Currency Note Crisis - Excised
SECURITY Printing & Minting Corporation of India Ltd. (SPMCIL) is a wholly owned company of Government of India incorporated in January, 2006 by bringing together nine units of Government of India (four mints, two bank note printing presses, two security printing presses, and one security paper mill) under one corporate entity. Prior to their incorporation, these units were departmental organizations under the Currency and Coinage Division in the Department of Economics Affairs, Ministry of Finance.
Notification No. dated 1.3.2006 exempts inter alia Security paper (Cylinder mould vat made), manufactured by the Security Paper Mill, Hoshangabad, and supplied to the Bank Note Press, Dewas.
Security Paper Mill, Hoshangabad is engaged in the manufacture of security paper which is used only for the purpose of printing of currency notes and other security instruments of the Government of India. They have claimed exemption under serial No.94 of Notification No.4/2006-CE dated 1.3.2006. The relevant entry reads as:
Security paper (cylinder mould vat made), manufactured by the Security Paper Mill, Hoshangabad, and supplied to the Bank Note Press, Dewas, the Currency Note Press, Nashik, the India Security Press, Nashik, the Security Printing Press, Hyderabad, Bharatiya Reserve Bank Note Mudran Limited, Mysore, or the Bharatiya Reserve Bank Note Mudran Limited, Salbony;
The Commissioner of Central Excise was not impressed and denied the exemption claimed by them on security paper on the ground that these papers did not bear water mark, security thread etc. as such, do not qualify for the exemption.
The Security Paper Mill which is obligated also to manufacture security paper (so that people have enough currency notes), apart from pursuing Central Excise Litigation, took the matter in appeal to the CESTAT.
The tribunal in a recent order observed,
1. For the exemption to be claimed, the appellant has to fulfill the condition that product should be security paper (cylinder mould vat made) manufactured by the Security Paper Mill and supplied to various press as specified therein.
2. There is no definition of "security paper" in the said Notification. The impugned order examined the term "security paper" from various internet sources and arrived at the conclusion that without water mark and the security thread, the paper cannot be called as security paper.
3. The original authority misdirected himself in examining the issue. The fact is that the appellants are specifically mentioned in the Notification by name and the security paper manufactured by them were cleared as per authorization given by the Government authority to various Security Press, Bank Note Press listed in the Notification itself.
4. There is no dispute regarding clearance of any other paper to any other recipient in violation of stipulation in the Notification.
5. The reliance of the original authority on the definition available in internet or any other sources to decide as to what will constitute security paper is uncalled for.
6. The only condition mentioned in the Notification is security paper should be cylinder mould vat made and no other condition is prescribed.
7. In case the original authority entertained certain doubts regarding correctness of claim by the appellant, the same should have been verified with expert opinion or by reference to the Government authorities or recipient of those goods to find out security paper. Instead of that, the impugned order proceeded to deny the nature/scope of exemption based on certain unsubstantiated definition of the term.
8. We find no justification for such interpretation.
It was held that the impugned orders are not sustainable and were aside.
Will the litigation end here or will the department take the matter in appeal to the Supreme Court?
Please see