FENOPLAST LTD. Vs. COMMISSIONER OF C. EX., HYDERABAD

JUDGEMENT

(1.) THE appellants are manufacturers of PVC leather cloth at their two factories, one situated at 1 DA Patanchere and the other at Nandigaun village. Unit I manufacture goods exclusively for home consumption while Unit II for export and supply to institutional buyers.

(2.) UNIT II had imported Release paper under DEEC scheme, against the exports made. Use of this Release Paper is essential in the manufacture of the products viz. PVC Leather Cloth, on both the Units. The officers working out on intelligence found certain quantity of Used Release Paper falling under Heading 47.02 of CETA, 1985 lying in the premises of Unit I, which was removed from Unit II without payment of duty and they caused further enquiries and notice was issued :

(3.) THE Commissioner, did not find the plea of partial use in Unit II and thereafter removal to Unit I and use there as Release Paper to be acceptable. He emphasized on that the same was used to the core, any further usage at that stage would have resulted in loss of quality of PVC leather cloth manufactured for export at Unit II. Therefore predominant use of the product was down stayed and what remained was waste product classifiable and liable to duty as such. He relied on Boards Circular No. 359/75/97 -CX, dt. 28 -11 -97, to conclude the USED RELEASE PAPER to be waste paper. He confirmed the demand of duty as made with a penalty of Rs. 29,18,330 under Rule 173Q along with interest at 20% under Section 11AB and dropped the proceedings as regards confiscation of plant and machinery as proposed on Unit II. In unit I he ordered the confiscation of the USED RELEASE PAPER under Rule 173Q and gave an option of redemption on a fine of Rs. 1 lakh and a penalty was imposed of Rs. 20,000/ - under Rule 173Q. A penalty of Rs. 20,000 was imposed on the Director under Rule 209A. The present appeals are against this order.