STAR PAPER MILLS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) By this writ petition the assessee company seeks the issue of a writ of certiorari quashing two notices dated 3rd November, 1970 and 16th November, 1970 issued by the fourth respondent, the order of the fourth respondent dated 1st November, 1970, a notice dated 23rd July, 1973 issued by the second respondent under Section 36(2) of the Central Excises and Salt Act, 1944 and finally an order of the second respondent dated 25th July, 1975 passed under the above section. The writ petition has been filed in the followine circumstances.

(2.) The petitioner is a company carrying on business in the manufacture of various types of writing and printing paper with a factory at Saharanpur. Excise duty on paper was for the first time levied in 1955 and different rates of duties were prescribed for different types of paper. The paper produced by the assessce was packed in reams or in the form of rolls. Naturally when the goods were packed in reams they had to be wrapped up in wrapping paper which was also the subject matter of excise levy. So far as the rolls were concerned they were actually weighed as and when they were removed from the factory and duty was paid on the actual weight. There is no dispute about the paper so manufactured and removed by the assesses. We are concerned in this writ petition only with the paper which was produced and packed in reams and were duly wrapped up in packing paper before they were removed from the factory. The controversy between the parties is as to whether the assessee has paid the excise duty leviable in respect of the wrapping paper.

(3.) Soon after excise duty on paper was introduced the Central Excise Collector at Allahabad passed a standing order in pursuance of the instructions of the Central Board of Indirect Taxes in August, 1956. This standing order provided for assessment of duty on paper and paper-board either on the basis of actual weight or on the basis of standard nominal weight. In respect of the unit packages not marked with the nominal weight duty was levied on the basis of actual weight. But where paper was packed in reams and the standard nominal weight of paper was marked on the ream covers the duty was assessed on the basis of the standard nominal weight so marked. The department naturally reserved for itself the right of checking the correctness of the standard nominal weight thus marked on the paper. The procedure prescribed was that I per cent of unit packings produced on each day would be rest weighed and 10 per cent of the packages would be checked and weighed. If the variation found on check weighments did not exceed I per cent to 1-1/2 per cent as prescribed it was taken that the standard nominal weight indicated by the assessee was not wrong. However, if the average of I per cent test weighment showed excess over the tolerance limits referred to above, the percentage of weighment was to be increased to 10 per cent. If as a result of the 10 per cent weighment the average variation exceeded the limits prescribed, the entire day's production could be subjected to weighment, the goods being stored separately for clearance on the basis of actual weight.