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Issues: Assessment of customs duty on imported paper cutting machinery under Notification No. 18/61, classification of paper cutting machinery as paper making machinery, eligibility for concessional rate of duty for paper cutting machinery.
Analysis: 1. Assessment under Notification No. 18/61: The petitioner, a paper manufacturing company, imported a simplex rotary sheet cutter assessed under Item 72(b) with Notification No. 18/61 at 10% as paper making machinery. The Customs Revenue Audit objected that the machine is not part of paper making machinery as it only cuts already manufactured paper. A demand was raised, and a show cause notice issued. The Assistant Collector determined duty payable at Rs. 98,594.65. 2. Appeals and Remand: The petitioner appealed to the Appellate Collector, who dismissed it stating no appeal lay as the decision was by the Collector. The matter was remanded by the Central Board of Excise and Customs to the Collector. The petitioner sought revision from the Government of India under Section 131 of the Customs Act, which decided on merits that rotary sheet cutters are not paper making machinery eligible for concessional assessment under Notification 18/61. 3. Contending Classification: The petitioner argued that paper manufacturing includes the process until paper is marketable, requiring cutting for sale. The cutting machinery should be considered paper making machinery as it is essential for making paper marketable. 4. Interpretation of Notification: Notification No. 18/61 provides for concessional duty on "Paper making machinery." The question arises if paper cutting machinery falls under this category. The machinery imported cuts paper already made, not used for paper production. The notification's intent is crucial, as it does not explicitly include paper cutting machinery for concessional duty. 5. Legal Interpretation: The court analyzed the term "paper making machinery" in the notification, emphasizing machinery that brings paper into existence. Paper cutting machinery alters paper sizes but does not create paper. The court compared similar notifications for textile machinery, explicitly mentioning cutting machines. As the paper cutting machine was not specified similarly, the benefit of concessional duty was not extended. The court upheld the Government's decision, dismissing the writ petition. In conclusion, the court held that paper cutting machinery does not qualify as paper making machinery under Notification No. 18/61 for concessional duty. The judgment emphasized the distinction between machinery that creates paper and machinery that alters paper sizes, ruling in favor of the Government's decision and dismissing the petitioner's writ petition.
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