JUDGMENT

RANGANATHAN, J.:—These are two appeals u/ S. 35-L of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act). They arise out of the claim of M/ s Rohit Pulp and Paper Mills Ltd. (hereinafter referred to as the assessee) for partial exemption from excise duty in respect of the art paper and chromo paper manufactured by it.

2. The assessee is having a factory at Khadki in which different varieties of paper and paper boards are manufactured. The factory does not have a bamboo pulp plant. It uses waste paper and cereal straw which are considered to be unconventional raw materials for the manufacture of paper and paper board. The pulp used by the assessee contains more than 50% by weight of pulp made from these unconventional raw materials.

3. Paper and paper board are goods failing under item 17(1) of the first schedule to the Act. Two notifications were issued on 1 st March, 1984 under rule 8(1) of the Central Excises Rules, 1944 in respect of the above item. The first of them, being notification No. 24 of 1984, restricted the excise duty on items falling under the aforesaid item in the manner following:-

S. No. Description Rate

1. Printing and writing paper. Ten per cent ad valorem paper plus one thousand and five rupees per metric tonnes.

2. All sorts of paper commonly known as kraft paper (including paper and paper boards of the type known as kraft liner or corrugating medium) of a substance equal to or exceeding 65 grammes per square metre. Ten per cent ad valorem plus one thousand three hundred and eighty-five rupees per metric tonne.

3. Paper board of the following varieties, namely, pulp board duplex board and triplex board. Ten per cent ad valorem plus one thousand eight hundred and ten rupees per metric tonne.

4. Paper and paper boards, other than those specified in S.Nos. 1 to 3. Ten per cent ad valorem plus one thousand four hundred and thirty rupees per metric tonne.

4. The second notification, notification No. 25 of 1984, is the one with which we are directly concerned here. It provides for a concession in respect of paper and paper boards falling under item 17(1) of the Schedule, manufactured out of pulp containing not less than 50 per cent by weight of pulp made from materials (other than bamboo, hardwoods, softwoods, reeds or rags) and cleared on or after the Ist day of April in any financial year. The concessional rates prescribed were as below:

(See table on next page)

5. The grant of the above concessional rates were, however, subject to certain important conditions set out in the provisos to the notification. These provisos read:

"Provided that the factory does not have a plant attached thereto for making bamboo or wood pulp.

Provided further that the exemption contained in this notification shall not apply to cigarette tissue, glasine paper, grease proof paper, coated paper (including waxed paper) and paper of a substance not exceeding 25 grammes per square metre."

TABLE

S. No. Description Rate Conditions

1. (i) Printing and writing paper Rs.450 per metric tonne Provided that the total quantity of clearances, if any, of all varieties of paper and paper boards in the preceding financial year, by or on behalf of a manufacturer, from one or more factories, or from a factory by or on behalf of one or more manufacturers did not exceed 3,000 metric tonnes

(ii) All sorts of paper commonly known as kraft paper (including paper & paper boards of the type known as kraft liners or corrugating medium) of a substance equal to or exceeding 65 grammes per square metre. Rs.450 per metric tonne

(iii) Others Rs.560 per metric tonne.

2. (i) Printing and writing paper Rs. 730 per metric tonne Provided that the total quantity of clearances of all varieties of paper & paper boards in the preceding financial year, by or on behalf of a manufacturer, from one or more factories, or from a factory by or on behalf of one or more manufacturers, exceeding 3,000 metric tonnes but did not exceed 7,500 metric tonnes.

(ii