KHODAY INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner is a Company incorporated under the Companies Act and is engaged, inter alia, in the manufacture of carbon paper. In the writ petitions, the petitioner has prayed for quashing the order of the Assistant Collector Annexure 'D' and that of the Appellate Collector Annexure 'G' and the notice of demand, Annexure 'H'. The two writ petitions relate to the demand made to pay difference of excise duty for the period 16-10-1978 to 18-4-1979 and the demand made for the further period 16-4-1979 to 22-2-1980 as per Annexure 'H'.

(2.) A show cause notice was issued to the petitioner Company on 16-4-1979 proposing to demand difference of duty on the carbon paper cleared during 16-10-1978 to 15-4-1979. This item had been subjected to duty under item 68 as per the classification list approved by the proper Officer. What was proposed to be done under the show cause notice was to demand difference of duty payable under item 17(2) of the Central Excise Tariff which was amended with effect from 27-5-1976.

(3.) The petitioner replied to the show cause notice contending that the carbon paper manufactured by the petitioner Company was being rightly subjected to duty under Item 68 and that was in conformity with the Collector's trade notice 56/76 dated 2-3-1976. The trade notice is reproduced below : "CENTRAL EXCISE TRADE NOTICE NO. 56/76, DATED 2-3-1976 (3/76 Paper) Sub : Paper - carbon paper and stencil paper - Whether excisable under item No. 17 of CET. A doubt has been raised whether carbon paper/stencil paper, produced by conversion of duty paid base paper, should be treated paper falling under Tariff Item 17(4) of Central Excise Tariff, or as an item of stationery, outside the scope of Item 17 of Central Excise Tariff. 2. The matter has been examined and it is clarified for the information of the trade, that the carbon paper/stencil paper, are articles of stationery, and therefore, outside the purview of Item 17 of Central Excise Tariff." It was clarified in the said trade notice by the Collector that carbon paper/stencil paper are articles of stationery and, therefore, are outside the purview of Item 17 of the Central Excise Act. It is relevant to notice that this trade notice was issued consequent to the tariff advice 5/76 by the Central Board of Central Excise. 'Tariff Advice No. 5/76. Subject : Paper - Carbon paper and Stencil Paper - whether Excisable under Item No. 17 of C.E. Tariff. A doubt had been raised whether carbon paper/stencil paper produced by conversion of duty paid base paper, should be treated as paper falling under tariff item 17(4) of Central Excise Tariff or as an item of stationery, outside the scope of Item 17 of Central Excise Tariff. 2. The matter was considered in the Central Excise Tariff Conference held at Cochin on the 13th to 15th November, 1975. It was reported that carbon paper/stencil paper is sold in the market mostly cut to size by retail stationers. The Indian Customs Tariff Guide has also treated Carbon paper as an item of stationery and not as paper. The Conference was therefore, of the view that carbon paper/stencil paper, were commercially recognised only as articles of stationery. 3. The Board is accordingly advised that carbon paper and stencil paper should be treated as articles of stationery, and therefore outside the purview of item 17 of Central Excise Tariff.'