1977 (9) TMI 113 - Commissioner - Central Excise

Summary

Issues:
1. Whether the process of slitting and re-rolling of duty paid paper rolls constitutes the manufacture of paper.
2. Whether duty is chargeable on the paper under Tariff Item 17(2).
3. Whether a Central Excise Licence under Item 17 is required for the process.

Analysis:
1. The Assistant Collector determined that the process of slitting and re-rolling of duty paid paper rolls resulted in a new product assessable to duty under Tariff Item 17(2). The Assistant Collector required the appellants to obtain a Central Excise Licence under Tariff Item 17 and pay duty accordingly. The appellants argued that slitting paper does not alter its characteristics significantly, and no new product emerges. They compared it to stationery marts cutting full sheets of paper into smaller sizes, which is not considered manufacturing. The appellants contended that if slitting and re-rolling are termed manufacturing, then cutting paper into reams should also attract duty, which is not the case in practice.

2. The Commissioner analyzed the operation carried out by the appellants, where they cut duty paid paper rolls into various sizes without altering the original characteristics of the paper. The Commissioner concluded that this process did not amount to manufacturing as no new product with changed characteristics was created. The resultant product retained the identity of the original paper, unlike converted paper types such as Bituminised paper or plasticised paper. As no manufacturing process attracting duty under Tariff Item 17(2) occurred, the Commissioner ruled that no Central Excise Licence was required for the process, and no further duty levy was applicable on the paper cut and re-rolled by the appellants.

3. Ultimately, the Commissioner set aside the Assistant Collector's order and allowed the appeal, providing consequential relief to the appellants. The decision was based on the finding that the process of slitting and re-rolling duty paid paper rolls did not constitute manufacturing under Tariff Item 17(2), and therefore, no duty or licence obligation applied.