K.L. Rekhi, Member (T)

1. The point at issue in this appeal is whether Central excise duty was payable on jute pack sheets and jute twine used in the factory of their production for packing of other jute manufactures which were exported out of India under bond.

2. The jute manufactures exported were classifiable under Item 22A of the Central Excise Tariff. So too were the pack sheets used for their packing. The stitching twine, although made of jute also, was classifiable under Item 18D. However, Notification No. 56/72-C.E., dated 17-3-72 fully exempted from payment of duty such jute twine as was consumed within the factory of its production "for the manufacture of jute manufactures falling under Item 22A".

3. During the period from 24-2-79 to 31-7-79, the respondents used, without payment of duty, some quantity of jute pack sheets and stitching twine for the packing of jute manufactures for export as well as for the packing of jute manufactures cleared for horns consumption. The Department issued a show cause notice on 17-8-79 demanding from them total duty of Rs. 36,952.02 on the pack sheets and twine so used. On adjudication, the Asstt. Collector confirmed the demand. The Appe