Tissue paper used for interleaving aluminium foils is not a new manufactured product liable to excise duty, and levying excise duty on it after it has already been paid on it would amount to double taxation, which is not permissible under the law.

( 1 ) INDIA Foils Ltd. the petitioner No. 1 (hereinafter referred to as the company carries on business in the manufacture and sale of aluminium foils of diverse varieties including foils known as tea chest linings. These foils are manufactured by the company at its factory at Kamarhati in the District of 24-Parganas.

( 2 ) ACCORDING to the Writ petition, tea chest lining foils are bare foils which are not backed by any reinforcing material; after being manufactured these foils are interleaved with duty paid tissue paper to ensure that the edges of the foils do not get stuck in the process of being cut to shape. Neither is the tissue paper used for the purpose of interleaving glued or pasted to the foils with any adhesive.

( 3 ) WHEN the Excise authorities demanded payment of excise duty on the tissue paper used for interleaving the aluminium foils for tea chest linings, the company drew the attention of the said authorities to a Notification bearing No. 155/72, dated 15-6-72, issued by the Central Government in exercise of its powers conferred by Rule 8 (1) of the Central Excise Rules whereby; Central Excise duty on foils of the description 'merely cut to shape and embossed or perforated was exempted if the appropriate duty of excise or the additional duty under Section 2 (A) of the Indian Tariff Act had already been paid in respect of the said foils. A copy of this Notification has been annexed to the petition and marked with the letter 'a'. The company thereafter wrote to the Collector of the Central Excise claiming exemption from payment of duty on the tissue paper used for the purpose of interleaving aluminium foils used for tea chest linings. The company also claimed the benefit of the aforesaid Notification. The Assistant Collector of Central Excise by a letter dated 24-7-76, rejected the company's contention. A copy of this letter is Annexure 'b' to the petition. Against this order the company preferred an appeal to the Collector, who by an order dated 28-8-76 held that the price of the interleaving paper and the cost incurred therefor cannot be deducted in arriving at the assessable value of the foils. A copy of this letter is Annexure 'c to the petition. Thereafter the company approached the Central Board of Excise and Customs, New Delhi against the order of the Collector and the Board, by an order dated 28-8-78, rejected the company's contention-A copy of this order is Annexure 'e' to the petition. In this Writ petition the validity of these orders have been challenged.

( 4 ) MR. N. C. Chakravarti, appearing on behalf of the petitioners, has submitted that the company used tissue paper on which excise duty had already been levied for the purpose of interleaving aluminium foils to facilitate their cutting to shape and size and this process does not bring into existence any new manufactured product and both the articles namely, aluminium foil and tissue paper, retain their individual characters and as such, the attempt on the part of the Excise authorities to further tax the tissue paper, tantamounts to double taxation and is also illegal in view of the fact that no new product has come into existence. In this connection Mr. Chakravarti has referred to two decisions of the Supreme Court, namely, Union of India v. Tata Iron and Steel Company Ltd. Jamshedpur and Union of India v. Delhi Cloth and General Mills Co. Ltd. The next submission of Mr. Chakravarti is that in any event the company is entitled to get the benefit of the aforesaid Notification, and on its basis the tissue paper used for the purpose of interleaving is not liable to further payment of Excise duty.

( 5 ) MR. S. M. Sanyal, appearing on behalf of the Respondents, has contended that the Company uses the tissue paper as raw material for the purpose of manufacturing tea chest linings and as such a new commodity comes into existence and it is liable to Excise duty under Tariff Item 27 (c) of Schedule I of the Central Excises and Salt Ac