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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, NEW DELHI
M. Gouri Shankar Murthy, H.R. SYIEM, A.J.F. D’Souza, JJ.
Golden Paper Udyog (P.) Ltd. -Appellant
Versus
Collector of Central Excise, Delhi -Respondent
Order No. 109 of 1983-C
Decided On : 25-05-1983
M. Gouri Shankar Murthy, Member (J)
1. The two questions that had been raised for decision in the instant Revision application transferred to the Tribunal and heard as an Appeal pursuant to the provisions in Sec. 35(P) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act), are-
(a) Whether, in the facts and circumstances of the case, the process of bituminising duty paid kraft paper by bonding with duty paid bitumen, amounts to "manufacture" or involves "any process incidental to or ancillary to the completion of manufacture" in terms of the definition of "manufacture" in the Act,
(b) If it does, is duty paid kraft paper on bonding with duty paid bitumen, assessable to duty again in terms of Item 17(2) of the First Schedule to the Act (hereinafter referred to as the Schedule), or the residuary Item 68 thereof.
2. The facts necessary to appreciate and determine the aforesaid questions are,-
(a) the Appellant buys duty paid kraft paper ;
(b) the layers of such kraft paper are bonded with bitumen (duty paid) as the bonding agent or adhesive ;
(c) for the period between 1-9-1977 to 31-1-1978, the Appellant was paying Excise duty assessable under Item 17(2) of the Schedule ;
(d) an application for refund filed on 23-2-1978 was dismissed by the Deputy Collector on the ground that "water proof bituminised kraft paper undergoes lamination process and as such process is covered under Tariff Item 17(2)", the bituminised kraft paper is dutiable ;
(e) an appeal to the Appellate Collector ended in dismissal, inter alia, for
(i) the product manufactured by the Appellant is commercially known as water proof paper ;
(ii) the plea that the identical product cannot be exigible to duty twice over under the same item of the Schedule is unsustainable in as much as, kraft paper is transformed and its value enhanced by bonding "with the result that identity commercially must pay duty even if the same is classifiable under the same tariff item" ;
(iii) the processes specified in Item 17(2) are merely illustrative and do not exclude lamination or bonding and, accordingly, paper board and all other kinds of paper are assessable to duty under the said item even if the process is anything other than those actually specified therein.
3. The contentions of the Appellant, reiterated before us, were that-
(a) the Appellant does not manufacture paper at all ;
(b) since no "manufacture" was involved, the Appellant is not required to pay any duty whatsoever ;
(c) such duty as was paid by the Appellant for the aforesaid period was by inadvertence/mistake/error ; and
(d) it is, accordingly, refundable,
4. While the adjudication order was begging the question, the order in Appeal, proceeded on misconception of manufacture and misconstruction of the relevant item in the Schedule.
5. Shri Khaitan, learned counsel for the Appellant submitted fairly, even at the outset, that while the decision of the Madras High Court in 1980 E.L.T. 579 Kwality Coated Products v. Govt. of India-(now stated to be the subject matter of an Appeal in the Supreme Court), supported his case in the Appeal, that in 1981 E.C.R. 113 (Standard Packaging v. Union of India) by the High Court of Andhra Pradesh was against his contentions.
6. A perusal of the aforesaid decisions would reveal that-
(a) following the ratio of the decisions of-
(i) the Supreme Court in MANU/SC/0112/1968 : A.I.R. 1968 S.C. 922 S.B. Sugar Mills v. Union of India) on the oft repeated meaning of "manufacture";
(ii) the Calcutta High Court in MANU/WB/0095/1970 : A.I.R. 1970 Calcutta 479 (Dalhousie Co. v. Union of India) holding, inter alia, that more coating of jute fabric with solution would not change the character of the product or transform it into another, and duty charged by difference in weight between the original jute fabric and the coated fabric was in reality duty on the coating material, not assessable to duty at all;
(iii) the Gujarat High Court in 1977 E.L.T. J67 (Navgujarat Paper Industries v. Supdt. of
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