1984 (2) TMI 327 - AT - Central Excise

Summary

Issues Involved:
1. Validity and timeliness of the show cause notice.
2. Whether polycoating/polylamination of kraft paper amounts to "manufacture" u/s 2(f) of the Central Excises and Salt Act, 1944.
3. Classification of polycoated/polylaminated paper under Item No. 17(2) C.E.T.
4. Whether the finished products attract duty under sub-item (2) of Item 17 C.E.T.
5. Respondent's right to challenge the levy after availing concessional duty.
6. Timeliness of the refund claims.
7. Appellate Collector's authority to allow refunds beyond the prescribed time-limit.
8. Entitlement for refund duty and the concept of unjust enrichment.
9. Whether settled practice of duty levy could be unsettled by the Appellate Collector.

Summary:

Issue No. (i): Validity and Timeliness of the Show Cause Notice
The Tribunal concluded that the show cause notice issued on 21-7-1981 was valid and within the one-year limitation period prescribed u/s 36(2) of the Act. The corrigendum issued later did not vitiate the legality of the original notice. The Tribunal also found that the Central Government had sufficient material to initiate the review proceedings, thus rejecting the contention that the notice was invalid due to lack of records.

Issue No. (ii), (iii), and (iv): Manufacture and Classification under Item 17(2) C.E.T.
The Tribunal held that the process of polycoating/polylamination of kraft paper amounted to "manufacture" u/s 2(f) of the Act, as it resulted in a product with a distinct name, character, and use. Consequently, polycoated/polylaminated paper was classifiable under Item No. 17(2) C.E.T. The Tribunal emphasized that the legislative intent, as evidenced by contemporaneous documents, was to charge duty on treated papers even if made from duty-paid base papers.

Issue No. (v): Concessional Duty and Right to Challenge Levy
The Tribunal did not find it necessary to address this issue in detail, given the conclusions on the previous issues.

Issue Nos. (vi) and (vii): Timeliness of Refund Claims
Given the Tribunal's conclusion that the products were dutiable under Item 17(2) C.E.T., the question of whether the refund claims were filed within the prescribed time-limit became moot.

Issue No. (viii): Entitlement for Refund Duty and Unjust Enrichment
The Tribunal did not consider this issue, as it was rendered irrelevant by the findings on the classification and dutiability of the products.

Issue No. (ix): Settled Practice of Duty Levy
The Tribunal noted that it was not necessary to answer this question in the abstract. However, it emphasized the importance of not rendering statutory notifications meaningless, thus supporting the consistency of the duty levy practice.

Conclusion:
The appeal was allowed, the impugned Order-in-Appeal was set aside, and the Assistant Collector's orders were restored.