1984 (1) TMI 67 - HC - Central Excise

Summary

Issues Involved:
1. Classification of "poster paper" under the Central Excise Tariff.
2. Validity of excise duty assessment on "poster paper" from 16-3-1976 to 18-6-1980.
3. Applicability of Tariff Item 68 to "poster paper" post 19-6-1980.

Issue-wise Detailed Analysis:

1. Classification of "poster paper" under the Central Excise Tariff:
The petitioner, a public limited company, manufactures various types of paper, including "poster paper," which is excisable under Section 2(d) of the Central Excise Act. Prior to 16-3-1976, "poster paper" was assessed under Tariff Item 17(3) as a kind of printing and writing paper. The Finance Act 2 of 1976 amended Tariff Item 17, introducing two sub-items:
- Sub-item (1) for uncoated and coated printing and writing paper (excluding "poster paper") at 20% ad valorem.
- Sub-item (2) for paper board and all other kinds of paper not elsewhere specified at 40% ad valorem.

The Assistant Collector and the Appellate Commissioner held that "poster paper," excluded from sub-item (1), falls under sub-item (2) of Item 17. The court agreed, stating that the exclusion of "poster paper" from sub-item (1) was not for exemption but to classify it under sub-item (2) at a higher duty rate due to its commercial use.

2. Validity of excise duty assessment on "poster paper" from 16-3-1976 to 18-6-1980:
The petitioner argued that "poster paper" was totally exempt from excise duty during this period due to its exclusion from sub-item (1) of Item 17. However, the court found that "poster paper" was still covered under the main head of Item 17, making it excisable under Section 2(d) read with Section 3(1) of the Act. The court emphasized that no exemption was granted by the Central Government or the Central Board of Revenue under Rule 8 of the Central Excise Rules, 1944. Thus, the assessment of "poster paper" under Item 17(2) was valid and not a mistake of law.

3. Applicability of Tariff Item 68 to "poster paper" post 19-6-1980:
The petitioner contended that "poster paper" became liable to excise duty under Tariff Item 68 after the introduction of an explanation to Item 68 by the Finance Act 2 of 1980. Item 68 is a residuary item for goods not specified elsewhere in the Schedule. The court rejected this contention, stating that "poster paper" is covered by Item 17 and does not fall under Item 68. The introduction of the explanation to Item 68 did not alter the classification of "poster paper" under Item 17.

Conclusion:
The court dismissed the writ petition, affirming that "poster paper" was correctly classified under Tariff Item 17(2) and was liable to excise duty from 16-3-1976 to 18-6-1980. The petitioner's claim for exemption and reclassification under Item 68 post-19-6-1980 was also rejected. The court awarded costs of Rs. 200/- to the respondent.