1980 (11) TMI 50 - HC - Central Excise

Summary

Issues Involved:
1. Whether excise duty is leviable on teleprinter rolls made by the petitioners.
2. Whether the petitioners are entitled to the facility of proforma credit under Rule 56A of the Central Excise Rules, 1944 for the excise duty paid on the tissue paper used in making teleprinter rolls.

Detailed Analysis:

1. Excise Duty on Teleprinter Rolls:

The petitioners, a company manufacturing various stationery items including teleprinter rolls, argued that their process of cutting and rolling large paper into specified sizes for teleprinter machines does not constitute manufacturing within the meaning of Section 2(f) of the Central Excises & Salt Act, 1944. They contended that the paper they use is already fully manufactured and duty-paid, and their activity does not alter its essential identity.

The respondents countered that teleprinter rolls, due to their specific characteristics and the processes involved (cutting, rolling, inter-leafing with carbon paper, printing warning marks, and slogans), constitute a new product distinct from ordinary printing or writing paper. They argued that these processes amount to manufacturing under Section 2(f) of the Act, making teleprinter rolls liable to excise duty under sub-item (2) of Tariff Item No. 17.

The court examined the statutory provisions and relevant case law, concluding that the processes carried out by the petitioners result in a new product with distinctive characteristics, known in the market as teleprinter rolls. The court held that this activity amounts to manufacturing, making teleprinter rolls subject to excise duty under sub-item (2) of Tariff Item No. 17.

2. Proforma Credit under Rule 56A:

The petitioners sought proforma credit under Rule 56A for the excise duty paid on tissue paper used to make carbon paper, which was then used in teleprinter rolls. They argued that the tissue paper, though converted into carbon paper, should still qualify for proforma credit.

The respondents contended that carbon paper, not being an essential ingredient for teleprinter rolls and not subject to excise duty at the relevant time, disqualified the petitioners from claiming proforma credit for the duty paid on tissue paper.

The court referred to Rule 56A, which allows credit for duty paid on materials used in manufacturing excisable goods, provided the finished goods are not exempt from duty. The court noted that carbon paper was not an excisable commodity at the relevant time and was not essential for manufacturing teleprinter rolls. Therefore, the petitioners were not entitled to proforma credit for the duty paid on tissue paper.

The court dismissed the petition, upholding the respondents' decisions and reasoning that the petitioners' activities constituted manufacturing of teleprinter paper, making them liable for excise duty, and that they were not entitled to proforma credit under Rule 56A for the tissue paper used in carbon paper.