1996 (8) TMI 311 - AT - Central Excise

Issues Involved:
1. Application for stay of final order pending disposal of ROM application.
2. Application for rectification of final order.
3. Examination of whether the Motley process constitutes manufacture.
4. Correct classification of plain tipping paper.
5. Validity of the show cause notice.
6. Jurisdiction of the Assistant Collector.
7. Difference of opinion between Member (Judicial) and Vice President.
8. Procedural correctness of remand directions.

Detailed Analysis:

1. Application for Stay of Final Order Pending Disposal of ROM Application:
The applicant sought a stay of the Final Order No. 333/94-C dated 16-11-1994 in Appeal E/5493/92-C pending the disposal of the ROM application. Since the ROM application had been heard, the stay application was deemed unnecessary and thus rejected.

2. Application for Rectification of Final Order:
The applicants sought rectification of the final order, highlighting several findings in the separate orders of Member (J) and the Vice President. They argued that the Tribunal's remand for de novo adjudication was flawed and sought quashing of the proceedings and setting aside of the impugned order.

3. Examination of Whether the Motley Process Constitutes Manufacture:
Member (J) held that the lower authorities had not technically examined whether the Motley process amounted to manufacture and whether the resultant paper was cigarette paper. The Department was instructed to obtain technical and trade opinions and counter the same to the assessee for a reply. The matter was to be adjudicated considering the HSN Explanatory Notes and the Supreme Court ruling in the Laminated Packaging case.

4. Correct Classification of Plain Tipping Paper:
The Vice President opined that the classification of plain tipping paper was the responsibility of the manufacturer and the Assessing Officer in charge of the manufacturing unit. The appellants were responsible only for converting this paper into decorative paper through the Motley process, which did not constitute manufacturing. The Vice President suggested that the show-cause notice should have been issued to the manufacturer of the paper and not the appellants.

5. Validity of the Show Cause Notice:
The Vice President held that the show-cause notice should have been addressed to the initial manufacturer of the tipping paper, not to the appellants who merely converted it into decorative paper. The proceedings were thus initiated against the wrong party and deserved to be quashed.

6. Jurisdiction of the Assistant Collector:
The applicants argued that the Assistant Collector did not have jurisdiction to decide the case, a point not addressed by Member (J) because it was not argued before the Bench. The Vice President's observations on jurisdiction were deemed recommendatory, and the matter was ultimately remanded for de novo proceedings.

7. Difference of Opinion Between Member (Judicial) and Vice President:
The Vice President agreed with the remand for de novo adjudication but noted that the two orders differed in their reasoning and directions. The Vice President's order suggested a remand for re-examination, while Member (J) provided specific directions for obtaining technical and trade opinions. This difference necessitated a reference to a third member.

8. Procedural Correctness of Remand Directions:
The Vice President's order lacked specific directions for the lower authority, while Member (J)'s order provided clear instructions. The third member concluded that the matter should be remanded for de novo adjudication based on Member (J)'s observations and findings.

Final Order:
The majority opinion required the matter to be remanded for de novo adjudication, keeping in view the observations, findings, and directions of Member (J). The remand was to be executed with specific instructions as outlined by Member (J), ensuring a thorough and precise re-examination of the case.

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