TMI Blog2005 (2) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... C and 11AB were also proposed. The Commissioner of Central Excise, Visakhapatnam, who adjudicated the dispute, held that the respondent before him is entitled for the benefit of the said notification. The Revenue is aggrieved by this order. Hence the appeal. 2. The Revenue is represented by learned Joint CDR, Ms. Shobha L. Chary, and the respondent by learned senior Advocate Shri R. Raghavan with Shri T.S. Subramaniam, Advocate. 3. The Joint CDR contend : (a) Old gunny bags are nothing but rags and pulp made out of the same should be considered as rag pulp; (b) Notification 30/93-C.E. dated 28-2-1993 exempts uncoated kraft paper from payment of duty provided such paper contains not less than 75% by weight of pulp made from jute, jute waster (including hessian waste and old gunny bag waste) whereas Notification 22/94 does not make any mention of jute waste, old gunny bags etc. and therefore the respondent is not entitled to the benefit of Notification 22/94 when they have admittedly used pulp of old gunny bag rags; (c) Gunny bags are textile materials and old gunny bags which are worn out are nothing but rags as per the description contained in Chapter Heading 63.10 of HSN; (d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier Notification 30/93 which has extended the benefit to paper made out of jute waste; (l) Gunny bags are made out of jute/hessian and the pieces cut out of them cannot be called rags; (m) CBEC Circular dated 28-2-1994 F.No. 333/33/93 clarified that the material other than bamboo, hardwood and softwood shall be treated as unconventional raw material for the purpose of granting exemption under Notification 22/94-C.E.; and (n) Notifications 8/96 and 4/97 have defined rags though in the context of rates of duties applicable to textile articles. Viewed from this definition, it is clear that old gunny bags are not rags and finally he submitted that the dispute started only with the introduction of Notification 22/94 and prior to that, paper manufactured out of jute waste was exempted from payment of duty. 5. The respondent further pleaded that there was no contravention of any Rule under the Central Excise Rules and therefore penalties under various Rules proposed are not imposable. 6. We have considered the rival contentions orally presented and the written submissions. 7. Coming to the core issue as to whether the old gunny bag waste is rag for the purpose of interpreting Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arances of paper from more than one factory of a manufacturer. I am now allowing this concession to be availed of by each factory separately." 8. The Commissioner relies only on a single sentence in this part of the Finance Minister's Speech, i.e. "I am enlarging the scope of the exemption currently available to paper mills using unconventional raw materials" to interpret that Notification 22/94 expands the scope of exemption from what has been allowed in 30/93. The reasoning of the Commissioner is faulty. The Finance Minister was only stating that he reduced the number of rates of duties insofar as paper is concerned and secondly he was expanding the scope of Notification 33/90 by allowing the exemption to be availed by each of the factories of a manufacturer instead of they being clubbed to determine the eligibility for the benefit of the notification. The Finance Minister's Speech does not say that Notification 22/94 expands the scope of raw material used in the manufacture of paper for the purpose of availing of exemption. The Commissioner was also wrong in interpreting the Budget Speech inasmuch as he does not take into consideration the fact that a duty at 10% ad valorem is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or new rags, scrap twine, cordage, raw and cables and worn out articles of twine, cordage raw or cables of textile materials. It is provided in the HSN that this heading covers :- (a) Rag of textile fabrics. Rags may consist of articles of furnishing or clothing or of other old textile articles so worn out has to be beyond cleaning or repairs or of small new cuttings; and (b) Scrap pieces of twine, cordage etc. and worn out articles of such materials. Thus it is clear that this heading covers worn, dirty or small pieces of textile material. They are generally fit only for recovery of the fibres. 10. The respondent's contention in view of the aforesaid HSN chapter headings and notes is two-fold. Since old gunny sacks and bags are excluded from 63.09, they were covered under Heading 63.05 and not under Heading 63.10 as rags. Secondly, CETA, 1985 does not have Heading 63.10. Heading 63.05 of HSN is pari materia with Heading 63.05 of CETA. Therefore, under CETA also old gunny sacks and bags cannot be considered as rags. Thus the term rags in Notification 22/94 does not cover old gunny bags, waste or jute waste. 11. We are unable to agree with this contention. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, old gunny bag waste cannot be called as rags. It is argued that the benefit of these notifications including the one under earlier Notification 22/94 and the subsequent Notification 5/98 cannot be denied. The Commissioner has accepted this contention. The Revenue in its appeal contended that fents, rags and chindis mentioned in Notification 8/96 relate to exemption of polyester fibre contained in such materials arising during the course of manufacturing process of goods, falling under Chapters 54 and 55 of CETA. Our attention in this regard has been drawn to entry at sr. no. 55.10 of Notification 8/96 dated 23-7-1996 and entry at sr. no. 118 of Notification 4/97. Both the entries relate to the exemption of polyester staple fibre wherein the term low priced fabrics, fents, rags and chindis has been used. It has been submitted that the meanings of these terms given in the explanation clause in the notification specifically relate only to the exemption of polyester fibre covered by entry at sr. no. 55.10 of Notification 8/96 and at sr. no. 118 of Notification 4/97. The exemption to paper in question in these two notifications is at sr. no. 48/19 and sr. no. 70 respectively. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion and misdeclaration. It is alleged that the respondent has used only gunny waste, i.e. old, used, torn gunny bags but declared it as jute waste in their Central Excise records. The respondent misdeclared the pulp manufactured out of the said material as jute waste pulp with the intention of availing of the concessional rate of duty under the relevant notifications. It is contended that the respondent ought to have declared the said pulp correctly as pulp of rags. In view of his finding that the gunny bag waste is not rags and gunny bags are not excluded raw material for the purpose of concession, the Commissioner held that it did not matter how the respondent described the raw material in the documents. The Commissioner further held that as the basic premises on which the show cause notice stands are not available, the allegation of suppression and invocation of extended period has to be rejected. He also dropped proceedings under Sections 11AB, 11AC and Rules 226 and 173Q. In the Revenue's appeal, there is no explicit challenge to the Commissioner's finding of dropping of these allegations. The Revenue has only contended that the Commissioner has erred in dropping the demand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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