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Judgment
Ramesh Nair, Member (J)
The brief facts of the case are that the appellants are engaged in the manufacture of news print reels, writing and printing paper falling under sub heading 48010090 and 4802990 of Central Excise Tariff Act, 1985. The appellants manufacture newsprint specified under Schedule of Newsprint Control Order, 2004. The appellants generally supplied news print to certificate holders who are publishers of newspapers registered by the Registrar of Newspaper for India under the provisions of Press and Registration of Books Act, 1867. Thus, when the paper is intended for printing of newspapers and supplied against purchase order placed for the appellant by the newspaper which is registered by Registrar of Newspaper for India (RNI) under the provisions of Press and Registration of Books Act, 1867. The same is classified by the appellant under heading 4801 as newsprint chargeable to nil rate of duty as the tariff rate itself is nil in terms of Notification No. 23/1998-CE dated 01.08.1998 as amended issued in terms of chapter note 4 to chapter 48 for this purpose. In the month of October, 2008, the appellant requested their jurisdictional officer to grant permission to store newsprint outside the factory due to shortage of space. For this purpose the appellant identified a place to store their finished goods namely newsprint within the jurisdiction of Commissioner Surat- II. They subsequently requested the Learned Commissioner vide letter dated 05.11.2008 for transfer of newsprint to specified godown/depot, the learned commissioner informed that the appellants are permitted to transfer the goods outside the godown/depot on payment of duty and cess at applicable rate. The appellant also executed a necessary bond with the jurisdictional Assistant Commissioner of Central Excise and Customs for transfer of newsprint to godown situated at M/s. Bhavesh Prints Pvt Ltd 810/3 GIDC, Sachin District – Surat. The said bond was accepted by the Assistant Commissioner and accordingly the clearance of newsprint was made to said godown referred to above.
1.1 The appellant cleared 6182.799 MT newsprint reels by showing depot transfer on payment of paper cess at the rate of 0.125%, education cess @ 2% and Higher and Secondary Education Cess @ of 1%. The said clearance on payment of cess was clearly indicated in their monthly ER-1 return. On verification of monthly ER-1 return proceedings were initiated against the appellant to demand excise duty on the quantity of newsprint reel cleared by the appellants to the depot during the period from November, 2008 to June, 2009. Thereafter, the show cause notice dated 08.12.2019 came to be issued to deny the benefit of Notification No. 23/1998-CE dated 01.08.1998 to the appellant on the grounds that the condition of the said notification are not fulfilled in as much as the goods cleared by the appellant can be treated as newsprint only when the same were supplied against the purchased order placed on the appellant by newspaper which is registered by the Registrar of Newspaper for India. According to the show cause notice since the goods were cleared to the depot and at the time of removal from the factory to the depot, the same was not supplied against the purchase order placed upon the appellant by the newspaper registered under Registrar of Newspaper for India, the goods cannot be classified as newsprint under heading 4801. Therefore, the nil rate applicable to newsprint cannot be extended. The adjudicating authority vide impugned order has confirmed the demand of Rs. 1,62,39,230/- and imposed penalty of Rs. 1,62,39,230/- under Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. Being aggrieved by the Order–In-Original, the appellant filed the present appeal.
Shri Anand Nainawati, Learned Counsel appearing on behalf of the Appellant submits that Chapter Note 4 to Chapter 48 defines the newsprint means newsprint as defined by the Central Government by notification published in the official gazette. The relevant Notification No. 23/1998 –CE dated 01.08.1998 issued in terms of Chapter Note 4 to Chapter 48 which defined the newsprint. It is not in dispute that the entire quantity of 6182.799 MT of newsprint reels cleared by the appellants during November, 2008 to January, 2009 to their depot/godown was ultimately cleared against the purchase orders placed upon the appellant by newspapers which are registered by the Registrar of Newspaper for India. Thus, the goods in question which are subject matter of dispute satisfy the requirement of the notification to be called as newsprint and chargeable to nil rate of duty as per the chapter heading 4801.
2.1 It is not the case of the department in the show cause notice that the goods are not intended for printing of newspapers. As per the condition of the notification, the subject goods should be manufactured by the manufacturer of newsprint under Schedule of Newsprint Control Order, 2004 which is not in dispute. The only reason to deny the benefit is that clause of the second condition of the notification i.e. supply against the purchase order which is very technical in nature. He submits that against the purchase order the goods should be supplied as such goods i.e. paper manufactured by the appellant to the newspaper. On this fact there is no dispute that from the depot/godown goods were ultimately cleared to the newspaper only. Therefore, all the conditions stand fulfilled to be eligible for nil rate of duty under Chapter 4801 read with Notification No. 23/1998-CE. In support of his submission, he placed reliance on the tribunal’s decision in the case of Sri Venkatesa Paper and Boards Ltd vs. Commissioner of Central Excise, Madurai – 2008 (231) ELT 459 (Tri.- Chennai).
2.2 He further submits that assuming without admitting the said goods in question are not newsprint of Chapter 4801, however, the department has not suggested any alternative classification so as to demand excise duty in absence of classification of product, demand of duty is not sustainable.
2.3 He also submits that there is no suppression or mis-statement of fact and also there is no contravention of any provisions of Central Excise Rules. The entire case is made out on the basis of scrutiny of ER-1 return also the show cause notice has been issued within the period of 1 year and therefore element of suppression of fact cannot be sustained. On this ground alone, the penalty is liable to be set aside.
Shri Ajay Kumar Samota, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order.
We have carefully considered the submission made by both sides and perused the records. We find that the adjudicating authority confirmed the demand in the impugned order on the following grounds:-
(a) The compliance of the conditions of the notification is mandatory.
(b) That the Appellants have not complied with the conditions of Notification No. 23/1998-CE dated 01.08.1998 as the appellants have cleared the good to the unregistered depots which cannot be defined as “place of removal” and therefore transfer of finished goods to such unregistered premises cannot be called as “Depot” transfer.
(c) That the finished goods have not been cleared against purchase order as required under the Notification.
4.1 We find that the goods manufactured by the appellants are undisputedly newsprint as per Notification No. 23/1998-CE dated 01.08.1998. The relevant portion of this notification is reproduced below:-
“ In exercise of the powers conferred by Note 3 to Chapter 48 of the Schedule to the Central Excise Act, 1985 (5 of 1986), the Central Government, hereby defines ‘newsprint’ for the purpose of the said Chapter 48, as paper of a kind:-
(a) intended for the printing of newspapers; and
(b) Manufactured by a manufacturer of newsprint specified under Schedule of the Newsprint Control Order, 2004 and supplied against a purchase order placed upon such manufacture by a newspaper which is registered by the Registrar of Newspaper for India under the provisions of the Press and Registration of Books Act, 1867 (25 of 1867)”
4.2 There is no dispute that the newsprint manufactured by the appellant is intended for printing of newspapers for the reason that the entire quantity lying in the godown were supplied to the newspapers only, therefore, the condition (a) clearly stands satisfied. As regard the clause (b) of the notification there is no dispute that the appellants are manufacturer of the newsprint specified under schedule of Newsprint Control Order, 2004.
4.3 As regard second limb of the clause (b) that it should be supplied against the purchase order placed upon the such manufacturer by newspaper which is registered by the Registrar of Newspaper for India under the provision of Press and Registration of Books Act, 1867, We find that from the godown of the appellant, the newsprint was supplied by the appellant against the purchase order which was placed by the manufacturer of the newspaper and the said newspaper is registered by the Registrar of Newspaper for India under the provision of Press and Registration of Books Act, 1867 which is not under dispute. The only dispute raised by the revenue is that at the time of removal of goods from the factory it was not removed against the purchase order but since the same goods were sold from godown against the purchase order as prescribed under clause (b) of the Notification, the condition at clause (b) stands satisfied.
4.4 We find that the first requirement is that the subject goods must be intended for newspapers. It is not the case of the department in the show cause notice that the goods are not intended for printing of newspapers. The second condition may be read as under:-
“Manufactured by a manufacturer of newsprint specified under Schedule of the Newsprint Control Order, 2004 and supplied against a purchase order placed upon such manufacturer by a newspaper which is registered by the Registrar of Newspaper for India under the provisions of the Press and Registration of Books Act, 1867 (25 of 1867)” i.e. is to say subject goods should be manufactured by the manufacturer of newsprint under Schedule of Newsprint Control Order, 2004. The fact that the appellants are such a manufacturer is not in dispute. The paper cleared from the factory to godown has ultimately been removed to newspaper, the nature of goods when removed was newsprint. Merely because at the intermediate such goods were stored outside the factory, nature of goods will not go under change, therefore, in our considered view the benefit of notification cannot be denied in the facts of the present case.
4.5 In our view all the conditions of chapter heading 4801 of note 4 to chapter 48 and notification issued thereunder i.e. 23/1998-CE dated 01.08.1998 stands complied with. Therefore, merely because first the goods were cleared from factory to godown and then to newspaper, the conditions of the notification does not stand contravened. Similar issue has been considered by this Tribunal in the case of Sri Venkatesa Paper and Boards Ltd (Supra) The relevant order of the said decision is reproduced below:-
“2. The appellants had supplied newsprint through their depot to a registered newspaper during the aforesaid period. Their case is that such clearances were permitted in the past also and that the amendment to the Notification did not warrant any change. After hearing both sides, we have to subscribe to the interpretation given by the appellants. The expression “supplied against a purchase order placed upon such manufacturer by a newspaper” does not necessarily mean that the manufacturer should supply newsprint directly to a newspaper. What was intended by the amendment was that the supply of newsprint to a newspaper must be against a purchase order placed by the latter. It could either be direct or through a depot. We have found nothing in the text of the amended proviso which can be construed as a bar against indirect supply of newsprint by the manufacturer of a newspaper for the purpose of exemption under the Notification.
In the above view of the matter, we set aside the impugned order and allow this appeal.”
4.6 We also observed that the factory is the place of removal as per Section 4 of Central Excise Act, 1944, however, at the same time any other place from where the goods is sold after removal from the factory, the said place is also a place of removal. Therefore, whether the goods are sold from the factory or from any other place from where the goods were sold, both are statutorily considered as place of removal. Therefore, the goods sold from godown to newspaper after clearance from the factory will not take a different colour as far as the classification of goods under 4801 read with Notification No. 23/1998-CE. Therefore, in our considered view nil rate of duty is rightly and legally available to the appellant.
Hence, the impugned order is set aside. Appeal is allowed.