TMI Blog1999 (3) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain goods for the purpose of availment of credit of duty under Modvat. In permitting the duty paid on the inputs to be utilised in its entirety in credit being taken, certain exceptions were made. Vide a proviso, the credit of duty on paper and paper board was restricted to Rs. 800/- PMT or the actual duty paid whichever was less. This restriction did not apply in the case of certain nominated varieties of paper and paper board. On this count there is no dispute in this appeal. It is admitted that the sub-headings shown as exception to the ceiling prescribed in the proviso are not those under which the inputs in the present case were cleared. 2. The Government issued certain executive instructions amplifying the scope of this provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -headings. She found that except for the wrappers falling under 4823.19, the other wrappers were classified under those sub-headings which covered articles on paper. In their case applying the provisions of Notification No. 177/86 as interpreted by the Circular dated 20-2-1991, she held that the Modvat credit was properly taken. As regards the wrappers falling under sub-heading 4823.19 she observed that the sub-heading covered paper and paper board and not articles of paper and therefore the credit was rightly restrictable to Rs. 800/-. She directed the Jurisdictional Assistant Collector to work out the quantum of duty wrongly availed of. She imposed penalty, of Rs. 10,000/- on the appellants. In the follow up proceedings the duty under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced when enclosed with the R.T.12 returns. These R.T. 12 returns were finally assessed during the entire period and therefore the charge of suppression of fact could not stand. 11. I have considered these submissions and I have also seen the chart showing details of the 7 show cause notices leading to the impugned order. The first show cause notice was issued on 29-7-1991 and thereafter two more show cause notices were issued on the same ground. The show cause notice dated 20-6-1992 covered a period prior to that covered in the earlier show cause notices. Apart from the fact that the department had knowledge of the alleged wrong practice adopted by the assessees, it is significant that the earliest show cause notice on this issue was dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stands alone as it is preceded by single digit much - . Reading the entry, it has to be taken that this last sub-heading represents the second part of the tariff entry namely other articles of paper pulp, paper, paperboard, cellulose wadding or webs of cellulose fibre . In other words sub-heading 4823.90 would cover articles and all the preceding sub-headings would cover only paper and paper board etc. although cut to size or shape. Therefore the goods classified under these sub-heading would not be covered under the benevolent aspect of the cited circular of the Board dated 20-2-1991. Conversely, such article would attract the limiting proviso in the cited Notification No. 177/86. 13. Ld. Advocate submits that nowhere in the order had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticles of paper then in the case of other sub-headings there was justification for acceptance of the fact that the goods were articles of paper even if the classification was shown under heading 4823.19. His claim that the recipient manufacturer is not hit by wrong classification is based on the judgment of the Tribunal in the case of Leader Engineering Works v. Collector of Central Excise - 1996 (83) E.L.T. 188 (Tribunal). I have seen the Judgment. The appellants in the case had declared the inputs as oxide of lead although the original manufacturer had described it as paints. I do not think that the ratio of the Judgment would apply because the Tribunal in the cited case was examining the adequacy of a declaration filed under Rule 57G. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no justification for imposition of a penalty of Rs. 10,000/-. I find this statement has force. The loss to the assessee has occurred because of the different classifications adopted by the different manufacturers. It could be that the correct classification in all cases should have been under heading 4823.19 and in no other heading. In that case the assessee would clearly have been shown to be in the wrong. But in a situation where considerable confusion existed in the minds of the manufacturers of the inputs, there was no justification for a penalty, especially in view of my finding that the extended period invoked could not sustain. The order of penalty are set aside. The appeals are thus partly allowed. - - TaxTMI - TMITax - C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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