PITAMBER COATED PAPER LTD. Vs. CCE

JUDGEMENT

(1.) THIS appeal is at the instance of the assessee. The order impugned is passed by the Commissioner of Central Excise, Jaipur confirming the duty demand of Rs. 1, 06, 39, 037/ - under Section 11A of the Central Excise Act and imposed a penalty of Rs. 10 lakhs. The duty was confirmed on the ground that since the appellants are availing exemption on final product, namely, coated paper under dated 1.3.2001, they are liable t pay duty on uncoated paper.

(2.) THE appellants are engaged in the manufacture of coated and uncoated paper falling under Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985. Notification No. 3/2001 -CE grants exemption from payment of duty to paper and paper board or articles made therefrom upto the first clearance of an aggregate quantity of 3500 MTs in any financial year, subject t the condition that the pulp from which such paper is manufactured should have been made out of not less than 75% of non -conventional raw material. Admittedly the appellants satisfied the condition regarding required nature of raw material. It is also not disputed that the appellants are entitled t exemption under, Notification No. 3/2001 -CE on the first aggregated clearance of 3500 MTs in any financial year and that once the clearance exceeds 3500 MT, they are entitled to discharge duty liability on paper @ 16% ad valorem.

(3.) IT is contended on behalf of the appellant that the Commissioner has erred in treating uncoated paper subjected to coating, as a separate activity of manufacture. In support of the above contention reliance was placed on the decision of this Tribunal in CCE Aurangabad v. Shree Vindhya Paper Mills : 1988(35) ELT 361 (T). In the above decision it was observed that "in spite of the process of coating the papers remain printing and writing paper then I cannot be said that the processes have brought about a change in name character or use an if that be so no manufacture having taken place the two descriptions of paper would not attract Central Excise duty liability." On coating uncoated paper and article with different name commercially may have emerged but it is not a distinct article with different character or use. Therefore, no manufacturing process is involved while uncoated printing and writing paper is coated. It is, therefore, contended that no duty demand can be made at the uncoated stage. According to the appellants they are liable to pay duty at the stage at which coated paper is cleared from the factory. Reliance was also placed by the appellants on the decision of the Supreme Court in Sidhartha Tubes. v. CCE 2000(115) ELT 32(SC).