with previous cases and found a strong prima facie case, waiving the pre-deposit of the entire amount, including duty and penalty, and staying its recovery during the appeal's pendency based on limitations and observations from prior orders.