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TMI Blog1983 (5) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise contend that the Mills should pay duty on its wrapper paper as wrapper paper before it is taken for use to wrap other papers in. The Mills reject this contention saying that they pay duty on the wrapper paper when it is finally removed from the factory after other papers are wrapped in it. The duty on the contents which are wrapped in the wrapper paper is calculated on the total value which includes the value of the wrapper paper. To pay duty on the wrapper paper before it is used as wrapper for other paper as demanded by Central Excise would result in paying duty twice on the wrapper and this is contrary to the law. The wrapper does not become marketable till it is removed with its contents, at which time, it pays duty as part of the contents. 2. The learned Counsel for the appellant urged all the above before the Tribunal at the hearing on 3-5-1983. She also urged that the same question was decided by a Bench of this Tribunal in Rayalaseema Paper Mills Ltd. v. The Collector of Central excise, Hyderabad - 1983 E.L.T. 517, when the Bench decided that duty on wrapper paper cannot be levied twice. The Counsel urged that even proforma credit under Rule 56A was denie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise duty assessment. There is no double taxation here and there is no collection of duty twice on the wrapper as wrapper paper is a natural consequence of the manufacture of that paper. The criterion of marketability canvassed by the appellant is inept because they have not shown that the paper is unmarketable. They claim unmarketability only because they have not sold the paper. But that the paper is marketable is evident from the fact that the factory put it to the use to which such paper is capable of being put. 6. The mere fact that a commodity is not placed on the market and offered for sale, does not mean it is not marketable; all that it may mean is that the manufacturer has chosen not to market it then. But the saleability remains intact. The goods created here became marketable when they were manufactured and then put to the use for which they were meant. There are no signs that any further finishing processes were to be undergone or that the paper, were semi-manufactured. The mill merely for reasons of its own convenience, did not place the paper for sale. Such paper is sold and is still being sold. Marketability cannot mean the manufacturer s choice not to marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The appellants referred to a judgment of the Andhra Pradesh High Court writ petition No. 2055 of 1980. The High Court had ordered the authorities to allow the mills to clear the excisable goods manufactured by them without insisting on payment of duty on wrapping paper used internally for packing reams and rolls, provided the Mill has paid excise duty on the value of wrapping paper in accordance with the tariff rate applicable thereto . From this we see that the Court had ruled that the wrapper paper should be cleared without payment of duty provided that it has paid duty as wrapper paper at the appropriate rate in accordance with the tariff. This supports the view that duty on the wrapper paper is assessable as wrapper since evidently the Court was satisfied that the wrapper paper being an excisable commodity that has been manufactured, it should undergo excise duty payment like all excisable goods. As we have observed earlier the wrapper paper is not being charged to duty twice. The excisable authorities at O.P. Mills assessed the contents wrapper in the wrapper paper when they (contents) are cleared from the factory. The value of the package must necessarily include every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise authorities and we will therefore not deal with it at this stage. We would only observe that explanation to Rule 56A provide that for the purposes of this rule, material or component parts include component parts which are produced or manufactured in the manufacturer s factory. Although this explanation was inserted only in July, 1980 it should apply to past matters also because it is not an amendment but an explanation. An explanation merely makes something clear which was not clear, that something remaining the same even after the explanation. It cannot be said that the words material or component parts changed with the insertion of the explanation. They are the same words and their meaning cannot be changed by their explanation. Since the explanation elucidates the law and provides clarity where perhaps there was uncertainty or misunderstanding, we must hold that the position from the beginning of the rule was as explained. In this view we hold that Rule 56A should be extended in respect of the wrapper paper by the Central Excise authorities, if all other requirements of the law are met and fulfilled by the factory. An objection has been raised by the department that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on completion of all enquiries, tests, production of documents, etc. In other words, provisional assessment involves collection of difference of duty or in some cases refund of duty where the duty collected provisionally proves to have been more than the duty finally determined as leviable. Here we find that no duty was collected at all for the period although various correspondence are said to have been carried on between the Mill and the Central Excise. And it appears from the records that the Mills have been paying duty under protest after 30th November, 1976. So the claim, if provisional assessment for the period March, 1976 to November, 1976 must be held to be incorrect and unsustainable. On this finding the demand of duty was clearly time-barred. 13. However, the fact of the matter is that the party has paid this amount although it says it did so under protest. This is at page 5 of its appeal (which does not bear any date). The demand may be time-barred by that does not mean that the payment of duty is not acceptable. For reasons we have recorded above, duty was leviable on the wrapper paper and that duty has been paid by the Mills. Therefore, there is nothing more to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. In the operative part of their order allowing the appeal, that Bench again stressed the ruling given by the Andhra Pradesh High Court. 16. The present appellants have their factory in Brajrajnagar, in the State of Orissa. I am only stating this fact for the record and do not mean by this to imply that the principle enunciated by the Andhra Pradesh High Court should not be respected in dealing with their case. 17. However, a much more important factor is the order made very recently (on the 9th May, 1983) by a Full Bench of the Supreme Court on the principles of valuation of excisable articles under the Central Excises and Salt Act. I feel that this introduces a new dimension to the case because : (a) The Andhra Pradesh High Court was influenced by the general view of the Courts on the question of valuation which, till the recent order of the Supreme Court, were taken to be well-established, but which have now been substantially modified; (b) The other Bench in turn relied heavily on If it did not actually feel itself bound by the decision of the Andhra Pradesh High Court. 18. The Andhra Pradesh High Court quoted with approval another decision of the same High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng be primary packing or secondary packing and whether its cost is shown separately or as included in the wholesale cash price. Whatever packing is necessary for the purpose of putting the excisable article in a condition in which it is generally sold in the wholesale market at the factory gate, the cost of such packing cannot be deducted from the wholesale cash price of the excisable article at the factory gate . This amounts to a specific and direct authority for including in the cost of a consignment of paper the full cost, including any duties, of the paper in which it is wrapped or packed. 23. I feel, therefore, that the order of the Supreme Court, and the law as laid down by it, should supervene over the view taken by the Andhra Pradesh High Court in the case of Andhra Pradesh Paper Mills Ltd., and the view taken by the other Bench of the Tribunal, following the view of the Andhra Pradesh High Court : and that we would not be wanting in respect to either the High Court or the other Bench if we adopted our own view as set out above, which finds strong support in the latest order of the Supreme Court. I accordingly concur with my learned brother s view in rejecting this appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EDITOR S COMMENTS The Supreme Court of India in the case of Cannanore Spinning and Weaving Mills v. Collector of Customs - 1978 E.L.T. (J 375) - while dealing with the case of demand raised on the basis of retrospective effect given to an Explanation which was subsequently added by way of an amendment, has held that the rule making authority has not been vested with the powers under the Central Excises and Salt Act to make rules with retrospective effect, therefore, the retrospective effect purported to be given to the Explanation was beyond the powers of the rule making authority. The observation of the Appellate Tribunal in the instant case that an Explanation added to Rule 56A in July, 1980 will take effect from the date Rule 56A came into existence because an Explanation merely elucidate the law and provides clarity where perhaps there was uncertainty, does not survive on the face of the Supreme Court decision cited above. The Supreme Court in the said case has held as under :- 6. Dr. Seiyed Muhammed, learned Counsel for the department did not support the impugned demand on the basis of the retrospective effect purported to have been given to the explanation refer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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