MODERN PAPER INDUSTRIES Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners are a partnership firm carrying on business of paper printing and processing. The petitioners purchase paper manufactured in India from traders in the paper trade and the paper purchased is commonly known as printing paper, kraft paper and map paper and the excise duty payable thereon was paid by the manufacturers of such paper. The petitioners, after purchasing such paper, coloured, printed or embossed such paper on one side and thereafter varnished the same. The petitioners thereafter sold such printed paper under the trade descriptions such as plastic paper, marble paper, file paper etc. The paper which the petitioners purchased from the traders was subject to the levy of excise duty under Item No. 17 of the Central Excise Tariff. Item No. 17 is as follows :-

(2.) The Assistant Collector, Central Excise, Bombay, by his letter dated October 18,1967 informed the petitioners that the paper whether with or without design and varnish would attract excise duty under Tariff Item No. 17(4). The petitioners sent a reply dated November 8,1967 pointing out that the paper which was coated on one side with bright colours, embossed, polished or varnished cannot be treated as "Flint Paper" and cannot be classified as paper not otherwise specified under Item No. 17(4). The reply sent by the petitioners and the explanation thereto was not accepted and the Assistant Collector passed an order on December 5, 1967 holding that the paper which was processed by the petitioners with bright colours and polished must be treated as flint paper. It is required to be stated that prior to this date, on June 17,1968, the Collector of Central Excise has issued a Trade Notice dated June 17,1968, inter alia , stating that the paper sold in the market after colouring, polishing and varnishing should be treated as a flint paper and excise duty should be levied under Item No. 17(4) of the CET.

(3.) The petitioners challenged the order of the Assistant Collector by filing an appeal but the said appeal was dismissed by the Collector of Central Excise by his order dated July 1968. Before the appellate authorities, the petitioners claimed that the process applied by them to the paper did not amount to manufacture and Tariff Item No. 17 cannot be applied. It was also urged that the process of printing and polishing would not convert the paper into a flint paper. The appellate authority noticed the submission of the petitioners but without answering it, by a cryptic order dismissed the appeal holding that such printed and polished paper stand in a class by themselves and accordingly are correctly classifiable under Item No. 17(4) of the Central Excise Tariff. The petitioners approached the Government of India in revision but the revisional authority with an equally cryptic order dated April 14,1974/May 25,1974 dismissed the revisional application. The petitioners have preferred the present petition under Article 226 of the Constitution of India to challenge the legality and validity of the orders passed by the authorities below.