NEPA LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) M /s. NEPA Ltd. have filed this appeal against the Order, dated 1 -5 -1997 passed by Commissioner, Central Excise demanding Central Excise Duty amounting to Rs. 12.37 crores on paper for the period from 1 -3 -1986 to 22 -2 -1988 denying the benefit of Notification No. 163/67, dated 21 -7 -1967.

(2.) SHRI M. Chandrasekharan, learned Senior Advocate, submitted that on merit the issue has been decided by the Appellate Tribunal against the Appellants in the case of Hindustan Newprint Ltd. v. C.C.E. Cochin, Final Order No. 970/99 -C, dated 30 -9 -1999 denying the benefit of Notification No. 163/67, as amended, since the newsprint manufactured by them did not contain mechanical wood pulp amounting to not less than 50% of the fibre content. He, submitted that the entire demand is hit by time limit specified in section 11A of the Central Excise Act; that the show cause notice was issued to the Appellants on 21 -9 -1989 for demanding the duty for the period from 1 -3 -1986 to 29 -2 -1988; that initially the newsprint manufactured by them compraised of 60% mechanical wood pulp and 40% Chemical Pulp; that in or around 1977 -78, they adopted a better technology for manufacture of refined machanical wood pulp by using cold soda refining mechanical wood pulp process; that the composition of the newsprint became 1/3 mechanical wood pulp and l/3rd Cold Soda mechanical wood pulp; that by letter, dated 17 -6 -1978, Inspector of Central Excise raised the doubt that as the mechanical process pulp was only 42% to 45%, the benefit of Notification was not available to the Appellants; that they, in their reply, dated 7 -2 -1979, categorically stated that cold soda pulp was a variation of mechanical wood pulp and since the combination of two exceded 50%, they were eligible to the exemption under Notification No. 163/67; that this was accepted by the Department as no doubt was further raised while finally approving the classification lists and RT 12 -Returns. The learned Senior Counsel, therefore, contended that there was no suppression of fact in as much as the Department was fully aware of the composition of the pulp of the Appellants; that the Collector under Order, dated 8 -10 -1991, while adjudicating the show cause notice, dated 5 -1 -1990, held that cold soda pulp was nothing but mechanical wood pulp and that if the sum total of the two exceeded 50% of the total fibre content the appellants would be entitled to the exemption. The learned Senior Counsel, therefore, concluded that the fact that the Tariff had undergone a change on 1 -3 -1986 would not entitle the Department to allege suppression or wilful misstatement as the facts on the basis of which the demand was sought to be sustained were within the knowledge of the Department since long and he relied upon the decisions of the Apex Court in the case of C.C.E. v. Chemphar Drugs and Liniments - 1989 (40) E.L.T. 276 (SC) and C.C.E. v. H.M.M. Ltd. - 1995 (76) E.L.T. 97 (S.C.). The Learned Senior Counsel also mentioned that in Hindustan News Print case, Supra, also the Tribunal set aside the demand being time barred.

(3.) COUNTERING the arguments, Shri K. Srivastava, learned SDR, reiterated the findings of the Commissioner to the effect that in reply to Inspector's letter, dated 17 -6 -1978, the Appellants had clarified that the cold soda pulp was an improved variety of mechanical wood pulp whearas in fact such pulp is entirely different from machanical wood pulp and thus they have misdeclared that cold soda pulp was a machanical wood pulp and that in classification lists they had misdeclared that paper manufactured by them contained not less than 50% mechanical wood pulp whereas in fact such pulp was used between 30% to 39% only as per the stock preparation report. The learned SDR, distinguished the facts available in Hindustan Newsprint case from the facts in the present mater by submitting that there was no Communication from the side of the Appellants to the Department indicating the process of manufacture and or percentage of various types of pulp during or near about the period of dispute (1 -3 -1986 to 29 -2 -1988); that letter, dated 17 -6 -1978 was much in time before the disputed period to warrant an inference of full disclosure. He also submitted that the stock preparation reports giving the percentage of the different grades of pulp were supplied by the Party to the Department after repeated reminders and this fact was admitted by Shri N.V. Subramaniam, Secretary, NEPA, in his statement, dated 26 -6 -1989. He thus, contended that the extended period of limitation is correctly invokable in the present matter.