TMI Blog2018 (2) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 - Dated:- 16-1-2018 - Mr. Anil Choudhary, Member ( Judicial ) And Mr. C.J. Mathew, Member ( Technical ) Shri Prithviraj Choudhari, C.A., for appellant Shri S.V. Nair, Superintendent (AR), for respondent ORDER Per : Anil Choudhary The appellant, M/s. Malu Paper Mills Ltd., is a registered manufacturer of newsprint under Chapter Heading 4801 of the Central Excise Tariff Act, 1985 attracting nil rate of duty. The appellant-assessee imported waste paper falling under Chapter Heading 4707 of the Customs Tariff Act and cleared the same at concessional rate of duty by availing exemption as provided vide serial No. 152-B of Notification No.21/2002-Cus. dated 1.3.2002 for use in the manufacture of newsprint. Based on intelligence that the appellant was misusing the benefit of the exemption notification as amended by Notification No.66/2004-Cus. (serial No.152-B) by using the imported waste paper in the manufacture of paper other than newsprint, a team of officers visited the manufacturing unit situated at Nagpur on 16th November 2007 and conducted enquiry/investigation. 2. The relevant notification and the entries are quoted herein below for ready reference: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Deputy Commissioner or Assistant Commissioner may allow, a certificate issued by the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, in whose jurisdiction the said goods have been used in such unit, that the said goods have been so used. 3. During the relevant period, the waste paper imported by the appellant was cleared by claiming the benefit of exemption under entry at serial No.152-B of Notification No.21/2002-Cus. on payment of basic customs duty (BCD) of 5% adv. and by claiming nil rate of additional customs duty. The imported paper was brought to the factory and ustilised in the manufacture of newsprint. The appellant had also executed before the Assistant/Deputy Commissioner of Customs an undertaking to the effect that the imported goods would be used for the specified purpose, along with a bond. After consuming the imported waste paper in the manufacture of newsprint, the appellant had furnished before the Deputy Commissioner all the documents necessary so as to enable him to issue the end use certificate in terms of condition No.20(B) appended to the said notification. After due verification, the Deputy Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d analysis of consumption of indigenous and imported waste paper therefrom, it was seen that during the period 9.7.2004 to October 2007, the appellant had consumed 1095.519 MT of imported waste paper in the manufacture and clearance of paper other than newsprint and more fully Annexure B to the show cause notice. This analysis of consumption of raw material revealed that the appellant had consumed imported waste paper in some months to the extent of 60 to 100%, contrary to their claim that the imported waste paper was consumed to the extent of 40%. Thus it appeared that the appellant had failed to fulfil the conditions as laid down under Notification 21/2002-Cus. as amended inasmuch as the imported waste paper had not been utilized fully in the manufacture of newsprint. Thus they also violated the terms and conditions of the undertaking submitted by them for availment of concessional duty. The tariff rate during the relevant period was 15%, 12.5% and 10% adv. It further appeared that the appellant had suppressed the fact of non-utilisation of part of the imported waste paper in manufacturing of other paper from the department while obtaining the end use certificate from the jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 389/-). As regards confiscation of the imported waste paper, the appellant has contended that the same was not liable to be confiscated for alleged violation of post import condition. It was also submitted that the calculation of duty payable in the show cause notice by applying the tariff rate is ex facie illegal and unsustainable in law. The entry at serial No.152-A of the Notification 21/2002-Cus. also grants concessional rate of BCD of 5% adv. (as is applicable to the entry at serial No.152-B). If the waste paper is used or supplied to a unit for manufacture of paper or paper board other than newsprint, the only difference between the rates of duty under the aforesaid entries is that why under entry 152, CVD is not payable, the same is payable under entry at 152-A. The show cause notice admits that the quantity of only 1095.518 MT was used in manufacturing of paper or paper board other than newsprint. This being so, the only duty liable to be demanded is the CVD which becomes payable by applying the exemption entry at serial No.152-A of the said notification. It is settled proposition of law that if there are two entries applicable to same goods and if the benefit of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h regard to the CVD payable. While CVD was payable for waste paper use in the manufacture of paper other than newsprint, it was totally exempt for waste paper used in the manufacture of newsprint. Thus the learned Commissioner has misconceived the provisions of the said notification and committed error in not allowing the benefit of the entry at clause A of 152, only on the ground that the condition of clause B was violated by the appellant by using a particular quantity of the imported waste paper for manufacture of paper other than newsprint. Under the facts that the appellant has allegedly violated the condition of clause B, such violation would justify demand only of CVD and could not be a ground to charge BCD at tariff rate since there was an alternative entry as mentioned hereinabove. The learned counsel further states that the alleged diversion of imported waste paper is only about 10% of the total waste paper imported. Thus there is no active violation on their part and there has been substantial compliance. Further, as the appellant had paid the differential duty at the time of inspection and before the show cause notice, the whole proceedings are vitiated and bad. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X
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