1987 (2) TMI 181 - AT - Central Excise

Summary

Issues Involved:
1. Proper classification of carbon paper and carbonised adding machine rolls under Central Excise Tariff before the 1982 amendment.
2. Period for which demands should be raised if the products are classified under T.I. 17(2).
3. Jurisdiction and authority of the Superintendent of Central Excise to rescind the classification approved by the Assistant Collector.
4. Limitation period for raising demands.

Detailed Analysis:

1. Proper Classification of Carbon Paper and Carbonised Adding Machine Rolls:
The primary issue was whether the products should be classified under Tariff Item 17(2) as claimed by the Revenue or under Tariff Item 68 as claimed by the appellants. The appellants argued that their products, carbon paper and carbonised adding machine rolls, were not "paper" in the proper sense but "articles of paper," and thus should fall under T.I. 68. They relied on the Supreme Court decision in *State of Uttar Pradesh & Another v. Kores (India) Ltd.* and the Karnataka High Court decision in *Khoday Industries v. Union of India* to support their argument.

The Tribunal considered the six decisions cited by the respondent, which classified carbon paper under T.I. 17(2). However, it decided to follow the Karnataka High Court's decision, which held that carbon paper during the relevant period should be classified under T.I. 68 as an article of stationery. The Tribunal emphasized that in the absence of any contrary decision from other High Courts, the interpretation given by the Karnataka High Court should be followed.

For carbonised adding machine rolls, the Tribunal distinguished them from carbon paper based on their character and use. It held that carbonised adding machine rolls, being coated paper, should be classified under T.I. 17(2).

2. Period for Which Demands Should Be Raised:
The Tribunal noted that the appellants' classification list dated 1-4-1979 was approved under T.I. 68 by the Assistant Collector on 4-9-1979. The Superintendent of Central Excise rescinded this approval by a notice dated 29-12-1979. The Tribunal held that the Superintendent could not rescind the approval made by his superior without following proper procedures. The Assistant Collector's adjudication order dated 13-5-1980 modified the classification, and demands were raised by show cause notices dated 1-9-1980. The Tribunal concluded that demands for carbonised adding machine rolls should be limited to six months preceding the show cause notice, i.e., beyond 1-3-1980.

3. Jurisdiction and Authority of the Superintendent:
The Tribunal found that the Superintendent of Central Excise acted without jurisdiction in rescinding the classification approved by the Assistant Collector. The proper procedure was not followed, and there was no evidence that the rescinding was done by or at the behest of the Assistant Collector.

4. Limitation Period for Raising Demands:
The Tribunal agreed with the appellants that the demands preceding six months from the show cause notice dated 1-9-1980, i.e., beyond 1-3-1980, should be time-barred. This applied to the carbonised adding machine rolls classified under T.I. 17(2).

Conclusion:
The appeals were partly allowed. The Tribunal held that carbon paper should be classified under T.I. 68, while carbonised adding machine rolls should be classified under T.I. 17(2). The demands for carbonised adding machine rolls beyond 1-3-1980 were held to be time-barred.