BALLARPUR INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The impugned order has demanded a duty of over Rs. 21 lakhs and has imposed an equal amount of penalty. Further, there is a demand for interest also on the duty not paid. The duty demands are in respect of alleged manufacture and clearances of paper waste/broke by the appellant paper mill. It is the appellant's contention that the duty demand is not tenable at all inasmuch as the items in question arose during the course of manufacture undertaken by M/s. Haryana Coated Paper Ltd., and not by the appellants. The appellants have explained that they were supplying map litho paper to M/s. Haryana Coated Paper Ltd., for the purpose of converting them to art paper. In accordance with the terms of the contract, M/s. Haryana Coated Paper Ltd., disposed of the waste paper arising during the conversion and made adjustments in the appellant's accounts to the extent of the price realized on such waste paper. During the hearing of the case, the learned Counsel for the appellants has explained with reference to the invoices covering the dispatch of map litho paper and the documents relating to paper waste and broke that the waste and broke are relatable to the conversion of paper carried out by M/s. Haryana Coated Paper Ltd. The learned Counsel has also brought to our notice the decision of this Tribunal in Sri Venkatesa Paper and Boards Ltd. and Ors. v. C.C.E., Trichy - 2000 (90) ECR 526 (T) that 'broke' is not liable to duty, as it is not marketable goods. He also pointed out that the Apex Court has dismissed the Revenue's appeal against that order.

(2.) We have perused the records and heard the learned DR also. Since the paper waste and scrap arose during the manufacturing activity carried out in another unit namely - M/s. Haryana Coated Paper Ltd., no duty demand could be raised against the appellants. It is also settled law that broke is not liable to central excise duty. In view of these, the impugned order is set aside and the appeal is allowed.