TaxTMI 
TaxTMI 
2006 (8) TMI 358
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....f fibre content were exempted from the whole of duty of excise. The case of the department is that the appellants do not fulfill the condition that the paper manufactured by them contained mechanical wood pulp amounting to not less than 50% of fibre content. Hence, they would not be entitled for the benefit of the Notification. On the other hand, it is the contention of the appellants that they are manufacturing Newsprint from out of 70% chemic-mechanical wood pulp and 30% sulphate chemical pulp. According to the appellants, chemi-mechanical wood pulp is just another variation of mechanical wood pulp. If this is accepted, the appellants would be fulfilling the conditions of the Notification. While denying the benefit of the Notification, the Commissioner (Appeals) has relied on the order of CEGAT in the party's own case for an earlier period in Final Order No. 970/99(C) dated 30-9-1999, 2003 (162) E.L.T. 1125. The appellants challenged the above mentioned Final Order of the CEGAT before the Apex Court and the Apex Court in Civil Appeal No. 2245/2000, dated 17-3-2005 [2005 (186) E.L.T. A77 (S.C.)] passed the following order: ORDER "Mr. Joseph Vellapally, learned senior Counsel....
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....p; Monogrph dated March, 1997 titled "Pulp & Paper Industry in India" published by Government of India. (d) Certificate dated 7-4-1988 given by the Central Pulp & Paper Research Institute, Dehradun. (e) Photocopy of pages 87 to 91 and 108 from hand book "Casey's reports on Pulp and Paper Industry" by Mr. James P. Casey a leading authority in Pulp and Paper Making in the world. (f) Copy of pages No. 195 and 196 from the Hand Book on Pulp and Paper Technology by Mr. Kenneth W. Britt. (g) Mechanical wood pulp is of various kinds. Chemi Mechanical pulp is also mechanical Wood pulp vide hand book for Pulp & Paper Technologists (by G.A. Smook). (v) The CEGAT, in its order, gave no specific findings with regard to the above mentioned documents but only relied on the Board's Circular dated 12-9-1990. (vi) The CEGAT has also not considered the process of manufacture. (vii) The learned Advocates strenuously argued that Chemi Mechanical Wood Pulp should also be treated as Mechanical Wood Pulp and the ....
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....e Chemical examiner, vide his test reports to the authorization, has reported that the yarn contained synthetic staple fibre. Obviously, therefore, his reports are based on misconception of the definition of "staple fibre", and consequently these reports cannot be reliable basis for determining the classification. The Revenue's appeal is based on these test reports. The Revenue has not placed any material, except these test reports, to prove that the yarn in dispute contained synthetic staple fibre." (vi) The Apex Court's order in Appeal No. 2245/2000, dated 17-3-2005 [2005 (186) E.L.T. A77 (S.C.)] in the party's own case was consequent to the withdrawal of the appeal by the appellant since there was no duty demand sustainable in terms of the Tribunal's judgment appealed against. The Tribunal found that there was no suppression of facts to invoke the extended period of limitation. This order of the Apex Court is to be construed as a case of dismissal without going into the merits and not as a dismissal of the Tribunal's decision as urged by the learned Counsel for the appellant during the hearing on 22-6-2006 before the Bench. (vii) The test report which is ....
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....s extended the benefit of the exemption Notification because the chemical test indicated that the paper manufactured by the appellant satisfied the condition stipulated in the Notification. In other words, the Paper manufactured by the appellant was found to contain mechanical wood pulp of not less than 50% of the fibre content. Even after 28-2-1986, the appellant is using the same process of manufacture of pulp and paper. The question arises as to why the benefit should be denied after 28-2-1986. The main reason, according to the Revenue, is the change in the Tariff with regard to classification of pulp. Prior to 28-2-1986, there was no separate classification of pulp. The Revenue contends that as per the old Tariff, the appellant satisfied the condition of the Notification. But, in terms of the new Tariff, they do not satisfy the condition of the same Notification. Is there any change in the Notification itself? No change, excepting in the amended Notification, there is a reference to Chapter 48 of the New Tariff because Paper falls under that Chapter. 6.2 In order to decide the entitlement to the benefit of the Notification, the approach of the Revenue is to go by the Ta....
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....und Wood Process (SGW); (b) Pressurised Ground Wood Process (PGW); (c) Chemi Ground Wood Process (CGW); (d) Fine Ground Wood Process (FGW)); (e) Refiner Mechanical Pulping (RMP); (f) Chemi Refiner Mechanical Pulping (CRMP); (g) Semi Chemical Pulping (SCP); (h) Chemi Mechanical Pulping (CMP); (i) Thermo Mechanical Pulping (TMP); (j) Chemi Thermo Mechanical Pulping (CTMP). 2. The Board considered that the matter should be decided separately under the Old Tariff and in the New Tariff. As regards the position under the old stated by the Deputy Chief Chemist [Annexure-I (copy of opinion enclosed for information and guidance)] and the fact that the samples of paper were tested by Chemical Examiners who certified that the paper contained not less than 50% of mechanical wood pulp by fibre content, it was decided that chemi-mechanical pulping and chemi-thermo mechanical pulping are only variations of mechanical pulping and the pulp so obtained would be covered by the expression 'Mechanical wood Pulp' occuring in exemption Notification No. 163/67, dated 21-7-1967. Accordingly, for the period prior to 28-2-1986 wood ....
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....cation No. 72/76, dt. 16-3-76 will not be admissible to the newsprint manufactured by the appellant" 6.5 Since the Apex Court, in its order dated, March 17, 2005 [2005 (186) E.L.T. A77 (S.C.)] has left the question of applicability of the Notification open, we are examining the issue here afresh. 6.6 A discussion of the process of pulp manufacture would be relevant here. Pulp is used for the production of Paper and Newsprint. Pulp is produced from materials like wood, bamboo, grasses and certain agricultural residues, which contain cellulosic materials. The general processes of pulping are (i) Chemical pulping; (ii) Mechanical pulping; (iii) Semi-chemical pulping. Chemical and mechanical pulping are distinctly separate processes and the semi-chemical pulping is the combination of the two. Mechanical pulp was conventionally made by grinding wood logs. Initially, only softwood was used for producing mechanical pulp. Mechanical pulp is mainly used for the production of Newsprint. The pulp produced just by grinding the logs was very weak, which was not suitable for high speed machines for printing. Hence, improvement in processing became a necessity. The use of hard woo....
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....;We have also perused an opinion given by the Director and the Officer in charge of Central Pulp & Paper Research Institute, an autonomous organization registered under the Societies Act under the Administrative control of the Ministry of Industry, Government of India. This opinion of the Central Pulp & Paper Research Institute is very relevant in deciding the issue. Therefore, the document dated April 7, 1988 is reproduced below :- To whomsoever it may concern Mechanical pulp was conventionally made by grinding wood logs. The manufacture of mechanical pulp was developed first by F.G. Keller of Germany in 1843. Considerable developments have taken place since then and more particularly during the last two decades in the process technology for manufacture of mechanical pulp. There has been a proliferation in the terminology of mechanical pulping processes. Some of them are as follows:- - Stone Ground Wood Process (SWG); - Pressurised Ground Wood Process (PWG); - Chemi Ground Wood Process (CGW); - Fine Ground Wood Process (FGW); - Refiner Mechanical Pulping (RMP) - Chemi Refine....
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....th the interpretation of Notification No. 29/83-Cus. in the case of Collector of Customs, Bangalore v. Maestro Motors Ltd. - 2004 (174) E.L.T. 289 (S.C.). This Notification exempted components, including components of fuel efficient motor cars in semi-knocked down packs and completely knocked down packs. When the appellants imported completely knocked down packs. The Revenue used the weapon of Interpretative Rule 2(a) to hold that the components in a completely knocked down pack would be considered to be Cars. By holding the above view, Revenue sought to deny the benefit of the exemption notification. The Apex Court ruled that, Effect must be given to the wording of the notification. Thus, components in completely knocked down packs would get the exemption under the Notification even though for purposes of classification, they may be considered to be cars. 6.12 The CEGAT Larger Special Bench, New Delhi, in the case of Indian Airlines, Calcutta v. Collector of Customs [1988 (38) E.L.T. 679 (Tri. - LB)] had occasion to interpret Notifications No. 145/77-Cus., dated 9-7-1977 and 99/81-Cus., dated 1-4-1981. The first Notification covers, inter alia, 'rubber tyres and tubes used....
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....hod and the result confirms the claim of the appellants that the paper has been made of pulp containing not less than 50% of mechanical wood pulp, we are of the view that Board's reliance on HSN explanatory note ignoring the expert opinion of Central Pulp & Paper Research Institute, an autonomous body of the Government of India, is misplaced. 6.14 We have also gone through some of the literature available on Pulp Industry. The Wikipedia, a free Encyclopedia available on the Internet, gives details about the manufacture of Wood Pulp. According to the above source, chemicals can be used to break up the cellulose fibres. The wood is crushed with grinders and then soaked in water to produce Ground Wood (GW). The wood can also be crushed with refiners using steam at high pressures and temperatures to produce Thermo Mechanical Pulp (TMP). TMP differs in quality from GW. In addition to the refiners, chemicals can be used to break up the cellulose fibres. Pulp produced this way is known as Chemi-Thermo Mechanical Pulp (CTMP). GW, TMP and CTMP are all considered as Mechanical Pulps. The Mechanical Pulps tend to turn yellow in kind because of the binding material, lignin, in the pulp....
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....try of Industry, Department of Industrial Development. This order is called as Newsprint Control (Amendment) Order, 1992. What is of interest to us in the above order is that in Para 2 of the order, there is a listing of all the processes which are used to obtain Mechanical Wood Pulp. In fact 14 variations of Mechanical processes are given. The Chemi-Mechanical Pulping employed by the appellant is given in Entry No. (g). This strengthens the contention of the appellant that the process employed by them is recognized in the industry and also by Government of India as a Mechanical process. 6.17 The appellants further contended that till 2005, the Central Excise classification was not fully aligned with HSN. Only after the 8 digit classification came into force w.e.f. 28-2-05, the Central Excise Tariff was fully aligned with HSN. Therefore, it was contended that the HSN Explanatory Note should not be used to deny their benefit of the Notification when the same was not aligned with the Tariff. Since it is very clear that the pulp obtained by them as Chemi-Mechanical Pulp is considered as Mechanical Pulp in the Industry, we do not want to go into this question now. The most impo....