1985 (3) TMI 261 - AT - Central Excise

Summary

Issues:
- Recovery of duty on wrapping paper manufactured for captive consumption
- Double payment of duty on the same goods
- Interpretation of duty recovery on wrapping paper when used for other varieties of paper
- Applicability of previous judgments by CEGAT and the Supreme Court
- Assessable value determination under Section 3 and Section 4 of the Central Excises and Salt Act, 1944

Analysis:
1. Recovery of Duty on Wrapping Paper for Captive Consumption:
The case involved a dispute regarding the recovery of duty on wrapping paper manufactured by the appellants for captive consumption. The appellants argued that duty was being recovered twice over on the same wrapping paper, contending that once duty was paid upon manufacturing the paper, no further duty should be levied when the paper was used as wrapping material for other varieties of paper. The Department, on the other hand, asserted that duty on the wrapping paper should be collected again when it was used for other paper varieties, as it lost its identity as wrapping paper and became an integral part of the other paper.

2. Interpretation of Previous Judgments:
The appellants relied on a previous judgment by CEGAT in the case of M/s. Sree Rayalaseema Paper Mills Ltd., which held that duty on wrapping paper used for captive consumption should not be recovered again when used as wrapping material for other paper varieties. However, the Department referred to a subsequent order of the Special Bench 'C' in the case of M/s. Orient Paper Mills, which considered a Supreme Court judgment and concluded that duty on wrapping paper used for other paper varieties should be recovered.

3. Applicability of Supreme Court Judgment:
The Department emphasized the pronouncement of the Hon'ble Supreme Court in the case of Union of India v. M/s. Bombay Tyres International, which supported the view that duty on wrapping paper used for other paper varieties should be collected. The Department argued that the Supreme Court judgment superseded the earlier CEGAT judgment relied upon by the appellants.

4. Assessable Value Determination:
The Tribunal, after considering the arguments presented by both sides, aligned with the Department's position. It highlighted that the Supreme Court judgment clarified that wrapping paper, when used for other paper varieties, should be considered as primary packing material, and its value must be included in the assessable value of the other paper varieties. Therefore, the Tribunal rejected the appeal based on the detailed reasoning provided in the Special Bench 'C' order and in accordance with the guidelines set out by the Supreme Court.

5. Legal Provisions:
The Tribunal underscored the relevance of Section 3 and Section 4 of the Central Excises and Salt Act, 1944, in determining the assessable value of goods. It explained that duty is not being levied again on the packing material but is included in the assessable value of the goods, as per the provisions of the Act, especially when the packing is not durable or returnable.

In conclusion, the Tribunal dismissed the appeal, following the interpretation of the Supreme Court judgment and the applicability of the duty recovery on wrapping paper used for other paper varieties.