1996 (11) TMI 206 - AT - Central Excise

Summary

Issues:
Levy of cess on wrapping paper - Single or multiple times.

Analysis:
The appeal in question concerns the levy of cess on paper, specifically wrapping paper, and whether the cess can be collected multiple times. The Revenue sought to collect the cess twice: first when the wrapping paper is cleared for captive consumption, and second when it is used as a wrapping material for other paper during clearance. The lower appellate authority ruled that the cess on paper under the Cess Act should be collected only once. The Department argued that as soon as the paper is produced, it becomes liable to cess payment, and if it is subsequently used for wrapping, its identity merges with the wrapped paper, necessitating another cess payment. However, the Consultant for the respondents contended that the Cess Act does not allow for multiple levies on the same product. The Consultant emphasized that once the cess is paid on the goods produced, it cannot be charged again, even if the form of the paper changes due to its use as a wrapper.

Upon considering the arguments from both sides, the Tribunal examined Section 9 of the Industries (Development and Regulation) Act, 1951, which pertains to the imposition of cess on scheduled industries. The Tribunal noted that the cess is levied on goods manufactured or produced, and once the cess is paid on a particular product, it cannot be charged again due to a change in form. In this case, where wrapping paper is subsequently used as packing material, if the cess liability is discharged before its use, no further cess can be levied on the same paper when used as wrapping material. The Tribunal held that there is no provision in the Act to permit a multi-point levy of cess on the same paper. Therefore, the Tribunal upheld the lower authority's decision and dismissed the Revenue's appeal.

Additionally, a Cross Objection was raised, but the Tribunal deemed it as comments and dismissed it as misconceived in law. The judgment clarifies the application of cess under the Cess Act and highlights that once the cess is paid on goods produced, it cannot be subjected to another cess due to a change in form. The decision provides clarity on the single levy of cess on wrapping paper, emphasizing the statutory provisions and principles governing cess collection under the Industries (Development and Regulation) Act.