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TMI Blog1989 (10) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... s regards manufacturing process is mentioned in the petition. It is contended that after the aforesaid process is over, the paper remains the paper and there is no change in the character and quality of the paper. 3. In the petition, the history of the Tariff Item is narrated. The Notification granting certain exemptions on the bituminised water-proof packing paper is also referred to. 4. All these details are not necessary for deciding the issues involved in the petition. The central question which requires to be decided is as to whether there is manufacturing process in preparing the bituminised water-proof packing paper and after the process is over, whether a new product comes into existence. Therefore, other details are not referred to. 5. However, it may be mentioned that in Para 9 of the petition the petitioners have stated that for the period commencing from March 16, 1976 to May 31, 1976 the petitioners have cleared certain goods. In this respect departmental proceedings were pending. One of the demands for the period commencing from May 27, 1976 to May 31, 1976 made by the Assistant Collector has been confirmed and the same was carried in appeal. In this connection, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise duty was being levied on weight basis and not ad-valorem. By Finance Act, 1976, Tariff Item No. 17 was substituted and the excise duty was made leviable ad-valorem . The relevant part of the entry, as it stood substituted by Finance Act, 1976, reads as follows :- "T.I. No. 17- PAPER AND PAPER BOARDS, ALL SORTS (Including paste-board, mill-board, straw-board, cardboard and corrugated board) in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. XXX XXX (1) (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), riot elsewhere specified; Thirty per cent ad valorem." 9. At this stage we may refer to the definition of "manufacture" occurring in section 2(f) of the Central Excises and Salt Act, 1944 (for short 'the Act'), the relevant part of which reads as follows: " "manufacture" includes any process incidental or ancillary to the completion of a manufactured product." Thus, the aforesaid definition is an inclusive definition. 10. The learned Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Single Judge of the Andhra Pradesh High Court has held that bond-paper and kraft paper both may have been used for packing goods but the bituminised water-proof paper or bond paper is not kraft paper. The two are so different that a purchaser of bond paper cannot be delivered kraft paper. He has further held that these are also known with different names in commercial parlance. Therefore, it cannot be said that kraft paper and bond paper were same kind of paper and that there was no manufacture involved in the process bringing about the end product i.e. bituminised water-proof paper. 12. The definition of the phrase "manufacture" occurring in Section 2(f) of 'the Act' has come up for consideration before the Supreme Court on several occasions. In the case of Empire Industries Ltd. v. Union of India and Others, reported in A.I.R.1986 S.C. 662 = 1985 (20) E.L.T. 179 (SC) in Para 32 of the judgment the Supreme Court has observed as follows :- "The taxable event under the Excise Law is 'manufacture'. 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 be it the result of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , reported in 1983 (12) E.L.T. 786 (A.P.). 15. In view of the aforesaid principle laid down by the Supreme Court, the question which is required to be examined and decided is as to whether any process whatsoever incidental or ancillary is being undertaken or not. If yes, as a result of such process, whether a new product is coming into existence or not. This new product should have distinctive name, character or use. In the instant case, in the affidavit-in-reply it is stated that bituminised water-proof paper is altogether a different variety in appearance or form. Its end use is different than basic paper which is a kraft paper. It is further stated that kraft paper is not water-proof paper, while bituminised water-proof paper has the characteristic of being water-proof paper, as its name suggests. It is further stated that the original kraft paper loses its identity after the manufacturing process is undergone. It is also stated that the price is also higher. In view of the aforesaid position we ourselves have examined the raw material i.e. the kraft paper and the end-product i.e. bituminised water-proof paper. The kraft paper is very thin. The very idea of bonding kraft paper ..... X X X X Extracts X X X X X X X X Extracts X X X X
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