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TMI Blog1989 (8) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is held that in the manufacture of paper rolls delivered to the customers for use as roll paper, paper core is used as component part. - Civil Appeal No. 3474 of 1988 - - - Dated:- 22-8-1989 - S. Ranganathan, N.D. Ojha and J.S. Verma JJ. Harish N. Salve, Mrs. M. Sud, Ms. Aruna Jain and Praveen Kumar, for the appellant. B. Dutta, Additional Solicitor-General (T.V.S.N. Chari and P. Parmeshwaran, Advocates, with him), for the respondents. [Judgment per : Ojha, J.]. - This appeal under Section 35L of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) has been preferred against the order dated June 28, 1988 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi. The appellant carries on the business of manufacture and sale of paper. On the plea that in the manufacture of paper the appellant uses paper cores, exemption from payment of excise on such paper cores was claimed by it on the basis of a Notification No. 201/79 dated June 4,1979 as amended by Notification No. 105/82 dated February 28, 1982 (hereinafter referred to as the Notification). The Assistant Collector, Central Excise rejected the claim of the appellant but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e excise duty was payable at the relevant time separately both on paper and paper core under different tariff items of the First Schedule to the Act and it has also not been disputed by the respondent that if paper core fell under the term "component parts", the appellant would be entitled to the exemption as claimed by it and contemplated by the Notification. The short question which, therefore, arises for consideration in the instant appeal is whether paper core is used in the manufacture of paper as component part. Even though the term "component parts" has not been defined either by the Act or by the Notification the term "manufacture" has been defined in Section 2(f) of the Act. This definition inter alia contemplates that "manufacture" includes any process, incidental or ancillary to the completion of a manufactured product. Section 3 of the Act which is the charging section contemplates levy and collection of duty of excise on all "excisable goods". The First Schedule to the Act specifies the excisable goods under various tariff items. In the absence of any definition of the term "component parts" it is permissible to refer to the dictionary meaning of the word "component". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he use of paper core is necessary in "any process incidental or ancillary to the completion of paper as marketable goods and it would consequently be commercially inexpedient to sell paper without the use of paper core, it would certainly be a constitutent part of paper and would thus fall within the purview of the term "component parts" used in the Notification. This takes us to the process of manufacture of paper. The process of paper manufacture is to be found at pages 230 to 235 of Part 17 of Encyclopaedia Britannica. The process of paper manufacture by paper making machine is contained at pages 232 onwards. After referring to the various stages of manufacture of paper it is stated :- "After the drying comes the calendering and there are usually two or more sets or stacks of calendering rolls, according to the grade of surface required. These calenders consist of vertical stacks of chilled iron rolls, generally five in a stack, which revolve on one another and some of which are bored for heating by steam; pressure is applied to them at will, by adjusting levers at the top of each stack. Finally the paper passes to cooling rolls, where the paper can be cooled by water spray if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds or more; much kraft paper is sold to be used directly from the roll in wrapping goods, while tremendous quantities are used to feed the machines making paper bags. Paper for the conventional coating operations is delivered to the coating plant in roll form; and considerable quantities of white paper are printed continuously from rolls. These are only a few of the more obvious uses of roll paper. All roll paper must reach the consumer in perfect condition if it is to be of the greatest use. It must be carefully wrapped and the ends of the rolls protected by stout heads to keep edges of the paper from being injured." 8. As regards paper which is to be used in sheet form it is stated at pages 190 and 191 :- "Paper which is to be used in sheet form may be so prepared by passing directly from the reel stand of the paper machine to a cutter, layboy and sheet counter in line with the machine and attended by the paper machine crew. This system is used for coarse papers which do not need sorting, and it is common on machines which run off pulp for chemical or papermaking use. As a more common alternative the rolls go to independent cutters from the rewinders or the supercalenders, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known as roll paper. The use of paper core, however, is not necessary for the manufacture of paper sheets. As stated at page 184 of the Story of Papermaking (supra), the core on which the paper is wound will depend to some extent on what happens to the paper next. If it is delivered to the customer in rolls as it comes from the rewinder the core is apt to be of heavy board stock wound and pasted at mandrel. If, however, the rolls of paper are not be delivered to the customer in the form of rolls as such and the rolls of paper are to pass to another part of the same plant for further treatment the core is likely to be of iron pipe which can be used over and over. Consequently core of iron pipe is more likely to be used in the normal course for further treatment in the plant which will include the process of cutting the paper into sheets. Inasmuch as core of iron pipe can be used over and over, it cannot be said that the use of paper core is necessary for the rewinding of paper meant to be cut into sheets. It may be that for the sake of convenience paper core may be used by some manufacturer even for rewinding of such paper as is meant to be cut in sheets out in that case it would at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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