MAGNUM PAPERS LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) The appellants are engaged in the manufacture of printing/writing paper, duplex board, coated paper etc. falling under Chapter 48 of the Central Excise Tariff Schedule. They manufacture their products from waste paper purchased indigenously or imported. They are availing the credit of duty paid on various chemicals used in the manufacture of their final products.

(2.) The Commissioner of Central Excise disallowed Cenvat credit amounting to Rs. 65,69,795/ - to the appellants in respect of Caustic Soda Rakes, Soda Ash and Titanium Dioxide for the period August, 2000 to March, 2001. The denial of the credit was on the ground that 627 MTs of Caustic Soda/Flakes, 1282.225 MTs of Soda Ash and 311.675 MTs of Titanium Dioxide had not been used in the process of manufacture of final products. The Commissioner also demanded interest on the above amount and imposed penalty equal to duty, on the party. He also imposed a personal penalty of Rs. 10 lakhs on Shri Parveen Jain, the then Director of the Company. Appeal No. 2810/2002 is by the Company and Appeal No. 2811/2002 is by Shri Parveen Jain.

(3.) Examined the records and heard both the sides. Shri Pardeep Jain, Director of the appellant -company submitted that the entire demand was on the basis of the finding that the consumption of the chemicals, during the period of dispute, was in excess of the quantities consumed during the previous year 1999 -2000. The credit had been taken on the strength of valid duty -paying documents and the inputs were received in the factory and utilized in the manufacture of final products. The inputs were duly accounted for in RG 23 -A Parts I and II. These facts were not disputed by the Department. Shri Jain submitted that there was no input/output ratio for allowing the credit of duty paid on inputs under the Cenvat Scheme. What was required to be established was receipt of the inputs in the factory under cover of valid duty -paying documents and utilization of the goods in the manufacture of the final products cleared on payment of duty. The aforesaid quantities of Caustic Soda, Soda Ash and Titanium Dioxide had actually been utilized in the process of manufacture of final products. The Titanium Dioxide was used in the manufacture of coated paper. It was used for coating of paper to produce high quality and high priced paper products. The appellants had installed a coating plant in July, 2000 at a cost of Rs. 77.87 lakhs for the manufacture of coated paper and the Titanium Dioxide purchased during the period August, 2000 to March, 2001 was used in the manufacture of coated paper in this plant. This plant was not in existence during the previous period 1999 -2000 and hence the lower consumption for that period. It was further submitted that, during the subsequent period 2001 -2002. The appellants purchased and used a total quantity of 388.6 MTs of Titanium Dioxide. Therefore, the Commissioner's finding that 311.675 MTs of Titanium Dioxide (involving Cenvat credit of Rs. 37/96/944/ -) were not utilized in the manufacture of final product by reason of the said quantity being in excess of the quantity used in the previous year was not justifiable. Referring to denial of credit on Caustic Soda and Soda Ash, Shri Jain submitted that these goods were used for deinking and bleaching of waste paper (raw material) imported from UAE. During the period of dispute, the appellants had imported 333 MTs of waste paper from UAE and what was so imported was the waste of currency notes containing synthetic glue. Though the order placed with the UAE supplier was for good quality waste paper, what the appellants received was currency waste. The appellants later received compensation from the foreign supplier for the bad quality paper supplied. The appellants had to use larger quantities of caustic soda flakes and soda ash for the purpose of de -inking and bleaching of the poor quality waste paper from UAE. Soda ash (Sodium Carbonate) and Caustic Soda (Sodium Hydroxide) were chemicals which were used for the purpose of de -inking, bleaching, washing and pulping of waste paper. It was submitted that the technical literature produced by the appellants to prove this fact was not properly considered by the Commissioner. Reliance was placed on the Tribunal's decision in CCE v. Indapur SSK Ltd. [1999 (106) E.L.T. 118].