NAVGUJARAT PAPER INDUSTRIES Vs. SUPERINTENDENT OF CENTRAL EXCISE

JUDGEMENT

(1.) THE petitioners herein are a partnership firm having their office at Bombay and they have a factory situated at Barejadi in the district of Ahmedabad in the State of Gujarat and according to the petitioners, at the said factory the petitioner, have been producing since 1963 paper gummed tapes of different widths varying according to the requirements of their different customers. According to the petitioners, they manufacture these papers gummed tapes out of duty paid paper purchased by the petitioners from the manufacturers. According to the petitioners, in the integrated process of preparing paper gummed tapes, gum is merely applied on one side of the duty paid paper, but according to the petitioners, they do not manufacture gummed paper at all another product which the petitioners prepare at their factory is printed wrappers meant for different customers and manufacturers and such wrappers are printed on white paper normally used as textile wrappers. It is the petitioner's contention that at their factory at Barejadi they do not manufacture paper at all. The petitioners contended that for the purpose of producing paper gummed tapes and also print wrappers on white paper, they purchase duty paid paper from the manufacturers of paper and the textile wrappers are printed in accordance with the orders placed by their customers as per their requirements and according to the designs and specifications given by such customers. The Excise Authorities have been contending that the paper produced by the petitioners as an intermediate product is gummed paper; that the petitioners manufacture gummed paper as an intermediate product in the process of manufacturing paper gummed tapes and they contend that such gummed paper means paper obtained by applying gum to one side of paper. The contention of the Excise authorities regarding the textile wrappers produced by the petitioners by printing designs etc. on white papers is that such textile wrappers are converted types of paper. The excise authorities contend that ordinarily gummed paper and converted types of paper would be liable to duty by virtue of Section 3 of the Central Excises and Salt Act, 1944 read with Item 17. Clause (4) of the First Schedule to the Act, but by virtue of a notification dated September 5, 1970 bearing No. 165/70, the Government of India have exempted converted types of paper commonly known as imitation flint paper or leatheratte paper or plastic -coated paper, or by any other name, obtained by one side of paper being subjected to printing of colour, with or without design, irrespective of the fact whether or not such paper is subsequently varnished or glazed by chemicals or embossed, and also gummed paper obtained by gum being applied to one side of paper, from excise duty under sub -item (4) of item 17 of the First Schedule of the Act. But this exemption is subject to the condition that it must be proved to the satisfaction of the proper officer that the appropriate duty of excise or the appropriate Additional duty leviable under section 2A of the Indian Tariff Act, 1934, has been duly paid in respect of the paper used in the making of such converted type of paper or gummed paper. The petitioners, however, contend that what they are doing is not manufacturing any paper, either gummed paper or converted types of paper, but they are merely manufacturing gummed tapes and so far as converted paper is concerned they manufacture labels, cartons etc. made out of duty paid paper and printed with design or monograms of the manufacturers or traders, with or without description of particular goods or quality and both these products of theirs are articles of paper and, therefore, outside the purview of this item of excise.

(2.) IN view of these rival contentions, the petitioners have filed this special Civil Application, praying that a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, direction or order under article 226 of the Constitution of India be issued against respondents ordering and directing the respondents, namely, the Union of India, the Collector of Central Excise, Baroda, the Superintendent of Central Excise, I.O.C. Range, Div. II. Ahmedabad and the Inspector of Central Excise, Barejadi, Distt. Ahemdabad, not to apply the provisions of the Act and rules made thereunder to the petitioner's factory at Barejadi in respect of paper gummed tapes and textile wrappers and they have also sought direction against these respondents preventing these respondents from enforcing the demands contained in the letters of December 29, 1970, February 18, 1971, March 15, 1971 all the three of them from the Superintendent of Central Excise and letter dated July 19, 1971 of the Inspector of Central Excise, Barejadi and letter dated July 21, 1971 of the Superintendent of Central Excise, I.O.C. Range, Div. II, Ahmedabad. They have also sought for orders seeking to restrain the respondents from taking any steps or proceedings against the petitioners either under the Act or under the Rules in respect of the said two products of the petitioners, namely, paper gummed tapes and textile wrappers.

(3.) AFTER the publication of this notification dated September 5, 1970, the Collector of Central Excise, Baroda, on September 17, 1970, issued Trade Notice No. 249/1970 (Paper and Board No. 4/70) drawing the attention of all Trade Associations/Chambers of Commerce and Member of R.A.C. to this notifcation of September 5, 1970 and mentioning therein that the exemption granted by the notification of September 5, 1970 was effective from 5th September 1970. On the very day that is, on September 17, 1970 the Central Excise Collectorate, Baroda, issued another trade notice bearing No. 250/70 (paper and Board No. 5/70) and that trade notice on which the petitioners rely is in these terms : - 'Doubts have been raised regarding duty liability under Item No. 17 of Central Excise Tariff in respect of - (i) lables, cartons, etc. made out of duty paid paper and printed with design or monogram of a manufacturer or trader, with or without description of particular goods or quality, and (ii) Gummed tape made out of gummed paper. It is clarified that the above description of goods are articles of paper and therefore outside the purview of the said items of the tariff.'