S.C. Jain, Member (J)

1. The facts of the case in brief are that M/s. Metal Box India Limited, (hereinafter called the appellants) are the manufacturers of various types of packaging material. During the period 1st March, 1974 to 14th March, 1976, the appellants supplied base paper to M/s. Industrial Packaging for the purpose of manufacturing waxed paper. M/s. Industrial Packaging after manufacturing waxed paper to the extent of 46,557 Kgs. returned the said waxed paper to the appellants after charging conversion charges. The appellants did not pay excise duty on the waxed paper so got manufactured from M/s. Industrial Packaging. Show cause notice was, therefore, served upon the appellants asking them as to why penalty under Rule 173Q should not be imposed and excise duty of Rs. 69,494.56 should not be demanded or realised under Rule 9(2) of the Central Excise Rules, 1944 in respect of 65,441.3 Kg. of such waxed paper.

2. In reply to the said show cause notice the appellants stated, inter alia, that they had no facility for manufacture of waxed paper and as such they did not apply for the excise licence nor they held licence for manufacture of the said waxed paper; that on reque