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Jai Hind Process and Printing Vs. Collector of Customs and Central - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)LC457Tri(Delhi)
AppellantJai Hind Process and Printing
RespondentCollector of Customs and Central
Excerpt:
1. this is a revision application filed before the central government (now transferred to the appellate tribunal under section 35p of the central excises and salt act, 1944) against the order in review no. v.misc/2-2/oa/79, dated 12-5-1980 passed by the collector of customs and central excise, ahmedabad.2. briefly stated the facts of the case as are apparent on record are that the central excise officers visited the factory premises of m/s.jaihind process and printing depot (hereinafter called the appellants) on 7-5-1977 and found that the appellants were manufacturing waxed papers with the aid of power without obtaining any excise licence as required under rule 174 of the central excises rules, 1944, for the manufacture of waxed papers. on enquiries it was found that the appellants had.....
Judgment:
1. This is a revision application filed before the Central Government (now transferred to the Appellate Tribunal Under Section 35P of the Central Excises and Salt Act, 1944) against the order in review No. V.MISC/2-2/OA/79, dated 12-5-1980 passed by the Collector of Customs and Central Excise, Ahmedabad.

2. Briefly stated the facts of the case as are apparent on record are that the Central Excise Officers visited the factory premises of M/s.

Jaihind Process and Printing Depot (hereinafter called the appellants) on 7-5-1977 and found that the appellants were manufacturing Waxed Papers with the aid of power without obtaining any excise licence as required under rule 174 of the Central Excises Rules, 1944, for the manufacture of Waxed Papers. On enquiries it was found that the appellants had manufactured Waxed Papers for various parties on job basis and did not pay the excise duty on the manufactured product i.e.

waxed paper, and therefore, a show cause notice dated 6-4-1978 was served upon the appellants by the Assistant Collector of Central Excise, Jamnagar proposing penal action under Rule 173 Q (1) and also proposing recovery of excise duty under rule 9(2) on the Waxed Paper valued at Rs. 36,476.50 and Rs. 50,135.00 alleged to have been manufactured and cleared by the appellants during the period 1-3-1974 to 7-5-1977.

3. The appellants in their reply dated 25-7-1977 denied that they had manufactured waxed papers in contravention of the Central Excise Rules.

It has been alleged that since March 1974 the appellants had been waxing and printing the paper wrappers on job basis supplied by the various soap manufacturers and Bakeries for wrapping of soaps and bread, etc. and for this job work the appellants were only charging job charges from the suppliers of the papers. They had stopped doing this work after 26-3-1977.

4. The Assistant Collector of Central Excise, Jamnagar did not accept the contention of the appellants and passed an order (original) dated 30-6-1979 imposing a penalty of Rs. 200/- on the appellants under Rule 173 Q(1) of the Central Excise Rules, 1944 and also raised a demand of excise duty on the waxed papers on the job value of Rs. 12,974.50 under Rule 9(2) of the Central Excise Rules, 1944.

5. Aggrieved by the said order of the Assistant Collector, the appellants filed an appeal before the Appellate Collector of Central Excise, Bombay. While the appeal was pending disposal before the Appellate Collector, Bombay a show cause notice dated 21-12-1979 Under Section 35 A of the Central Excises and Salt Act, 1944 was served upon the appellants by the Collector of Customs and Central Excise, Ahmedabad proposing review of the order (original) dated 30-6-1979 passed by the Assistant Collector of Central Excise, Jamnagar.

6. The appellants filed a reply to the said show cause notice reiterating the same facts which were alleged in reply to the earlier show cause notice received from the Assistant Collector Central Excise, Jamnagar- But the Collector of Customs and Central Excise Ahmedabad did not appreciate the contentions of the appellants and vide order-in-review dated 12-5-1980 demanded duty on the waxed papers under Rule 9(2) of the Central Excise Rules 1944 on the value of Rs. 36,476.50 and Rs. 50,135.00 for the period 1-3-1974 to 25-4-1974 and 26-4-1974 to 7-5-1977.

7. Aggrieved by the said order of the Collector of Customs and Central Excise, Ahmedabad, the appellants filed a revision application before the Government of India which was transferred to this Tribunal and is treated as appeal.

8. We have heard Mrs. Vijay Zutshi S.D.R. for the department but none appeared on behalf of the appellants. We have also gone through the record.

9. As per the contention raised by Mrs. Zutshi, SDR waxed paper falls under tariff item No. 17(2) of the Central Excise Tariff and therefore, the appellants cannot take the benefit of notification No. 119/75-C.E., dated 30-4-1975. According to her, by this notification goods falling under item 68 of the First Schedule manufactured in a factory as a job work are exempt from excise duty, except to the extent of duty on charges for the job work. The explanation set out in the Notification makes clear what is meaiit by job work and job work in the context of this notification means, such items of work where the article intended to undergo manufacturing process is supplied to the job worker and that article is returned by job worker to the supplier after the article has undergone the intended manufacturing process, charging only for the job work done by him. She drew our attention towards a decision of this Tribunal in Kiran Printing and Packaging, Bombay v. Collector of Centrd Excise, Bombay (Order No. C 56/84 dated 27-1-1984) [1984 (16) ELT 570] in which the SpecialBench of the CEGAT held that waxing of papers amounts to manufacturing process and is subject to levy of excise duty under item 17(2) of the Central Excise Tariff. She also drew our attention towards a decision of the Special Bench 'C' of the CEGAT in Collector of Central Excise, Hyderabad v. Uma Laminated Products {P) Ltd. Hyderabad (Order No. C 95/84 dated 20-2-1984) [1984 (17) ELT 187] in support of her contention that waxing of a duty paid paper falling under the same tariff entry would amount to manufacture as laid down Under Section 2(f) of the Central Excises and Salt Act, 1944 and subject to levy of excise duty. According to the SDR a paper obtained as a result of treatment of a basic paper must fall within the scope of item No. 17(2) as the treated paper is a distinct or different article from the base paper.

10. As nobody argued on behalf of the appellants, we have to look into the grounds of appeal taken by the appellants in the Memorandum of Appeal to arrive at the correct conclusion in this case.

11. As per the submissions made by the appellants in the Memorandum of Appeal, the process of conversion of ordinary paper into waxed paper does not amount to manufacture within the meaning of Section 2 (f) of the Central Excises and Salt Act, 1944. The Supreme Court in the case Union of India v. Delhi Cloth and General Milk Co. Ltd [AIR-1963-SC-791] held that the word 'manufacture' used as a verb is generally Understood to mean as bringing into existence a new substance and does not mean merely to produce some change in a substance, however, minor in consequence the change may be. "Manufacture implies a change, but every change is not manufacture and yet every change of article is the result of treatment, labour and manipulation. But something more is necessary and there must be a transformation; a new and different article must emerge having a distinctive name, character or use..." . The decision of the Supreme Court in South Bihar Sugar Mills Ltd. v. Union of India and Anr.(1978-ELTJ 336) has also been quoted in this connection which lays down as under :- "The Act charges duties on the manufacture of goods. The word 'manufacture' implies a change but every change in the raw material is not manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name, character or use. The duty is levied on goods. As the Act does not define goods, the Legislature must be taken to have used the word in its ordinary dictionary meaning. The dictionary meaning is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market." 12. Certain other decisions of the Supreme Court and the High Courts have also been mentioned by the appellants in the Memorandum of Appeal in support of their contention.

13. In Civil Appeal No. 1722(N) of 1969 decided on 16-10-1979 (1979 E.L.T. J 593) the Supreme Court held as under : - "Whether a 'process' is a manufacturing process or not, the broad test for determining is whether it brings 'out a complete transformation for the old components so as to produce a commercially different article or commodity." 14. In Civil Appeal No. 2398 of 1978 decided on 9-5-1980 (1980 E.L.T. J 343 S.C. the Supreme Court held that ;- "The manufacture is the end result of one or more processes through which the original commodity is made to pass. Although the nature and extent may vary from one case to another yet, it is only when the change, or a series of changes take the commodity to the point where commercially it is recognised as a new and distinct article that a manufacture can be said to have taken place." 15. In Nav Gujarat Paper Industries v. Superintendent of Central Excise and Ors.s (1977 E.L.T. J 67) the appellants were manufacturing Gummed paper out of duty paid papers, purchased from the manufacturers. The Gujarat High Court rejecting the contention of the excise authorities had held as follows :- "Under the circumstances, we have come to the conclusion that the intermediate product of what the revenue calls 'Gummed Paper' is not gummed paper known to the market as such and mere application of gum on the side of paper does not convert that paper into a new commodity known to the market as such. Similarly, mere printing of designs and monograms and Ors. description of goods regarding the quality and the name of manufacturers does not convert packing or wrapping paper into another kind of paper." 16. In Swastic Products, Barodav. Supdt. of Central Excise (1980 E.L.T.164 Guj.) the Gujarat High Court was again concerned with the question of colouring/printing of papers which is already manufactured. The High Court observed :- "Colouring of paper which is already manufactured is not a process in the manufacture of paper nor can that process be said to be one incidental or ancillary to the manufacture of paper. No manufacturing process is involved by printing on white paper or by colouring manufactured product, namely the paper. "The expression" all other kinds of paper would not take in paper which has already been manufactured and on which either printing is done or colouring is done." 17. In Kwality Coated Products v. Government of India and Anr. (1980 E.L.T. 579-Madras) the question for consideration before the Madras High Court was whether the bitumnised waterproof paper is liable to be assessed to excise duty under entry No. 17(2) of the First Schedule to the Central Excise and Salt Act, 1944. The Court following the judgment of the Supreme Court in the case of South Bihar Sugar Mills v. Union of India (Supra) "By treating Kraft paper with bitumen, the kraft paper does not lose its essential character as kraft paper. The identity remains the same even after it being treated with bitumen. Consequently it cannot be said that a manufacture is involved in the process of treating kraft paper with bitumen. In other words, the process does not involve a change in the character of paper and transform it into another product. It cannot be said that a manu facture of new kind of paper is involved in the process of treating kraft paper with bitumen so as to attract the levy of excise duty as provided for under entry No. 17(2) of the First Schedule to the Act." 18. As per the submissions made by the appellants in the Memorandum of Appeal, the principle as laid down by Supreme Court and High Courts of Gujarat and Madras in the above cases clearly apply to the appellants case The appellants were merely doing the job woijk of application of wax on the base papers supplied to the appellants by other parties, who used such papers for wrapping of their products such as soaps, breads, etc. The base papers on which the waxing was done by the appellants was a fully manufactured paper purchased by the suppliers from the market and which had discharged full duty liability under entry No. 17 of the excise tariff. The subject paper was nothing but ordinary paper and retained its identity as paper. The process of mere application by rollers of Stove melted wax on already manufactured base paper which has already suffered excise duty once under entry No. 17(2) of the First Schedule to the Act cannot be considered as manufacture bringing into existence a new product with different name, character or use. The wrapping paper even after waxing remains wrapping paper and is known to the market as wrapping paper. Mere application of wax on original paper does not involve complete transformation of the paper. Paper remains paper before and after waxing, and no excise duty is at all attracted on the waxed paper as wrongly held by the Assistant Collector, Central Excise and the Collector.

19. On these allegations the appellants have challenged the impugned order of the Collector of Customs and Central Excise, Ahmedabad.

20. Besides these pleas taken by the appellants in the Memorandum of Appeal, the quantum of assessment has also been challenged. It has been alleged that the appellants have never done the processing work of the papers valued at Rs. 50,135.00 as mentioned in the impugned order of the Collector of Customs and Central Excise, Ahmedabad.

21. It has been alleged by the appellants that the period involved in this case was from 1-3-1974 to 26-3-1977 after which the appellants had not undertaken such waxing either on job work basis or on its own account. According to the appellants as mentioned in Memorandum of appeal during this period the position of tariff entry No. 17 was as under : - "The duty on various papers and boards falling under sub-items (1) to (4) of item 17 was at the specific rates mentioned against each sub-item read with relevant notifications issued under Rule 8(1) prescribing effective rates of duty. None of these sub-items covered waxed papers. Wrapping papers were covered by sub-item (3) of item 17 and the petitioner had carried on waxing on such duty paid wrapping papers which had already discharged appropriate excise duty liability." 22. They further alleged that during the periods 16-3-1976 to 26-3-1977 the position by virtue of Finance Bill 1976 the tariff entry No.17-paper was restructured and sub-items under this entry were reduced to 2 from 4, with change in the mode of duty from specific to ad valorem basis. During the above periods, the set-off of duty already paid on base papers was also admissible under the relevant notifications issued by the Central Government under Rule 8(1) of the Central Excise Rules, 1944.

23. As per the pleas raised by the appel lants in the Memorandum of Appeal the impugned order of the Collector is totally silent on the above facts of law. He has erred in adjudging the duty on the basis of value for the period 1-3-1974 to 15-3-1976 when the duty was at the specific rate only and the value had no relevancy for levying of excise duty under item 17 of the First Schedule. The benefit of set-off of duty already paid on the base papers on which waxing was subsequently done has been denied to the appellants. The appellants were entitled to the benefit under Notification No. 80/80, dated 19-6-1980 as all the conditions of this Notification are fully satisfied by the appellants.

The appellants were also eligible for the benefit of,Notification No.71/76, dated 16-3-1976 (as amended) as the said notification covered waxed papers also. The authorities below have not taken into consideration these aspects of the matter and therefore, it has been prayed by the appellants that the impugned order be set aside and the appeal be accepted.

24. In this case there is no dispute about the fact that the appellants converted the base paper to waxed paper, the final product and printing was made on them. As per the contention of the appellants the process of waxing done by them on the papers supplied by the different parties on a job work basis does not fall within the scope of the said tariff item No. 17(2) and that the provisions of item 17(2) C.E.T. would apply to the waxed papers manufactured in mills and not to those papers manufactured by them. They simply applied wax on papers supplied to them by different parties and returned them to the suppliers.

25. In view of these facts we will have to see whether this conversion of base paper into waxed paper amounts to manufacture within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944 bringing into existence a new article known to the Trade as waxed paper and subject to excise levy under item 17(2) of the C.E.T. If this fact is proved, the appellants are not entitled to the benefit of exemption Notification No. 119/75 as under item 17 of the C.E.T., there is no provision to charge duty only on the job work charges.

26. In this regard it is a settled law as has been laid down by the Hon'ble Supreme Court in the case of Union of India v. Delhi Cloth and General Mills Co. Ltd. (Supra) and South Bihar Sugar Mills v. Union of India and Anr. (Supra) that the word 'manufacture' implies a change but every change in the raw material is not a manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name, character or use. The ratio laid down by the Supreme Court in these cases was that the starting material and the finished product should be different in name, character or use. The processing should not be such as brought about a mere change in the starting material but should be such as resulted in a product which is known differently in trade by name, has characteristics or uses different from the starting product.

27. In the present case, the base paper and the treated paper (waxed paper) are different product known differently and have different uses.

Looking from this angle, there is little doubt that there has been manufacture for the purpose of excise duty.

28. Waxed paper is specifically enumerated in Notification No. 71/76 which reads as under :-- "In exercise of the powers conferred by Sub-Rule (1) of Rule 8 of the Central Excise Rules, 1944 the Central Govt. hereby exempts polyethylene coated paper, polyethylene coated board, waxed paper and waxed board, falling under Item No. 17 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) from so much of the duty of excise leviable thereon as is in excess of 12.5 per cent ad valorem, subject to the condition that the appropriate duty of excise or additional duty leviable Under Section 2A of the Indian Tariff Act, 1934 (32 of 1934), as the case may be, has already been paid in respect of the base paper or board used in their manufacture : Provided that nothing contained in this notification shall apply to a manufacturer who avails of: (i) the special procedure prescribed under Rule 56A of the aforesaid Rules in respect of the duty paid on base paper or board; or (ii) the exemption granted under the notification of the Government of India in the Ministry of Finance (Department of Revenue and Insurance) No. 67/76-C.E., dated the 16th March, 1976.

Explanation : -For the purpose of this notification the base paper or board used in the manufacture of polyethylene coated paper, polyethylene coated board, waxed paper or waxed board shall be deemed to have paid the appropriate duty of excise or the additional duty leviable Under Section 2A of the said Indian Tariff Act, 1934, if it is purchased from the market." 29. The above Statutory Notification exempts certain specified varieties of treated paper including waxed paper falling under Item No.17(2) from excise duty leviable thereon in excess of 12.5% ad valorem subject to certain specified conditions. 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. While double taxation may be a vice but multi-stage taxation is not and Rule 56A of Central Excise Rules is specifically designed to mitigate the rigours of multi-stage levies.

30. The same question arose before this very Bench of the Tribunal in case of Kiran Printing and Packaging, Bombay v. Collector of Central Excise, Bombay [1984 (16) E.L.T. 570] and after persuing the various authorities of the Supreme Court and the High Courts, it was held vide Order No. C 56/84, dated 27th January, 1984 that conversion of duty paid base-paper into waxed paper amounts to manufacture and is subject to levy under Item 17(2) of the Central Excise Tariff though eligible to the duty concession contained in Notification No. 71/76, dated 16-3-1976.

31. The contention of the appellants that the provisions of Item No.17(2) of the C.E.T. would apply to waxed papers manufactured in Mills and not to those waxed papers manufactured by them as they simply apply wax on papers supplied to them by different parties and return them to the suppliers, is also not tenable in view of the fact that the process of conversion of ordinary paper into waxed paper amounts to manufacture within the meaning Section 2 (f) of the Central Excises and Salt Act, 1944 and the goods resulting from such process would fall under Item 17(2) of the C.E.T. for the purpose of levy of excise duty. Under item 17 of the C.E.T., there is no provision to charge duty only on job work charges. Duty has to be charged as per the appropriate rate mentioned against Item No. 17(2) of the Central Excise Tariff.

32. The case law cited by the appellants in the Memorandum of Appeal do not help them in the present circumstances of the case. The ratio of all the decisions mentioned by the appellants in the Memorandum of Appeal is that a process is called a manufacturing process if it brings out a new and distinct article having a distinct name, character or use. This test as laid down by the Hon'ble Supreme Court squarely applies to the facts of the present case before us inasmuch as conversion of an ordinary paper into waxed paper is a manufacturing process as waxed paper is a distinct article having a distinct name, character and use.

33. The other decisions mentioned by the appellants in the Memorandum of Appeal do not apply to the facts of the present case. In Nav Gujarat Paper Industries v. Superintendent of Central Excise and Ors. (Supra) the petitioners were manufacturing gummed paper out of duty paid papers purchased from the manufacturers and it was found by the Gujarat High Court that the 'gummed paper' so-called by the Revenue was not gummed paper known to the market as such and that mere application of the gum on the side of the paper did not convert that paper into a new commodity known to the market as such. Here in the case before us, converting the ordinary paper into waxed paper has resulted in the production of a new article having distinct name, character and use.

Waxed paper is known in the market as such and is bought and sold as such. In the Statutory Notification No. 71/76 the word 'waxed paper' has been specifically mentioned meaning thereby the waxed paper is distinctly known as waxed paper in the trade. Statutory notification could be used as an aid for interpreting tariff entries as laid down in the case of J.K. Steels Ltd. v. Union of India and Ors. (1978 E.L.T. J 355). In Swastic Products (Supra) the question before Their Lordship was whether colouring of paper which was already manufactured was a process of manufacture of paper or not and in that context it was held that no manufacturing process could be said to have been involved by printing of white paper or by colouring manufactured product namely the paper. The decision in that case also does not help the appellants in the present case before us.

34. In Kwality Coated Products v. Govt, of India (Supra) the question for consideration before the Madras High Court was whether bitumnised waterproof paper was liable to be assessed to excise duty under entry No. 17(2) of the First Schedule to the Central Excises and Salt Act, 1944 and it was held that by treating kraft paper with bitumen the kraft paper does not lose its essential character as kraft paper. The identity remains the same even after it be treated by bitumen and as such no manufacturing process could be said to have been involved in that case. We would, with respect, follow the ratio of the decisions of the Andhra Pradesh High Court in the Standard Packaging case - (1983 E.L.T. 786 (AP) - in which the Court, after considering the Supreme Court's decisions referred to above and the Madras High Court decisions in the Kwality Coated Products case, concluded that bitumnised kraft paper made out of duty paid kraft paper and duty paid bitumen was liable to duty under item 17 C.E.T.Collector of Central Excise, Hyderabad v. Uma Laminated Products (Pvt) Ltd. Hyderabad (Order No. C-95/84 dated, 20-2-1984) [1984 (17) ELT 187J had also the occasion to deal with the interpretation of tariff item No. 17(2) of the Central Excise Tariff and after going through and analysing the various authorities of the Supreme Court and various other High Courts held that conversion of an ordinary paper into a new product having distinct name, character or use amounts to manufacturing process and that the new product is subject to levy of excise duty under item No. 17(2) of the Central Excise Tariff.

36. The period involved in the case before us is from 1-3-1974 to 7-5-1977 and prior to 1976 Budget, the product 'waxed paper' had been specifically mentioned under item No. 17(2) of the Central Excise Tariff, w.e.f. 16-3 1976 this tariff entry was changed in the Budget of 1976 and sub-items the entry was rewritten into 2 sub-items. Before 16-3-1976 there were 3 sub-items which set out, in detail, certain specific varieties of paper and board; the that in place of the proviously existing 4 4th sub-item was a residuary entry, w.e.f.

16-3-1976, the item was recast into 2 sub-items, the first one covering printing and writing paper (other than poster paper) and the other, paper board and all other kinds of paper including treated paper or paper board. Sub-item (2) has an inclusive clause whereby paper or paper boards which have been subjected to various treatments, such as coating etc. are specifically brought within the purview of this sub-item. The waxed paper which has been subjected to a treatment of coating wax would fall under item No. 17(2) C.E.T. in the category of treated paper, after the amendment of the Budget w.e.f. 16-3-1976.

Prior to 16-3-1976, there was a specific entry of waxed paper under tariff item No. 17(2) C.E.T.37. The proposition of law as laid down by the decision of this Tribunal in Golden Paper Udyog Pvt. Ltd. v. Collector of Central Excise (1983-ELT-1123), does not help the appellants in the circumstances of the present case.

38. In the case before us, the conversion of ordinary paper into waxed paper has resulted in the manufacture of a new article having distinct name, character or use. In Golden Paper Udyog (Supra), the product bitumnised kraft paper was a different product than the waxed paper involved in this case before us. Waxed paper is a product having distinct name, character and use and as such had been specifically mentioned under tariff item No. 17(2) before 16-3-1976 and after the amendment of the Budget w.e.f. 16-3-1976, this product has been included under sub-item (2) as a treated paper. The fact that the waxed paper is a distinct article is also supported by the fact that waxed paper has been specifically incorporated in exemption notification No.71/76. This case is not on all fours with the case of Golden Paper Uclyog Pvt. Ltd. (Supra). Besides this, in Golden Paper Udyog (Supra) it appears that the Bench had no occasion to consider the principles of contemporaneous exposition and that material bearing legislative intent had not been placed before the Hon'ble Members of the Bench hearing that case. The Hon'ble Supreme Court has laid down the principles of contemporaneous exposition in KP. Vcrghese case [1982 (1) SCR 629] and ap plying these principles, we are of the view that the inclusion of treated papers by express words under tariff entry No. 17(2) after the amendment by the budget of 1976, read with Notification No. 71/76, is a clear evidence of the manner in which the tariff entry has to be interpreted by the authorities charged with the task of executing the statute. It is a well-settled principle of interpretation that courts in construing a statute will give much weight to the interpretation put upon it, at the time of its enactment and since, by those whose duty it has been to construe, execute and apply it.

39. As waxed paper is subject to excise levy under tariff item No.17(2), the appellants are not entitled to claim the benefit of notification No. 119/75-C.E., dated 30-4-1975 which is meant for goods falling under item 68 of the First Schedule manufactured in a factory as a job work. On this point we confirm the findings of the authority below.

40. The other pleas raised by the appellants in the Memorandum of Appeal that quantum of assessment has also not been correctly arrived at are not substantiated on record. There is nothing on record to show and prove as to how the quantum of assessment has been wrongly made. It is on the checking of the record of the appellants, the excise authorities found that the appellants manufactured the excisable goods without obtaining the excise licence and cleared the same valued at Rs. 36,476.50 and Rs. 50,135.00 during the relevant period. If the appellants were not satisfied with these amounts as arrived at by the Department, they could have challenged the same in the reply to the show cause notice giving the correct figure of the value of the goods manufactured and cleared by them. In the absence of any such assertion on the part of appellants, it cannot be accepted now at the appellants stage that the quantum of assessment was wrong. The change in tariff entry No. 17-Paper w.e.f. 16-3-1976 had made a change in the mode of duty from specific to ad-valorem basis and we see from the tariff of 1974 that the entry was partly specific (basic excise duty) and partly ad-valorem (auxiliary duty). It is not clear from the records how the lower authorities had arrived at the figure of duty leviable for the period prior to 16-3-1976 when the specific duty was replaced by ad-valorem duty. The authorities should have furnished a revised chart showing the computation of duty for the two periods--viz. before and after 16 3-1976-separately with reference to the weight of the product where the duty was partly specific in nature and with reference to the value of the product where the duty was ad valorem. The applicability of the provisions of Rule 9(2) has not been challenged by the appellants in the Memorandum of appeal. Admittedly, the appellants did not obtain the excise licence for the manufacture of waxed paper which is subject to excise levy under Item No. 17(2) of the Central Excise Tariff and when licence is not obtained for the manufacture of excisable goods, and removal is effected (N.S. Metal Industries v.Union of India, [77-TLR(NOC)31], Rule 9(2) will apply 41. The submission of the appellants as contained in the Memorandum of Appeal that they are entitled to the benefit under Notification No.71/76, dated 16-3-1976 and Notification No. 80/80, dated 19-6-1980 has also no force.

42. A perusal of the record shows that nowhere the appellants have proved that all the conditions of exemption Notification Nos. 71/76, dated 16-3-1976 and 80/80, dated 19-6-1980 were fully satisfied. Before claiming the benefit of exemption notifications, it was incumbent upon the appellants to show and prove that all the conditions as laid down in the exemption notifications had been fully satisfied.

43. In the absence of the proof that all the conditions as laid down in these exemption notifications are fully satisfied by the appellants, the appellants are not eligible for the benefit of these exemption notifications.

44. In the circumstances, while we uphold the decision of the lower authorities classifying the product-waxed paper-under item 17(2) of the C.E.T. for charge of excise duty, we direct the Collector to furnish to the appellants a detailed calculation chart of the duty payable by the appellants- separately for the period prior to 16-3-1976 and the period commencing 16-3-1976.

46. I have carefully perused the concurring order proposed to be made by my learned Brothers. Much to my regret, however, I find I am unable to agree with them.

47. This is a case which we heard in the absence of the Appellant and we are proceeding to judgment on the basis of the material on record and the written submission of the Appellant. Our task, in the circumstances, becomes more onerous than if he had chosen to appear, either in person are by an Advocate, to argue the case.

48. In his written submissions, the Appellant placed reliance on the Tribunal's judgment in the case of Golden Paper Udyog v. Collector of Central Excise (1983 E.L.T. 1123). The ratio of the said judgment had been referred to a larger bench for reconsideration. In the meanwhile, before the Reference could be heard, in the case of Collector of Central Excise v. Uma Laminated Products (P), both my learned brothers in this Bench along with another learned Brother, had disagreed with the ratio of the aforesaid Golden Paper Udyog case, notwithstanding that it was affirmed and followed in 1983 ECR 1949, amongst others.

Accordingly, the decision in the case of M/s. Uma Laminated will also, necessarily, come up for reconsideration before the larger Bench hearing the Reference.

49. It is the case of M/s. Uma Laminated on which my Brothers rely as against the decision in the case of Golden Paper Udyog relied upon by the Appellant in this Appeal.

50. I, for one, would have liked to await the judgment of the larger Bench in the Reference case but that, however, was not to be.

51. In the circumstances, I am constrained to refrain from a consideration of the rationale or applicability of either of the two aforesaid cases in this Appeal presently before us, since I do not want to prejudge the issues that are, necessarily coming up for decision in the Reference case by the larger Bench in which I am also a Member.

52. Even so, my inability to concur with my learned Brothers arises on the peculiar facts of this case. Admittedly, as would appear from the show cause notice and the adjudication order, (a) the Appellant was waxing duty paid paper on a job work basis for as many as twenty-seven customers and more-'largely bakeries and small scale soap manufacturers-during the relevant period; (b) this was the case set forth in the notice to show cause dated nil, April 78. Indeed, the specific allegation therein was that the twenty-seven customers figuring in Annexure 'A' to the notice and some others enlisted in Annexure 'B' thereto-(Annexure 'B'-missing) were the "manufacturers as defined in Section 2(7) (iv) [obviously a mistake for Section 2(f) of the Central Excises and Salt Act, 1944-hereinafter referred to as the Act] and they, along with the Appellant, contravened the provisions of Rule 9 and 174 of the Central Excise Rules 1944 rendering themselves liable for payment of duty under Rule 9(2) and penalty under Rule 173(Q)(i) ibid. The Appellant and the twenty seven customers in Annexure 'A' and others in the missing Annexure 'B' were, accordingly called upon to show cause as to why- (i) a penalty should not be imposed under l73(Q)(i) of the Rules; and (ii) duty at the appropriate rate should not be recovered "on waxed paper valued at Rs. 36,476.50 and Rs. 50,135.00-already manufactured and cleared on behalf of the various parties as shown in the said Annexures under Rule 9(2) of the Central Excise Rules 1944".

(d) in his reply to the notice, the Appellant pleaded, inter alia, that- (ii) in any view, they were merely doing job work for the owners of the paper-their customers-in all but a few cases; and (i) it was only the Appellant and the first four out of the twenty seven customers figuring in Annexure 'A', apart from M/s Umed Bakery (possibly enlisted in the missing Annexure 'B' to the show cause notice) that appeared; (ii) the others i.e. twenty-three amongst those named in Annexure 'A' and all but one in the missing Annexure 'B'did not appear at all; (iii) the five customers (in all) that appeared through an Advocate supported the case of the Appellant to the extent that there has been no "manufacture" and the Appellant cannot be called a "manufacturer" within the meaning of Section 2 (f) of the Act. The others would appear to have replied to the show cause notice on similar lines; (iv) it was, nevertheless, held that since, by virtue of the inclusion of waxing of paper amongst the treatment specified in item 17(2), such process is a "manufacture" and accordingly, the Appellant, a "manufacturer". All the customers (twenty-seven in Annexuie 'A' and others in the missing' Annexure 'B' to the show cause) were not "manufacturers" since they did not engage themselves in the production or manufacture of waxed paper. In the result, while all the customers were completely exonerated, the Appellant was required to pay a fine or Rs. 200/- under Rule 173(Q)(1) of the Rules and Rs. 12,974.50 towards duty on waxing charges realised as well as Rs. 600/- on the cost of paper purchased for waxing; (f) The Appellant went in Appeal against the aforesaid order in adjudication. While the Appeal was pending, however, the Collector of Central Excise, Ahmedabad, in exercise of the powers vested in him Under Section 35(A)(2) of the Act, (as it read at the relevant time) issued on 21-12-1979, a notice to show cause as to why the aforesaid order in adjudication should not be reviewed by him, although a Revision was meant in terms of t he aforesaid provision, on the ground that the assessment of duty merely on the charges for job work realised by the Appellant was incorrect and it should have been more appropriately on the value of the waxed paper itself amounting to Rs. 36,476.50 and Rs. 50,135.00; (g) the Appellant reiterated his earlier contentions and submitted that waxing of paper supplied by different parties on a job work basis did not fall within the scope of item 17(2) of the Ist Schedule to the Act; (h) in the Revision proceedings that were thus initiated, it was ultimately held on 12-5-1980, that- (i) proceedings Under Section 35(A) of the Act for Revision of the order in adjudication are altogether independent of an Appeal that may have been filed against it and are not, hence barred on account of the pendency of an Appeal; (ii) the process of conversion of ordinary paper into wax paper amounts to a "manufacture" within the meaning of Section 2(f) of the Act; (iii) there is no question of assessment of duty in terms of item 17(2) of the Ist Schedule to the Act, on the basis of the charges collected on job work basis. It has to be assessed at the appropriate rates mentioned in the said item 17(2); and (iv) accordingly, the Appellant has to pay duty on the waxed papers valued at Rs. 36,476.50 and Rs. 50,135.50 for the periods between 1-3-1974 and 25-4-1975 and 26-4-1975 and 7-5-1977 under Rule 9(2) of the Central Excise Rules, 1944. The personal penalty in a sum of Rs. 200/- was confirmed.

(i) the Appeal filed against the adjudication order was dismissed by the Collector (Appeals) subsequently on 17-6-80 on the ground that it was barred by limitation. There was no further Appeal against it.

53. It is against the afresaid order, which, in fact, was in Revision althrough called Review, that the Appellant had come up before the Govern- ment of India. The proceeding on its transfer to the Tribunal pursuant to Section 35 (P) of the Act was heard by us as an Appeal.

54. It is of vital significance to note that the proceedings in Revision of the Adjudication order, cannot be viewed in isolation from the Adjudication order itself or the notice to show cause that preceded the Adjudication, for each of them stems from and is occasioned by the other. There could have been no Revision without an Adjudication order.

Nor'could there be an Adjudication without a show cause notice. Indeed, the notice to show cause against the Revision as well as the order in Revision itself advert to the original show cause notice dated Nil, April, 1978, and the Adjudication order as occasioning the Revision.

The causal relationship between each of them is too unmistakable to be ignored, even if one were not, for the time being inclined, to go into the issue as to how far a Revision and an Appeal from an Adjudication order, encroach upon each other, notwithstanding that they could be parallel proceedings. The original show cause notice and the Adjudication order therefore form the substratum for the Revision.

55. Where, in terms of the provision for Revision [S. 35A(2) of the Act, as it read at the relevant time], it is the correctness, legality or propriety of the order of any decision (e.g. in Adjudication) that has to be examined and that decision is challenged as erroenous, the Revisional authority is bound to go into the findings of fact entered by the subordinate authorities (e.g the Adjudication Officer) and in case it is found that a finding of fact can, legitimately, be characterised as improper in the sense of being wholly unreasonable or perverse, it is the duty of the Revisional authority to interfere with such finding and render justice between the parties. Reference, if any be required, may be usefully made to the decision of a Division Bench of the Kerala High Court in 1980 E.L.T. 625 [Government of India v.A.S. Bava] following the decision of the Supreme Court in AIR 1960 SC 655 [Motiram v. Suraj Bhaan}. Needless to say, in the instant proceeding Under Section 36 of the Act (as it read at the material time), transferred to and heard by the Tribunal in terms of Section 35(P) (2), we are equally bound to examine the correctness, legality or propriety of the Adjudication Order, particularly in view of the challenge to the finding of fact therein, and interfere with it, if found unreasonable and perverse.

56. It, therefore, becomes necessary to examine in an Appeal from order in Revision, if the Adjudication order itself is sustainable-more so on account of the Appellant's contentions in Adjudication reiterated in the Revision and elaborated in the instant Appeal to the effect that- 57. My learned Brothers had, therefore, in my opinion correctly, gone into the basic issues rather than limit the scope of the Appeal to the mere question of the appropriate assessment or computation of the duty leviable. While, as already stated, I refrain from going into the first contention, the Appeal would appear to be deserving of being allowed on the second.

58. The Appellant's contention that he was merely waxing paper for others-on a job work basis- is not to be understood to be merely a claim for the benefit of the Notification No. 119/75-C.E. dated 30-4-1975. A reference to the said notification is totally absent in all his pleadings. Such a contention cannot be attributed to the Appellant-only to be satisfactorily repelled on the ground that the said notification did not apply to goods falling within item 17 of the First Schedule to the Act. The crux of the contention has been, right through, that the Appellant is not the ' manufacturer" in term; of the definition of the said word in Section 2 (f) of the Act. Assuming that he was a "manufacturer", the further contention was that the Appellant was entitled to the benefit of Notificacation Nos. 71/76, dated 16-3-1976 and 80/80, dated 19-6-1980. The bar of Limitation, as is well understood, although not raised, still arises for consideration in the facts and circumstances of the case.

(a) Is the Appellant, the "manufacturer" within Section 2(f) of the Act, in the facts and circumstances of the case (b) Is the Appellant entitled to the benefit of the notifications (i) 71/76, dated 16-3-76 and (ii) 90/80, dated 19-6-80 and (c) Is the demand for payment of duty not barred by Limitation in terms of Rule 9(2) of the Central Excises and Salt Rules, 1944 60. (a) As already observed, it was not the allegation in the show cause notice that the Appellant was the "manufacturer". On the contrary, it was the Appellant's customers that are, according to the notice to show cause dated nil, April, 1978, the "manufacturers within Section 2(7) (iv) of the Act".

(b) This was the case of the customers as well-those who appeared through the Counsel as well as the others who submitted written replies to the notice to show cause.

(c) And yet, surprisingly, in adjudication, it is held that the Appellant was the "manufacturer"'-not because the Appellant satisfied the criteria laid down in the definition of "manufacturer" in Section 2(f) of the Act-no discussion about it at all-but because he had engaged himself in the waxing of paper which is a "manufacture" in terms of Section 2(f) of the Act.

(d) To say the least, if this is to ignore the statutory definition of the word "manufacturer"'-["shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account"-Section 2(f) of the Act], it was equally oblivious of the allegations in the notice to show cause dated nil, April, 1978. If the Appellant was engaging himself in "manufacture", he does not become automatically a "manufacturer" as was held in Adjudication. Where, admittedly, he does not engage himself in manufacture "on his own account", he is not a "manufacturer". Those who hired his labour were the "manufacturers"-as was clearly stated in the said notice to show cause. In Adjudication, one cannot reach conclusions contrary to the basic allegations in the notice to show cause. In the result those who were truly "manufacturers" were allowed to go scot free and the Appellant-the hired labour-was dubbed the "manufacturer".

(e) In Shree Agency v. S.K. Bhattacharya [AIR 1972 S.C. 780], it had been categorically held that when yarn was issued "to powerloom weavers not on credit, but for getting the same back duly woven by them into cloth", it was not the powerloom weavers that were "manufacturers"-but the supplier of the yarn, who had actually engaged himself in production of cotton fabrics.

61. (a) The relevant periods according to the notice to show cause were from (i) 1-3-1974 to 25-4-1975 and (ii) 26-4-75 to 7-5-77.

(b) The Appellant's case was, however, that he ceased to do the job work after 26-3-1977. This contention does not appear to have been gone into either in the Adjudication Order or the Order in Review.

(c) Be that as it may, Notification No. 71/76, dated 16-3-76, relied upon by him became applicable only for the period between 16-3-1976 and 7-5-1977, if at all and not for the earlier period.

The second Notification relied upon by the Appellant (No. 80/80 dated 19-6-1980) is altogether inapplicable in the facts and circumstances of the case.

(d) All that the Notification No. 71/76, dated 16-3-76 prescribed for its applicability was that- (ii) the "manufacturer" should not have availed of the special procedure prescribed under Rule 56A of the Rules or the exemption granted in terms of the Notification No. 67/76, dated 16-3-1976.

(e) Indisputably, the aforesaid conditions for the aforesaid Notification No. 71/76 dated 16-3-1976 are fulfilled in this case even on the allegations in the show cause notice. Admittedly, the base paper was purchased from the market and was accordingly duty paid. Nor was the Appellant availing himself of the procedure in Rule 56A when, for a fact, the Appellant had not even obtained a licence or paid any duty and was not claiming the benefit of Notification No. 67/76 at the relevant time or even in these proceedings. What is admitted, even on the allegations in the notice to show cause, need not have to be proved aliunde. We had extended the benefit of the aforesaid Notification to the "manufacturer" in the case of M/s. Kiran Printing and Packaging v Collector of Central Excise, Bombay [Order No. C-56/84 in Appeal No.16/79-C]-[1984 (16) ELT 570]. In that case, the Appellant asserted the fulfilment of the aforesaid conditions. There was no contradiction by the Revenue. In this case, the fulfilment of the conditions for the applicability are implicit in the allegations in the show cause notice itself. What more is the Appellant to prove? 62. (a) As already observed, even if limitation is not raised in the pleadings, it still arises for consideration in the facts and circumstances of the case. There is nothing to prevent the Appellant from raising the issue, had he appeared before us, when all the facts necessary to sustain such a plea are already on record. If we are to decide this appeal on merits in the Appellant's absence, we cannot refrain from going into it, in the interests of justice.

(b) For the periods aforesaid, the notice to show cause was issued in April 1978-i.e., more than ten months from 7-5-1977-the last day of the aforesaid periods.

(c) Rule 9(2) of the Rules as it read at the relevant time required payment of the leviable duty in respect of the goods removed from the place of manufacture in contravention of Rule 9(1) on a written demand within the period specified in Rule 10.

(i) fraud, collusion, or any wilful misstatement or suppression of facts by the manufacturer or his agent; or (ii) contravention of any of the Rules with intent to evade payment of duty.

that the notice of demand envisaged in Rule (2) could be issued within five years of the "relevant date" when duty became payable In terms of the Rules. Otherwise, it has to be within six months from the "relevant date".

(e) The purport, scope and effect of the aforesaid Rules had been discussed at length in our Order in the case of Sriram Pistons and Rings Ltd., Ghaziabad v. Collector of Central Excise, Meerut (1983 ELT 1927) as well as G.D. Industrial Engineers, Faridabadv. Collector of Customs and Central Excise, Chandigarh (1983 ELT 1994) and it is unnecessary to recapitulate the whole of it. Suffice it, to repeat, however, that- (i) "fraud" as well as misstatement and suppression of facts have not only to be alleged but particulars thereof have necessarily to be furnished in the show cause notice and proved in the adjudication proceedings, (ii) equally, it has to be proved that contravention of the Rules, if any, was with intent to evade payment of duty.

(f) None of these essential pre-requisites for the applicability of the larger period of limitation have even been alleged in the notice to show cause-much less proved.

(g) In the premises, it has to be held that the demand pursuant to the notice to show cause in April 1978, was barred by limitation.

63. The Adjudication order is, thus, seriously erroneous on all the issues that arise for determination. The first of them on the question as to whether the Appellant was a "manufacturer" is fundamental and a Revision of the Adjudication Order, even if it be on other issues, cannot sustain, once the decision on said basic issue was gravely erroneous and even perverse and is questioned in the Revision proceedings. If the Appellant was not a "manufacturer"-as it should be held-there could be no question of realising any duty in excess of what was determined to be payable by the erroneous Adjudication order-which had, unfortunately, become final-by way a Revision thereof.


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