KORES INDIA LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS Special Civil Application raises two interesting points of considerable importance, viz., (1) Whether any excise duty is at all leviable on teleprinter rolls made by the petitioners, and (2) Assuming that such excise duty was leviable on such teleprinter rolls, whether the petitioners are entitled to the facility of proforma credit under Rule 56A of the Central Excise Rules, 1944 for the excise duty paid on the tissue paper which was used by the petitioners making two -ply or three or more ply teleprinter rolls.

(2.) IN order to appreciate the contentions raised by the petitioners, it is necessary to refer to the facts of this petition which lie within a narrow compass : The petitioners are a Company carrying on the business of manufacturing and supplying diverse kinds of stationery articles including, inter alia, carbon papers, typewriter ribbons and teleprinter rolls at their factory at 1, Pokhran Road, Thane (West). The teleprinter rolls which are the subject -matter of this controversy are made by the use of various components including tissue paper. These teleprinter rolls are used on teleprinter machines on which messages received on the teleprinter machines are printed. The process of making teleprinter rolls, as stated in the petition, is really not complicated. The petitioners purchase from paper manufacturers and/or paper dealers paper which is described as Jumbo (or large) rolls of writing or printing paper. This paper is an ordinary printing or writing paper and the manufacturers of such printing or writing paper pay excise duty thereon in accordance with the appropriate rates in the Central Excise Tariff. After purchasing Jumbo (or large) printing or writing paper rolls, the petitioners cut the same to a size suitable for use on a teleprinter machine and roll such cut paper to a specification suitable for slitting such rolls on a teleprinter machine. The writing or printing paper cut to a specified size and rolled to a specified dimension is known in the trade as single -ply teleprinter roll. Some of the customers of the petitioners desire to take out copies of messages printed on the teleprinter machine and depending on the number of copies required the petitioners inter -leaf the writing paper cut by them to the specified size with one or two sheets of carbon paper(s) and roll the same to the specified dimension and such teleprinter rolls are known in the trade as two -ply or three or more ply teleprinter rolls. According to the petitioners, all such teleprinter rolls, whether ordinary teleprinter rolls or two -ply of three or more ply teleprinter rolls, are merely ordinary writing or printing paper cut to a specified dimension with or without inter -leafed carbon paper sheets. It is the contention of the petitioners that for making of teleprinter rolls, the petitioners do not carry out any process of manufacturing paper whatsoever as the manufacturing of paper is already complete before the petitioners purchased such writing or printing paper from the paper manufacturers and/or paper dealers. Therefore, the petitioners contend that all that is done by them is to cut large or Jumbo size paper into a specified size and roll the same to a specified dimension and no change whatsoever takes place to the Jumbo or large size rolls of writing or printing paper purchased by the petitioners and the paper in the teleprinter rolls is identical in every respect to the writing or printing paper purchased by them. According to the petitioners, the process of manufacturing of paper is already complete at the time of the purchase of the writing or printing paper and cutting fully manufactured writing or printing paper to the specified size and rolling the same to a specified dimension as such do not constitute any process of manufacturing of paper within the meaning of section 2(f) of the Central Excise & Salt Act, 1944, and, at any rate, this activity cannot be described as activity of manufacturing paper. It is further contended by the petitioners that the activity carried on by them cannot be regarded as an activity pertaining to manufacturing of paper or an activity incidental or ancillary to the completion of paper as a manufacturing product. The petitioners having averred that making of teleprinter rolls does not constitute manufacturing of paper, they further contend that such teleprinter rolls are not liable to excise duty under Item No. 17(2) mentioned in the First Schedule to the Central Excise Tariff.

(3.) ON 18th April, 1973 the petitioners submitted under protest to the Assistant Collector of Central Excise for classification of all the goods manufactured by the petitioners as required under the provisions of Rule 173B of the Central Excise Rules, 1944. The petitioners included teleprinter rolls even though, in their opinion, the same were not excisable. The petitioners received a communication dated 15th/18th May, 1973 purporting to amend the form submitted by them on the ground that teleprinter rolls were assessable to Central Excise duty and did not come within the category of paper entitled to a concessional rate of duty.