TaxTMI 
TaxTMI 
2015 (7) TMI 895
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.... which assures concessional rate of duty at 5% for "paper and paperboard or articles made from non-conventional material". The condition which is contained in the said Notification that needs to be fulfilled in order to avail the benefit thereof to pay the concessional rate of duty reads as under: "If such paper and paperboard or articles made therefrom have been manufactured, starting from the stage of pulp, in a factory, and such pulp contains not less than 75 per cent by weight of pulp made from materials other than bamboo, hard woods, soft woods, reeds (other than sarkanda) or rags." 2) As per the aforesaid Notification, following conditions are to be satisfied in order to avail the benefit: (i) Manufacture of paper and paperboard or articles made therefrom should start from stage of pulp, in a factory, (ii) Such pulp should contain not less than 75% by weight of pulp made from materials other than bamboo, hard woods, soft woods, reeds (other than sarkanda) or rags. It, thus, specifies certain materials which are excluded from the Notification, meaning thereby, if the pulp is made from those specific materials, namely, bamboo hard woods, soft woods, reeds (other ....
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....to refer to the Notification 48/91-CE dated 25.07.1991 which held the field prior to issuance of Notification No. 22/94-CE with which are concerned. In this Notification No. 48/91-CE, concessional rate of duty was provided in respect of writing and printing paper falling under the heading No. 48.02 and uncoated kraft paper, falling under heading No. 48.04 of the First Schedule to the Central Excise Tariff Act, 1985 (for short, 'CETA, 1985') on certain conditions mentioned in the proviso contained in the said Notification which was to the following effect. "Provided that such paper contains not less than 75% by weight of pulp made from jute, jute waste (including hessian waste and old gunny bag waste), mesta, rice straw, wheat straw or bagasse or mixture thereof or mixture of two or more of the pulps of the aforementioned materials." The purpose of mentioning to the aforesaid Notification is to point out this Notification listed those materials, the use whereof to manufacture paper and paper products entitled the manufacturer to get the benefit of the Notification. Thus the requirement was to show that the pulp was made from any of the said materials or from the mixtur....
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....ct, 1944 (for short, "Act") and demand of differential central excise duty for the period from 01.04.1995 to 31.10.1999 was given. This show cause notice was followed by two more show cause notices dated 16.05.2000 and 13.03.2001 covering the period from November, 1999 to May, 2000. The assessee contested the stand taken by the Revenue in these show cause notices, taking the position that pulp made out of jute bags/gunny bags entitled the assessee to avail the benefit of the said Notification as the paper from the waste of jute bags was non-conventional method. In support, the assessee also gave material in the form of technical literature and expert opinion. Personal hearing was provided by the Commissioner of Central Excise, Visakhapatnam. Thereafter, the Commissioner passed Order-in-Original dated 02.05.2005 accepting the contention of the assessee and dropping all the three show cause notices. He also held that show cause notice dated 28.04.2000 is barred by limitation as well under Section 11A of the Act as the Revenue was not entitled to invoke the proviso to Section 11A and claim extended period of limitation. 7) A perusal of the order of the Commissioner would disclose t....
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....CE and the definition of rag in various judgments mentioned in para 26.A it conveys the meaning, in unambiguous terms, that old used gunny bags would not be equated with rags. 38. The show cause notice has gone to add that jute waste is not gunny bag waste and as the party has not mentioned in their record jute waste and not gunny bag waste, there has been suppression of information. So long as we hold that rags are not gunny bag waste and gunny bags are not excluded raw materials for the purpose of concession, it does not matter how the gunny bag is described in documents. The amendments to Central Excise Notification No. 48/91 dated 25.7.91 vide 30/93 shows unambiguously that Jute Waste shall include old gunny bag waste. Therefore, it still remains correct that gunny bag waste can be described as waste of jute products and in extension would be includible in Jute Waste. Therefore, there is no mis-declaration in raw material account. In addition, this description by itself would not prove the point of the show cause notice. As the basic premises on which the SCN stands is not available, other allegations of suppression and application of extended period and attraction under Sec....
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....ry of old gunny bags which is different from gunny bags showing only signs of wear. Thus a rag is one which is worn out, soiled and torn of a textile material. If that is the meaning of rags, there is no need to refer to any dictionary, glossary of terms used in paper and paper industry or S.B. Sarkar's Words and Phrases to find out the meaning of rags. The respondent uses torn, soiled etc. gunny bags to make pulp. Gunny bag is a textile material. We agree with the Revenue's contention that rags can be made of any textile material or textile articles and are not limited to pieces of cotton or articles made of cotton." 10) However, on the issue of limitation, the Tribunal has concurred with the order of the Commissioner and rejected the appeal of the Revenue to that extent. The net result is that the demand contained in show cause notice which pertained to the period from 01.04.1995 to 31.10.1999 is concerned, the same is treated as time barred. Insofar as learned counsel for the assessee is concerned, in his endeavour to demonstrate that waste of jute bags/gunny bags cannot be termed as 'rags' in the sense the term is used in the Notification, he laid great stres....
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....the concessional rate of excise duty inasmuch as the waste of gunny bags or jute bags would be called 'rags' in ordinary sense of the term. However, whether case can be decided with such simplistic overtones, is the question. We are of the view that the expression 'rags' appearing in the Notification has to be construed having regard to the attendant circumstances, the context in which the same is used in the said Notification as well as the purpose for which this term has appeared in the Notification. At the same time, it is also necessary to go behind the objective for which Notification itself is issued thereby giving it a purposive interpretation, which has become cardinal rule of interpretation. In our opinion, it is only after examining all these factors that the final decision should be arrived at. 13) Right from 1977, the Central Government prescribed concessional rates of excise duty for paper made from non-conventional raw material, subject to certain conditions. History of these Notifications, in brief, has already been traversed by us in the beginning. The purpose for issuing such Notifications is clear, namely, to encourage the manufacturers of the p....
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.... has always been clearly understood that jute or jute waste including old gunny bag waste is non-conventional material. Once that is accepted, could the intention behind Notification No. 22/1994-CE be to exclude this non-conventional material with the insertion of the word 'rags' in the 'Negative List'. It seems difficult to comprehend such a kind of outcome or situation. 16) With the aforesaid introduction, we reproduce the 'Negative List' of the materials specified in the Notification 22/94-CE. It mentions 'bamboo, hard woods, soft woods, reeds (other than Sarkanda) or rags'. What is intended by mentioning that pulp made from the aforesaid material would not entail benefit. Obviously, all other materials, namely, bamboo, hard woods, soft woods, and reeds are conventional raw materials. These are the materials which have direct bearing on cutting of trees and in turn on environment. Therefore, 'rags' has to be read ejusdem generis. It has to be the specie of the earlier kind of materials mentioned therein. Otherwise, it would not make any sense. Admittedly, jute waste or for that matter gunny bag waste have no adverse impact on environmen....
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....y weight of pulp in the manufacture of paper (with few exceptions) or paperboard. In other words, so long as the percentage by weight of pulp bamboo, hard woods, soft woods, reeds or rags is not more than 50%, the concessional rates of excise duty would apply." 19) Thus, all the above materials and the notifications clearly suggest that the Government itself distinguished between jute bags/gunny bags and rags and the exemption was being extended to paper made from old jute/gunny bags. 20) No doubt, such exemption Notifications call for strict interpretation. However, at the same time when the expression 'rags' is not defined in the Notification, it has to be assigned a particular meaning which defines the purpose for which such a Notification was issued giving by plain meaning, even when there is a total disconnect between the said meaning and the Notification, may lead to absurd results as it would exclude the non-conventional material in the form of waste from jute bags or gunny bags even when this very material was there in the 'Positive List' and qualified for exemption. This Court has held in the case of H.M.M Limited v. Collector of Central Excise, New D....
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....onventional sense, and it is the colour of these attributes which is taken by the other words used in the definition though their normal import may be much wider. We are not impressed by this argument. It must be borne in mind that noscitur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. It is only where the intention of the Legislature in associating wider words with words of narrower significance is doubtful, or otherwise not clear that the present rule of construction can be usefully applied. It can also be applied where the meaning of the words of wider import is doubtful; but, where the object of the Legislature in using wider words is clear and free of ambiguity, the rule of construction in question cannot be pressed into service." This principle has been applied in a number of contexts in judicial decisions where the Court is clear in its mind that the larger meaning of the word in question could not have been intended in the context in which it has been used. The cases are too numerous to need discussion here. I....
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....closer look at the wording of the proviso. If the proviso had referred only to 'coated paper', no special object or purpose would have been discernible and perhaps there would have been no justification to look beyond it and enter into a speculation as to why the notification should have thought of exempting only 'coated paper' manufactured by these factories from the purview of the exemption. But the notification excepts not one but a group of items. If the items mentioned in the group were totally dissimilar and it were impossible to see any common thread running through them again, it may be permissible to give the exceptions their widest latitude. But when four of them-undoubtedly, at least three of them-can be brought under an intelligible classification and it is also conceivable that the Government might well have thought that these small scale factories should not be eligible for the concession contemplated by the notification where they manufacture paper catering to industrial purposes, there is a purpose in the limitation prescribed and there is no reason why the rationally logical restriction should not be placed on the proviso based on this classificatio....