1984 (10) TMI 48 - HC - Central Excise

Summary

Issues involved: Determination of liability to excise duty on bituminised waterproof paper u/s Tariff Item 17(2) of the Central Excises and Salt Act, 1944.

1. The judgment addresses the question of whether the process of producing bituminised waterproof paper constitutes 'manufacture' under the law. The process involves bonding kraft paper with bitumin to enhance its strength for packaging purposes. Both parties agree that duty is only leviable if the process amounts to 'manufacture'. The court examines the definition of 'manufacture' and concludes that the process employed does not result in the emergence of a new and distinct article, as the essential character and use of the kraft paper remain unchanged. The court cites precedents from Madras, Calcutta, and Gujarat High Courts to support its view that the process does not amount to manufacturing new goods.

2. The judgment contrasts the views of the learned Single Judge who held that the bituminised paper is distinct from kraft paper and serves different packaging needs due to its enhanced strength. However, the court disagrees, emphasizing that mere strengthening of kraft paper does not constitute manufacturing new goods. The court asserts that the process is akin to applying a solution to jute cloth or coating paper with gum, as seen in previous cases. It reiterates that the crucial factor is whether a manufacturing process is undergone, which, in this case, is deemed not to have occurred.

3. The judgment also analyzes Tariff Item 17(2) under which both kraft paper and bituminised waterproof paper fall. It notes that the bituminised paper is not specified elsewhere as a separate item, indicating that it should be classified under this tariff item. The court dismisses the argument that the higher bitumin content in the bonded paper affects its classification, emphasizing that both paper and bitumin have already been subjected to duty, and the process does not amount to manufacture.

4. Consequently, the Writ Appeal and Writ Petition are allowed with no order as to costs. The court rejects the oral request for leave to appeal to the Supreme Court under Article 133 of the Constitution of India, deeming the case not involving a substantial question of law of general importance warranting Supreme Court intervention.