Deptt.'s Instructions Referred :

1. Circular No. 18/88-CX.3 dt. 30.8.88 by CBEC [Para 8]

2. Circular No. 9/89 dt. 25.7.89 by CBEC. [Para 8]

Per Archana Wadhwa :

The short issue involved in the present appeal is as to whether Molten Wax used by the appellants in the manufacture of Wax Coated Wrappers/Papers is excisable goods classifiable under Tariff Heading 34.04 or the same may not be held liable to duty of excise inasmuch as the same cannot be considered as goods chargeable to duty.

2. Briefly stated the facts of the case are as under :-

2.1. The appellants are engaged in the manufacture of flexible packaging materials i.e. Wax Coated Wrappers in rolls/sheets. They were issued a show cause notice on 16.1.90 by the Commissioner of Central Excise, Bolpur, alleging that during the course of manufacture of their final product, the appellants are also manufacturing waxy materials comprising essentially of Paraffin Wax and the same are classifiable under Heading 3404.00 as Prepared Wax, though used captively by the appellants in the manufacture of Wax Coated Wrappers. The said notice proposed to confirm the demand of duty of Rs. 42,64,069.00 as duty of excise leviable on the Prepared Wax allegedly manufactured by the appellants during the period from 1.3.86 to 31.7.89 and also proposed imposition of personal penalty upon them. During the course of adjudication before the Commissioner, the appellants categorically stated that the said Hotmelt Wax only emerges during the course of manufacture of Hotmelt Wax Coated Wrapper and the same is neither commercially known as Wax in the market nor can the same be bought and sold in the market. It was contended by the appellants that the Wax used by them is nothing but Paraffin Wax in hotmelt stage and the same is incapable of being marketed at this stage and hence, cannot be considered to be excisable goods, marketability of the product being an essential pre-requisite for levy of duty. The said contention of the appellants was not found favoured with by the adjudicating authority who confirmed the demand and also imposed personal penalty of Rs. 4.00 lakh upon the appellants. The said Order of the Commissioner is impugned before us.

3. Shri S.N. Sinha Mahapatra, learned Advocate appearing for the appellants, details the process of hotmelt Wax Coating of Papers. For appreciation of the said process, the same is reproduced below :-

"PROCESS OF HOTMELT WAX COATING

Hotmelt waxcoating is done on printed as well unprinted paper through an automatic high speed waxing machine driven by power. Plain/printed paper rolls are mounted on unwind stand. Paraffin wax is first charged into melting tank. This is primary melting. Primary melting is done at around 80-90oC temperature. After melting of paraffin wax which comprises about 80-90% of total input into the melting tank, certain quantity of poly and eva granules are poured into first tank when paraffin was is already in molten state. Then more heat is provided to raise the temperature to about 150-170oC to absorb the poly and eva into the hotmelt mix. Proper mixing of the two is necessary to make the molten mix suitable for coating operation from the primary tank. The molten wax is strained through joint pipe and automatically transferred to the secondary tank at same temperature conditions (which is also known as lower tank). Such molten wax is then transmitted through pipelines to the coating tray/tub through which the paper passes and in this way, the molten wax coating is effected on to the duty-paid base paper through the impression rollers. Then the wax coated paper which is already rolled passes through the chilling tank (i.e. cooling drums) and thereupon the coated paper gets rewound on the rewind rollers. The excess molten wax left over in the coating tray gets automatically transferred back to secondary tank for recycling is an essential process for maintaining constant and desired temperature while the flow of coating through the coating tray i