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TMI Blog1984 (3) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise Rules, 1944 and demanded ₹ 12,709.48 and Rs, 474.72 on the said excisable goods under Rule 9(2) and also asked to show cause why penalty should not be imposed on them under Rule 173Q of the Central Excise Rules, 1944. 4. In reply to the show cause notices the appellants alleged that they manufactured varnished/coated paper from duty paid paper for use in the manufacture of electrical equipment. They contended that they had not violated Rules 174 and 9(1) of the Central Excise Rules, 1944 and that it was in the knowledge of the Central Excise Department that they were manufacturing varnished/coated paper and clearing it without payment of duty. They also submitted true copies of classification lists in Form I and other allied correspondence. It was also alleged by them. that on the advice of the Superintendent of Central Excise, Calcutta, IX Division, they applied for licence on 7th December, 1974. Benefit of exemption Notification No. 165/70, dated 5-9-1970 was also sought by the appellants and it was stated that varnished paper tapes, the end-product were cleared on payment of excise duty under tariff entry No. 59 of the Central Excise Tariff. 5. The Assistan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipi printing paper, emery paper, ferro and ammonia sensitised paper, flint paper, etc. in support of his contention that even though they are called paper but they are not liable to assessment under Item 17. Toilet paper, though it is called paper, is an article of toiletry and is toilet requisite and is not paper as commonly understood. Two cases of Allahabad High Court and Orissa High Court, namely Kilburn Co. Ltd v. Commissioner of Sales Tax (UP) [1973 31 STC (All.)] and State of Orissa v. Gestetner Duplicators (Pvt.) Ltd. [1974 33 STC 333 (Orissa High Court] were cited by him. Regarding the sand paper, indicator paper, ammonia and ferro paper, lipi printing paper, emery paper, ferro and ammonia sensitised paper, the learned counsel pointed out various letters of the Central Board of Excise Customs showing therein that these products though called paper do not attract duty under Item 17 of the Central Excise Tariff. 10. On the point of applicability of Rule 9(2) of the Central Excise Rules, 1944, the learned counsel submitted that in the very beginning the appellants submitted the classification list in Form I dated 24-7-1969. In that classification that the product Elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned counsel of the appellants, have been specifically excluded from the Tariff Entry No. 17 by way of the circulars issued by the Central Board of Excise Customs. In none of the cases cited by the learned counsel of the appellants it has been laid down that the entry of the paper product should be looked into with respect to their end use. Varnished paper which is the product in dispute came into existence by a process of manufacture and it has a destrictive name, character and use and it squarely falls within the Tariff Entry 17(4) of the Central Excise Tariff. 13. On the point of limitation, it was argued that the appellants submitted the Classification List in Form I to the Assistant Collector of Central Excise, Calcutta IX Division, who was not the proper officer for passing any order so far as the determination of duty regarding that particular product was concerned. The appropriate jurisdiction in that case was that of Assistant Collector of Central Excise, Calcutta II Division and therefore, the acceptance of the classification list by the officer having no jurisdiction gives no relief to the appellants. No licence was obtained by the appellants prior to 7t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious types of products, such as, Emery Paper, Ferro Ammonia Sensitised Papers, Lipi Printing Paper, Sand Paper, though the word paper has been used but they have been excluded from the ambit of the Tariff Entry No. 17 by various circulars of Central Board of Excise Customs meaning thereby that all the products though called paper in common parlance do not come within the ambit of this Tariff Entry No. 17 because their use is not as papers but as product with very different utilities. The electric insulating varnished paper which is the product under dispute is known as an electrical insulator, as has been alleged by the appellants and not disputed by the Department. The authority below has not alleged anywhere that this product serves as a purpose of paper as envisaged in Tariff Entry No. 17. All the merits are on the side of categorising this product as a insulating material and not as paper. The authority below has not given any justification in classifying this product under Item No. 17(4) of the C.E.T., and therefore, we have no other alternative but to set-aside the order of the authority below on this point. However, the excise authorities are at liberty to classify this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out payment of duty. Mere non-payment of excise duty is not a sufficient ground to invoke Rule 9(2). 21. Applying the said principle of law, we have to see in the present circumstances of the case, whether the provisions of Rule 9(2) and Rule 174 have been rightly applied by the authority below, in bringing this demand within time. 22. In this respect there is no dispute about the fact that in the very beginning when the appellants started manufacturing this product, they submitted a Classification List in Form I on 24-7-1969 and in that classification list this product electrical insulating varnished paper was declared to be non-excisable and this was provisionally accepted by the Supdt. of Central Excise. This continued upto 1972 and in the year 1972 the appellants received a show cause notice for removing this product without payment of duty but the proceedings were decided in favour of the appellants and it was held that the product was exempted from duty under Notification No. 165/70-C.E., dated 5-9-1970. On 17th December, 1974 on the advice of the department, the appellants applied for getting the licence for the manufacture of -this product and in that application i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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