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TMI Blog1984 (1) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The resultant paper is waxed on the other side, the grammage consequently going upto 52-55 G.S.M. It is used for packing and wrapping. 3. Samples were drawn by the Excise authorities from : (a) Base Paper T.D. Poster Paper, (b) Paper coated one side with Sodium Benzoate, and (c) Paper coated one side with Sodium Benzoate and the other side waxed. On test, the Chemical Examiner reported as follows : (1) BASE PAPER, i.e. T.D. POSTER PAPER. The sample is in the form of white sheet of paper. It is free from laid lines and watermarks. One side is more smooth than the other one. It has good mechanical strength e.g. folding and tearing strength. It is composed of chemical wood pulp. Ash gives tests for titanium dioxide. It has grammage of 41.10 gm/sq. metre. (2) PAPER COATED ONE SIDE WITH SODIUM BENZOATE. The sample is in the form of dull white sheet of paper. It is said to have been coated on one side with Sodium Benzoate, the tests of which are not clear. The sheet as such has grammage of 43.80 gm/per sq. metre. (3) PAPER COATED ONE SIDE WITH SODIUM BENZOATE AND OTHER SIDE WAXED. The sample is in the form of white sheet of paper. It is said to have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was placed in this context on the Tribunal decision in the Golden Paper Udyog case reported in 1983 E.L.T. 1123. The ratio of this decision applied to the facts of the present case. (iii) Reference was made to Central Excise Tariff Items 1-C, 12 and 14C. With reference to Item 1-C, it was submitted that biscuits even when a layer of cream was sandwitched between 2 pieces, continued to remain biscuits within the tariff entry. With reference to Item No. 12, it was submitted that vegetable non-essential oil, whether deodorised or not, continued to remain vegetable non-essential oil under the entry. With reference to Item 14-C, it was submitted that glycerine, whether crude or refined, continued to be glycerine within the meaning of the entry till the tariff item was amended so as to specifically and separately provide for crude glycerine and refined glycerine. The point urged was that the products mentioned in these tariff entries were liable to duty only once and not a second time after they were subjected to some processing or the other. Likewise, it was urged, the subject paper, though coated with sodium benzoate on one side and with wax on the other, remained paper within the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs or uses different from the starting product. If these tests were applied, Shri Lakshmi Kumaran urged, there could be no doubt that, in the present case, there was manufacture . The finished product was certainly different from the starting product. In this context, he placed strong reliance on the Bombay High Court judgment in the New Shakti Dye case - 1983 E.L.T. 1736 - in which the Court held that bleaching, dyeing, printings, etc. of grey cotton fabrics resulted in a new product known as bleached, dyed or printed fabrics, which, while still being cotton fabrics, were different from grey fabric. The Court came to this conclusion on considerations from first principles before it proceeded to consider the amendments effected to Tariff Items 19 and 22 and Section 2(f) of the Act. While it is true that if a product was specifically mentioned in the tariff entry, no question as to whether the process or processes resulting in the product amounted to `manufacture was permissible (according to judicial pronouncements), it was not correct to invoke a tariff entry to come to the conclusion that there was no manufacture despite the position that, in fact, there was manufacture con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tariff entry. 11. We have carefully considered the submissions of both sides. For a proper understanding of the issues involved, it is considered expedient to set out Tariff Item 17 as it stood at the relevant time : 17. PAPER AND PAPER BOARD, ALL SORTS (including paste-board, mill board, strawboard, cardboard and corrugated board), in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power : (1) Uncoated and coated printing and writing paper (other than poster paper). (2) Paper board and all other kinds of paper (including paper or paper boards which have been subjected to various treatments such as coating, impregnating, corrugation, creping and design printing), not elsewhere specified. It will be seen that sub-item (2) has an inclusive clause whereby paper or paperboards which have been subjected to various treatments such as coating, etc. are specifically brought within the purview of the entry. The question is whether an untreated paper, which falls under Item 17(2) would, after being subjected to one or more of the treatments alluded to in the inclusion clause, continue to fall in the said entry and attract ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be coated paper or waxed paper for the purpose of the above Notification. The Notification itself does not make a distinction between paper which is waxed on one side and the paper which is waxed on both sides. However, it is seen from the Indian Standard IS : 4661-1968 ( Glossory of terms used in paper trade and industry ), that coated paper has been defined as paper which has undergone a coating process on one or both sides . Applying this definition, the paper under consideration could be described either as sodium benzoate coated paper or waxed coated paper. The Dept. has not placed before us any evidence as to how the goods are known in the market. However, Kiran has produced invoices describing the goods as wax paper. Since waxed paper is specifically enumerated in Notification No. 71/76, we do not see any reason why the benefit of the said Notification should not be extended to the subject paper, as claimed by KIRAN in the classification list submitted by the claiming benefit of the Notification. The Notification further stipulates that it shall not apply to a manufacturer who avails of the special procedure prescribed under Central Excise Rule 56A or the exemption grante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the Central Excises Salt Act by the Finance Bill, 1976, which was introduced in the Parliament on 16-3-1976, and was later enacted as the Finance Act of 1976, the Central Government, acting in exercise of the powers conferred on it by Rule 8(1) of the Central Excise Rules, 1944, issued Notification No. 71/76 on the same date, i.e. 16-3-1976 (which we have set out in para 12 above) exempting specified varieties of treated paper from excise duty in excess of 12.5% ad valorem when such papers were made out of excise duty or additional Customs duty-paid base papers. The inclusion of treated papers by express words in the tariff entry 17(2), read with the Notification No. 71/76, is clear evidence of the manner in which the tariff entry has been understood by the authority charged with the task of executing the statute. And it is not as if this understanding is without any basis. The tariff entry, as we have noted, specifically includes treated papers. If the untreated paper and the treated paper were to be charged to duty at the same rate, that would amount to a considerable burden and it is clear that the Notification has been issued in order to mitigate the rigour of the 2nd s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known differently from the former. In the present case, the base paper (Poster paper) and the treated paper (waxed paper) are admittedly different products, known differently and have different uses. From this angle also, there is little doubt that there has been manufacture for the purposes of excise levy. 17. There is also another angle to the question. If we were to hold that waxed paper does not fall for a second stage levy under Item 17(2), we would, in effect, be rendering statutory Notification No. 71/76 nugatory. The Notification has been issued by the Central Government in exercise of its delegated powers. We would be slow to adopt a construction which renders a statutory Notification meaningless. 18. We must also refer to the submissions made on the hopping theory. In its judgment, in the case of Standard Packagings, 1983 E.L.T. 786 (A.P.) - 1981 ECR 113D, the Andhra Pradesh High Court has clearly held that the proposition that manufactured goods should hop into another item (from the parent item) before they are taxed, has no basis either in our fiscal philosophy or in our statutes. 19. Before concluding we must also refer to Shri Lodha s submission with r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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