COLLECTOR OF CENTRAL EXCISE CALCUTTA II COLLECTOR OF CENTRAL EXCISE BHUBANESHWAR Vs. EASTEND PAPER INDUSTRIES LTD

JUDGEMENT

(1.) These appeals are at the instance of the revenue under S. 35-L of the Central Excises and Salt Act, 1944 (hereinafter referred to as 'the Act'). Civil Appeal No. 1589 appeal arises out of Order No. 5 of 1988-A passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (hereinafter referred to as 'the Tribunal').

(2.) The respondent used to manufacture different varieties of printing paper including wrapping paper falling under Item No. 17(l) of the erstwhile Central Excise Tariff in their factory at Bansberia, District Hubli. It is the appellant's case that the respondent had violated the provisions of Rule 9(l), R. 173-F and Rule 173-G of the Central Excise Rules, 1944 inasmuch as they had removed 4,000 kgs. of wrapping paper under Gate Pass No. A-460 dated 9th February, 1984 and 485 dated 17th February, 1994 valued at Rs. 13,200/- without payment of central excise duty. Show cause notice was issued to the respondent as to why appropriate duty of excise amounting to Rs. 3,600/- (basic), Rs. 180/- (special) and Rs. 16.50 (cess) totalling Rs. 3,796.50 should not be recovered from them on the said quantity at the rate of Rs. 900 per M.T. and special duty at the rate of 5% of basic duty and cess 1/8% on value. Notice to show cause as to why penalty should not be imposed was also issued. Cause was shown by the respondent. It was the contention of the respondent that there was no infringement of the impugned provision and no duty was required to be paid on the excisable goods if it was captively consumed or utilised in the same factory as component part of the finished goods falling under the same tariff item and specified in Rule 56(a) of the Central Excise Rules, 1944. It was further stated that in the instant case, wrapped paper manufactured was captively Consumed and utilised as component part of other varieties of paper. Wrapping, it was contended, of finished product by wrapping paper is a process incidental and ancillary to the completion of manufactured product under S. 2(f) of the Act and wrapping is used as a component part of finished excisable goods attracting the benefit of the notification No. 18A/83-CE dated 9th July, 1983. The Superintendent (Technical) of Central Excise held otherwise. The respondent preferred an appeal before the Collector (Appeals), Calcutta. The respondent contended before the Collector that they were entitled to the benefit of notification and it is well settled law in view of several judgments of High Court and orders of the Tribunal that wrapping of paper was a process incidental or ancillary to the completion of manufacture of paper as the printing and writing paper could not be sold in the market without being packed and wrapped by wrapping paper. The Collector (Appeals), however, rejected the claim to exemption in respect of such wrapping paper in terms of the proviso to Rule 9(l). There was an appeal to the Tribunal. The Tribunal referred to its own decision in the case of Collector of Central Excise, Bhubneshwar v. Orient Paper Mills, Brajraj Nagar, (1986) 24 ELT 135, which is the subject-matter of the other appeal involved herein, and set aside the order of Collector.

(3.) Similar is the case in Civil Appeals Nos. 3760-62 of 1988. In that case, M/s. Orient Paper Mills, Brajraj Nagar, respondents, were manufacturers of various types of paper and paper board. They were also the manufacturers of wrapping paper for packing or wrapping of other varieties of paper. Under the relevant notification, the Central Government had exempted duty in respect of goods if these were consumed or utilised in a place where such goods were produced or manufactured under relevant rule either as raw materials or component parts for the manufacture. Therefore, in order to get the benefit of non-levy of excise duty on wrapping paper, it had to be established in both these appeals that the wrapping papers were consumed or utilised by the respondent assessees as component parts or raw materials for the finished products.