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TMI Blog1989 (9) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture and clearance of the aforesaid goods without taking out a Central Excise licence and observing the procedures laid down in the Central Excise law including payment of duty. The Assistant Collector of Central Excise issued a show cause notice dated 15-6-1987 to the appellants alleging contravention of several provisions of the Central Excise law. By their letters dated 6-7-1987 and 16-7-1987, the appellants refuted the allegations. They contended inter alia that the goods could not be considered as articles of paper falling under sub-heading No. 4818.90 of the Schedule but were a converted type of paper wholly exempted from Central Excise duty. In due course, the Additional Collector passed the impugned order, after hearing the appellants. 3. The process of manufacture of the goods, as set out in the Additional Collector s order, is as follows :- The noticee imports or buys locally the base filter paper in reel form. The said base filter paper reel is mounted on the unwind stand in the factory. The paper is then unwound and passed through a series of idler rollers. At that stage, the base filter paper comes into contact with the impregnating roll which picks up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of pleating. 5. The Additional Collector, while rejecting these contentions, observed that the pleated filter packs which had a specific end-use (viz. preparation of filter elements) were different from the impregnated filter paper which, according to him, was capable of general or varied use. Therefore, he held, the pleated filter packs were no longer converted paper but articles made of paper. 6. E/467/88-C. - The main issue involved in this appeal is the same as in the other appeal, viz., the classification and liability to duty of impregnated filter paper pleated packs. The Collector held that the goods were classifiable under Item No. 68 of the erstwhile Central Excise Tariff Schedule and under sub-heading No. 4818.90 of the current Schedule. The Collector further demanded payment of duty amounting to Rs. 18,28,219.41 under Central Excise Rule 9(2) in respect of the goods cleared during the period from 1-3-1982 to 31-12-1986. A quantity of seized goods was confiscated but allowed to be redeemed on payment of a fine of Rs. 12,500. A penalty of Rs. 6,00,000/- was imposed on the appellants. 7. We have heard Shri V. Sridharan, Advocate, for the appellants and Shri A.S. Sunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the pleated paper pack is the same: filtration. The paper in reel form has been no doubt slit to the required width, pleated and cut to the required length, in order to make it usable in motor vehicles etc. for filtration purposes. 10. The learned Counsel for the appellants has placed reliance on certificates furnished by certain authorities in support of the contention that pleated paper is only a converted type of paper. (i) The Institute of Paper Technology, Saharanpur has, in its letter dated 30-5-1987, on the basis of The Dictionary of Paper published by American Paper and Pulp Association, New York, 1965, and the ISO Recommendations R-66-1958 R-231-1961 Paper Vocabulary , explained that in the field of paper technology, conversion is a general term applied to processes or operations on paper or board after normal paper making operations. For example, impregnation, waxing, gumming, machine coating, printing, bag etc. manufacturing are referred to as converting processes. Consequently, the Institute has opined that the impregnation of base filter paper with phenol formaldehyde resin solution, drying, cutting and pleating are conversion operations. (ii) The India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) E.L.T. 179 (SC). In para 30 of this judgment, the Supreme Court observed that the moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether it be the result of one process or several processes, manufacture takes place and liability to duty is attracted". The Court further held that this would be so even if the new commodity falls under the same Tariff Item or sub-item as the commodity which was subjected to the processes. But the basic thing to note is that the processes to which the original commodity is subjected should result in the emergence of a new commodity distinct and different from the former in name, character and use. We have noted that the impregnated filter paper, even after being slit, pleated and cut to size, remains impregnated filter paper though in the latter state it may be known as impregnated filter paper pleated packs having regard to its physical condition. The use remains the same, namely, filtration. The pleating does not, in our opinion, bring about any fundamental change in the paper except, as we have noted, to make it possible to have a large surface ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tem No. 17(2) of the erstwhile Tariff Schedule whether cleared in reels or cut to the required length, width etc. Even when the paper is cut to the required dimensions, it does not cease to be paper and is not classifiable as an article of paper in the sense an envelope, a bag, a packet or carton is. 17. Now, turning to classification of the subject goods under the Tariff Schedule of 1985, the appellants claim is for Heading No. 48.17, sub-heading No. 4817.90 48.17 - Other paper, Paperboard, Cellulose Wadding and Webs of Cellulose fibres, cut to size or shape. 4817.90 - Other The Department would have the classification under Heading No. 48.18, sub-heading No. 4818.90 48.18 - Other articles of paper pulp, Paper, Paperboard, Cellulose Wadding or Webs of Cellulose fibres. 4818.90 - Other The Explanatory Notes under Heading No. 48.23 of the Harmonized Commodity Description and Coding System (HSN) of the Customs Cooperation Council, Brussels (on which the Schedule of 1985 is broadly patterned) state that in the heading (which is a combination of Heading Nos. 48.17 and 48.18 of the India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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