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TMI Blog2006 (8) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... whole of duty of excise. The case of the department is that the appellants do not fulfill the condition that the paper manufactured by them contained mechanical wood pulp amounting to not less than 50% of fibre content. Hence, they would not be entitled for the benefit of the Notification. On the other hand, it is the contention of the appellants that they are manufacturing Newsprint from out of 70% chemic-mechanical wood pulp and 30% sulphate chemical pulp. According to the appellants, chemi-mechanical wood pulp is just another variation of mechanical wood pulp. If this is accepted, the appellants would be fulfilling the conditions of the Notification. While denying the benefit of the Notification, the Commissioner (Appeals) has relied on the order of CEGAT in the party's own case for an earlier period in Final Order No. 970/99(C) dated 30-9-1999, 2003 (162) E.L.T. 1125. The appellants challenged the above mentioned Final Order of the CEGAT before the Apex Court and the Apex Court in Civil Appeal No. 2245/2000, dated 17-3-2005 [2005 (186) E.L.T. A77 (S.C.)] passed the following order: ORDER "Mr. Joseph Vellapally, learned senior Counsel appearing for the Appellants states that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pages 87 to 91 and 108 from hand book "Casey's reports on Pulp and Paper Industry" by Mr. James P. Casey a leading authority in Pulp and Paper Making in the world. (f) Copy of pages No. 195 and 196 from the Hand Book on Pulp and Paper Technology by Mr. Kenneth W. Britt. (g) Mechanical wood pulp is of various kinds. Chemi Mechanical pulp is also mechanical Wood pulp vide hand book for Pulp & Paper Technologists (by G.A. Smook). (v) The CEGAT, in its order, gave no specific findings with regard to the above mentioned documents but only relied on the Board's Circular dated 12-9-1990. (vi) The CEGAT has also not considered the process of manufacture. (vii) The learned Advocates strenuously argued that Chemi Mechanical Wood Pulp should also be treated as Mechanical Wood Pulp and the benefit of the exemption Notification should be given to the appellants. 5. The learned SDR urged the following submissions :- (i) Prior to 1-3-1986, all Wood Pulps were classifiable under Tariff Entry No. 17(3) of the old tariff. The CE Tariff, 1985 was effective from 1-3-1986. The new tariff provided for different classification of wood pulps falling under Chapter 47. Chapter 4701 covered Mecha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17-3-2005 [2005 (186) E.L.T. A77 (S.C.)] in the party's own case was consequent to the withdrawal of the appeal by the appellant since there was no duty demand sustainable in terms of the Tribunal's judgment appealed against. The Tribunal found that there was no suppression of facts to invoke the extended period of limitation. This order of the Apex Court is to be construed as a case of dismissal without going into the merits and not as a dismissal of the Tribunal's decision as urged by the learned Counsel for the appellant during the hearing on 22-6-2006 before the Bench. (vii) The test report which is specific to a consignment or batch cannot be made applicable to past or future consignments. In this regard, he relied on the following judgments :- (a) CCE, Mumbai-I v. Fibrotex - 2000 (124) E.L.T. 702 (T) affirmed by Supreme Court as reported in 2004 (166) E.L.T. 435 (S.C.) (b) Prakash Cotton Mills Pvt. Ltd. v. CCE - 1995 (78) E.L.T. 65 (T) (c) Punjab Fibres Ltd. v. CCE, Delhi - 2002 (141) E.L.T. 819 (T) 6. The main issue before us is whether the benefit of exemption Notification No. 163/67, dated 21-7-1967, as amended, can be extended to the paper manufactured by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds that as per the old Tariff, the appellant satisfied the condition of the Notification. But, in terms of the new Tariff, they do not satisfy the condition of the same Notification. Is there any change in the Notification itself? No change, excepting in the amended Notification, there is a reference to Chapter 48 of the New Tariff because Paper falls under that Chapter. 6.2 In order to decide the entitlement to the benefit of the Notification, the approach of the Revenue is to go by the Tariff classification. Revenue's logic is as follows :- 6.3 The appellant produced Pulp by chemi-mechanical process. Chemi-mechanical process is only a variation of mechanical process. In the old tariff, there was no mention of the different variations of mechanical pulp. Therefore, the benefit was extended even to chemi-mechanical pulp. However, in the new Tariff, after 28-2-1986, there is specific mention of mechanical wood pulp, chemical wood pulp and semi-chemical wood pulp, all classifiable under CSH 4701.00. In these circumstances, Revenue contends that the expression mechanical wood pulp in the Notification should not be extended to chemi-mechanical wood pulp for the reason that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who certified that the paper contained not less than 50% of mechanical wood pulp by fibre content, it was decided that chemi-mechanical pulping and chemi-thermo mechanical pulping are only variations of mechanical pulping and the pulp so obtained would be covered by the expression 'Mechanical wood Pulp' occuring in exemption Notification No. 163/67, dated 21-7-1967. Accordingly, for the period prior to 28-2-1986 wood pulp obtained by the chemi-mechanical and chemi-thermo mechanical pulping processes would be appropriately regarded as mechanical wood pulp and the benefit of exemption Notification No. 163/67 can not be denied by treating the pulp as other than mechanical wood pulp. 3. As regards the position under the new Tariff, it was viewed that since the Tariff specifically mentions mechanical wood pulp, chemical wood pulp and semi-chemical wood pulp, the expression mechanical wood pulp in Notification No. 163/67 should be interpreted in accordance with the Tariff. Therefore, after 28-2-1986 mechanical wood pulp in Notification No. 163/67 would refer to only such mechanical wood pulp as is covered under Heading 4701 HSN. Chemi-mechanical pulp and chemi-thermo mechanical pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... combination of the two. Mechanical pulp was conventionally made by grinding wood logs. Initially, only softwood was used for producing mechanical pulp. Mechanical pulp is mainly used for the production of Newsprint. The pulp produced just by grinding the logs was very weak, which was not suitable for high speed machines for printing. Hence, improvement in processing became a necessity. The use of hard wood for the production of pulp was also investigated. In due course, the following mechanical pulping processes evolved. (a) Refiner mechanical pulping (RMP) (b) Chemi-refiner mechanical pulping (CRMP) (c) Chemi-mechanical pulping (CMP) (d) Thermo-mechanical pulping (TMP) (e) Chemithermo-mechanical pulping (CTMP) In mechanical pulping, the use of chemicals is common. Hardwood chips are invariably treated with chemicals like alkali so that the binding material in the wood is softened and the subsequent mechanical treatment will reduce the damage to the fibres. It is seen that acceptable mechanical pulp cannot be produced from hard wood without the use of chemicals. The appellants have stated that in their unit, hard wood like Eucalyptus, Accacia, Wattle, etc. are used. The wood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss (SWG); - Pressurised Ground Wood Process (PWG); - Chemi Ground Wood Process (CGW); - Fine Ground Wood Process (FGW); - Refiner Mechanical Pulping (RMP) - Chemi Refiner Mechanical Pulping (CRMP); - Chemi Mechanical Pulping (CMP); - Semi Chemical Pulping (SCP); - Thermo Mechanical Puiping (TMP); - Chemi Themo Mechanical Pulping (CTMP). All these processes are variations of mechanical pulping. They yield pulps which exhibit properties of conventional mechanical pulp and are, therefore used for manufacture of newsprint and magazine grades. They all come under the general term "Mechanical Pulp". Thus the "CMP Pulp" of Hindustan Newsprint Ltd. (HNL) is a mechanical pulp (emphasis supplied) as it is manufactured by grinding in refiners (mechanical process). 6.8 We are also reproducing the test result of the sample of the paper done by the Chemical Examiner. "The sample contains mechanical wood pulp amounting to not less than 50% by weight of the total fibre content." 6.9 In view of the above discussion, taking into account the expert opinion as well as the test results, we are convinced that the pulp produced by the appellant is a mechanical pulp. 6.10 Ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 99/81-Cus., dated 1-4-1981. The first Notification covers, inter alia, 'rubber tyres and tubes used exclusively for aeroplanes.' However, the second Notification gives exemption to 'aeroplane spare parts', when imported into India for the servicing of aeroplanes, from Customs duty. When aeroplane tyres were imported, Revenue denied the benefit of exemption notification to the aeroplane tyres because it held that the tyres and tubes of aeroplanes would fall under Tariff items different from those of aeroplane spare parts. The CEGAT would not agree. The tyres were given the benefit of the exemption Notification 99/81. In the above decision, the CEGAT made the following observations :- "When an article is covered by an exemption notification, it is given the exemption. The words are given a meaning to cover what they can legitimately cover. The distinction must be not between a wide coverage and a narrow coverage but between a coverage that the meaning of the words can yield and one that it does not. If the words yield a meaning, it would be a mistake to say that wide coverage is being given simply because it does not appeal to one. It is not a question of wide coverage so much as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echanical Pulps tend to turn yellow in kind because of the binding material, lignin, in the pulp. From the above process, we understand that in the Pulp produced by mechanical process, there is always presence of lignin, which is not there in the chemical pulp. It is seen that the effect of heat and chemicals dissolves the lignin that binds the cellulose fibre together without breaking the wood fibres. Chemical Pulp is used for materials that need to be stronger or combined with mechanical Pulps to give a product with different characteristics. The Central Pulp & Paper Research Institute, in their opinion, has categorized the Chemi-Mechanical Pulping (CMP) process employed by the appellants as a variation of Mechanical Pulping. They have also given the reasoning that the CMP of the appellant is manufactured by grinding in refiners (a mechanical process). 6.15 We have gone through some extracts of the Handbook for Pulp & Paper Technologies prepared under the direction of the Joint Text Book Committee of the Paper Industry. This publication gives the history of various pulping processes. In page 17 of the Publication, the characteristics of major pulping processes are given. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echanical Pulp in the Industry, we do not want to go into this question now. The most important point is that the test results revealed that the paper was manufactured from pulp containing not more than 50% of mechanical wood pulp. This also clinches the issue. This position cannot change just because of the change in Tariff. 7. In summing up, we hold that the Chemi-Mechanical Pulp manufactured by the appellant is nothing but a variation of the Mechanical Pulp in the light of the test results and the expert opinion of the Central Pulp & Paper Research Institute. In view of the above, we do not agree with the views expressed in Board's Circular para 3 to deny the benefit of exemption to the appellant who used more than 70% of chemi mechanical pulp in the manufacture of paper. We hold that the appellants are rightly entitled to the benefit of the exemption Notification. Assuming but not admitting that the Chemi-mechanical pulp manufactured by the appellants would be classified as Semi-chemical mechanical pulp, still we hold that the expression Mechanical Wood Pulp appearing in the Notification should be given a meaning which would cover all the variations of mechanical wood pul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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