1988 (7) TMI 288 - AT - Central Excise

Summary

Issues:
1. Interpretation of duty exemption under Central Excise Notification No. 62/82 for wrapping paper used in the factory of production.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the entitlement to duty exemption under Central Excise Notification No. 62/82 for wrapping paper produced by the respondents and used in their factory for wrapping reels and reams of paper. The Assistant Collector contended that the wrapping paper was solely used for packing and did not contribute to the manufacture of the paper, thus denying the benefit of the notification. However, the Collector (Appeals) ruled in favor of the respondents, leading to the appeal. The key question was whether the wrapping paper qualified for duty exemption under the notification.

The notification in question, No. 62/82, dated 21.2.82, provides duty exemption for paper and paper board produced from pulp if used within the factory of production for further manufacturing of paper or paper board falling under the specified item. The Revenue argued that the wrapping paper, as a finished product, was not used for further manufacturing but only for packing other paper varieties before clearance from the factory. On the other hand, the respondents contended that packing was essential for selling the paper in the wholesale market, making it part of the manufacturing process. They argued that the wrapping paper was indeed used for the manufacture of other paper varieties.

The Revenue relied on a previous Tribunal decision and a Supreme Court judgment to support their argument. However, the Tribunal distinguished the cited cases, emphasizing that the issue at hand was not about determining the value of the paper for excise duty but whether the wrapping paper qualified for duty exemption under the notification. The Tribunal also referred to a previous case where it was held that normal packing essential for delivering manufactured products should be considered part of the manufacturing process. Applying this principle, the Tribunal concluded that the wrapping paper used by the respondents contributed to the further manufacture of paper and granted duty exemption.

In conclusion, the Tribunal upheld the Collector (Appeals) decision, stating that the wrapping paper was indeed used for the further manufacture of paper and thus eligible for duty exemption under Central Excise Notification No. 62/82. Consequently, the appeal was dismissed, affirming the correctness of the impugned order.