UNION OF INDIA Vs. BABUBHAI NYLCHAND MEHTA

JUDGEMENT

(1.) This appeal by special leave is directed against the order of Bombay High Court, dt. 2-12-1987 (Reported in (1988) 33 ELR 292 (Bom) ). Brief facts of the case are that respondent is the sole proprietor of a concern known as Neptune Water-proof Manufacturing Company (in short the company) and carries on business of manufacturing Water-proof Kraft Paper. The company manufactures the following products:

(2.) The Assistant Collector of Central Excise, Bombay by order dated February 16, 1981 held that the kraft paper marketed by the company is bitumanised water proof packing paper, polythene-lined kraft packing paper etc. and as such were different and distinct products than the original kraft paper purchased by the company. The Assistant Collector also held that the processed kraft paper had a definite characteristic, use and value and as such they are different products and are liable to payment of excise duty.

(3.) The company aggrieved against the order of the Assistant Collector filed a writ petition under Art. 226 of the Constitution before the High Court. Learned single Judge of the High Court held that the process carried on by the company cannot be considered as manufacture of a new commodity with a different name and different use. The learned Judge relied upon the decisions of Madras High Court and Andhra Pradesh High Court where identical question was considered. Learned Judge in these circumstances set aside the order of the Assistant Collector and directed that the department should refund the excise duty levied and recovered from the respondent.The Union of India filed an appeal before the Division Bench of the High Court. The Division Bench while admitting the appeal, directed the respondents to file an affidavit setting out the process and accordingly affidavit was filed on July 18, 1986. The High Court after the perusal of the affidavitobserved as under:--