G. Sankaran, Member (T)

1. This is an appeal against Order-in-Appeal No. 6/OR/84 dated 24-1-1984 passed by the Collector of Central Excise (Appeals), Calcutta by which he set aside the Assistant Collector (Rourkela)'s Order C. No. V (17) 3-18/RKL-83/9918 dated 21-11-1983. The facts of the case, briefly stated, are that M/s. Orient Paper Mills, Brajraj Nagar (the Respondents in the present proceedings) are manufacturers of various types of paper and paper board. They also manufacture wrapping paper for packing or wrapping of other varieties of paper. Consequent on the amendment of Rules 9 and 49 of the Central Excise Rules, 1944 (hereinafter referred to as 'the Rules') by Central Excise Notification No. 187/83, dated 9-7-1983, the Respondents claimed that they were not required to pay duty on wrapping paper utilised for packing other varieties of paper. This contention was rejected by the Assistant Collector of Central Excise, Rourkela. By his Order dated 21-11-1983, the Assistant Collector informed the 'Respondents that since wrapping paper was used by them neither as raw material nor as component part in the manufacture of (other varieties) of paper but as packing material, it could not be used without payment of duty for packing reams of paper in terms of Rules 9 and 49. The matter was pursued by the Respondents in appeal. In his Order, the Collector (Appeals) observed that when wrapping paper was used for making paper reams/reels, it lost its original identity as wrapping paper and because a part and parcel of the paper ream/reel. Holding that such wrapping paper was eligible for the benefit of the amended Rules, he allowed the appeal. It is this Order that has now been challenged before us in these proceedings.

2. In the appeal, it is contended that the Collector (Appeals) had erroneously held that wrapping paper is a component of the paper packed in it, that he ought to have held that wrapping paper is not consumed or utilised either as raw material or as component part in the manufacture of other paper in the place where such wrapping paper itself is manufactured.

3. Smt. Vijay Zutshi, learned Senior Departmental Representative, appearing on behalf of the appellant-Collector, submitted that the Collector (Appeals), in his Order, did not spell out whether wrapping paper was considered by him as raw material or component part. If it was the former, it ought to have been consumed or used up as the Rule required, which it was not. If it was the latter, it was not utilised as a component part: it was only a packing material. In this context, she submitted that Rules 9 and 49 were narrower in scope than Rule 56A in that while the latter talked of 'material', the former talked of 'raw material' which, in the case of paper, would be substances like pulp, rags etc. Nor could wrapping paper be deemed to be a component part because it did not become an integral part of the packed paper. In fact, she urged, hardly anything could be said to be a component part of paper. In this context, she relied upon the Kerala High Court decision in Paul Lazar v. State of Kerala-(1977) 40 STC 437.

4. In his reply, Shri R.N. Bajoria, learned Counsel, representing the Respondents, urged that the context in which the claim for the benefit of Rules 9 and 49 was made, should not be overlooked. Section 3 of the Central Excises and Salt Act (hereinafter called the Act) postulated excise levy on good s manufactured in India. The term "manufacture" was defined in Section 2(f) of the Act to include processes incidental or ancillary to the completion of the manufactured product. Therefore, all processes leading up to the stage the goods were 'completed' for marketing were comprehended in the term "manufacture". Even labelling, in specified cases,-e.g. patent or proprietary medicines-was considered by the Act to be part of "manufacture". Thus, the meaning of the term was wider in its scope than in the ordinary parlance. If this was kept in view, it was not d