PADMAVATHY PANEL BOARDS Vs. COMMISSIONER OF CENTRAL

JUDGEMENT

(1.) The appellant is Registered Small Scale Industry. The Registration to manufacture Machinery for Industrial purpose i.e. for manufacture of 'Rice Husk Boards' was obtained. Further no declaration for manufacture of 'Rice Husk Boards' was made by them as they did not find that this product to be figuring in any of the Chapters of Central Excise Tariff. It was assumed by them as non -excisable. Since they had exceeded turn over of Rs. 30 lakhs vide their letter dated 5.9.94 they sought clarification from the A.C. of Bangalore -III Division regarding the excisability of the said 'Boards'. The A.C. vide letter dated 29.12.94 informed them that the said 'Boards' are classifiable under Ch. Heading 44.06 of the Central Excise Tariff Act, 1985 and are leviable to duty. On 19.8.95, they received a Show Cause Notice dated 26.7.95 demanding duty of Rs 40,754/ - for the clearance affected from 1.4.93 to 31.3.94, under Rule 9 (2) of the Central Excise Rules, 1944 read with Proviso to section 11A of the Central Excise and Salt Act, 1994 and also proposing as to why a penalty under Rule 173 Q (1) of the Central Excise Rules should not be imposed on them as it was observed that the sales turn over after considering the turn over of 'Rice Husk Boards' during the year 1993 -94 was Rs 41.74 lakhs which had exceeded the exemption limit prescribed in Notification No 1/93 dated 28.2.93 for Small Scale Units.

(2.) The assessee were manufacturing different types of Boards viz. (1) Plain Husk Board, (2) Plain Husk Board (Smooth), (3) Veneerd Board, (4) Jute Fabric Natural Board, (5) Jute Fabric Brown and (6) Bamboo Mat Decorative Board. The process of the manufacture is that Rice Husk is winned or wind shifted to remove dust, paddy and grain, if any. The cleaned and dried Husk particles are fed to adhesive applicator where the glue mix is sprayed maintaining a pre -determined weight ratio between glue mix and particles. After the completion of this blending, the material is conveyed to the mat forming area, where it is hot pressed by an automatic process. The 'Boards', now emerging after processing, are separated from cauls and then manually removed from the unloader and kept in a vertical position for cooling. After cooling they are sanded and trimmed by simple but efficient double dimension saw. The resin/glue content in the board manufactured by them does not exceed 12% by weight of the Board. The inputs used for different types of Boards are Rice Husk, Cardenol and Phenol. The appellant was also found to be manufacturing the requisite glue/resin within the factory. The main raw material used in the manufacturing the glue/resin are Phenol, Paraformaldehyde, Cardenol and Caustic Soda.

(3.) The General Manger of the appellant, in a statement recorded on 30.12.94 admitted that the 'Rice Husk Boards' to be value added material made from agro waste and a substitute for solid wood used for partition, false ceiling, etc. marketed in the brand name of 'DURAPAN' in different sizes and thickness. They also manufactured Bamboo overlay, Jute overlay and Veneer overlay boards. It was also admitted, that 'Rice Husk Boards' were being marketed as 'DURAPAN' phenol bonded particle board and they had not informed the department till 5.9.94 and they had obtained Registration from the Tumkur Range I only for the 'Rice Husk Board Machinery as they assumed that their product "Rice Husk Boards' was not excisable.