TMI Blog2003 (9) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Excise Act and imposed a penalty of Rs. 10 lakhs. The duty was confirmed on the ground that since the appellants are availing exemption on final product, namely, coated paper under Notification No. 3/2001-C.E., dated 1-3-2001, they are liable to pay duty on uncoated paper. 2. The appellants are engaged in the manufacture of coated and uncoated paper falling under Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985. Notification No. 3/2001-C.E. grants exemption from payment of duty to paper and paperboard or articles made therefrom upto the first clearance of an aggregate quantity of 3500 MTs in any financial year, subject to the condition that the pulp from which such paper is manufactured should have been mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper in the manufacture of coated paper. It was also contended that the exemption Notification No. 3/2001-C.E. does not treat coated or uncoated paper differently. The Commissioner was not inclined to accept the contention raised by the assessee. Duty demand was, therefore, confirmed under the impugned order. 4. It is contended on behalf of the appellant that the Commissioner has erred in treating uncoated paper subjected to coating as a separate activity of manufacture. In support of the above contention reliance was placed on the decision of this Tribunal in CCE, Aurangabad v. Shree Vindhya Paper Mills - 1988 (35) E.L.T. 361 (T). In the above decision it was observed that in spite of the process of coating the papers remain printing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting to manufacture as envisaged by Section 2(f) of the Central Excise Act. 6. After hearing both sides we are of the view that the appellants are justified in contending that the process of coating of the uncoated paper would not amount to a manufacturing process. No different commodity emerges after the coating having distinct features, name, use and character. The coated paper continuous to be paper for printing and writing. The ratio of the decision of this Tribunal in CCE v. Shree Vindhya Paper Mills is directly applicable in the present case. The view taken by the Commissioner in the impugned order that the assessee is manufacturing two products, namely, uncoated paper and coated paper cannot be accepted. Uncoated paper emerges at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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