1.This appeal dated 19-4-1980 was filed (as a revision petition under Section 36 of Central Excises & Salt Act, 1944), against order-in-appeal No. 26/WB/80 dated 11-1-1980 passed by the Appellate Collector of Central Excise, Calcutta which agreed with order (original) No. 1/Paper/77 dated 18-11-1977 passed by the Assistant Collector of Central Excise, Calcutta IV Division. The appeal dated 19-4-1980 filed by M/s. Ashoke International (P) Ltd. had been dismissed for non-appearance of the appellant on 17-1-1983, but it was restored on 18-5-1984 on which day it was also heard.
2. The trouble arose when the Assistant Collector by his order dated 18-11-1977 ruled that M/s. Ashoke International was required to pay duty for the paper it manufactured. This manufacture is done by subjecting white tissue paper to dyeing. This coloured tissue paper was held by Central Excise to be dutiable and so a demand for Rs. 2,52,159.36 was made. The Assistant Collector said the coloured tissue paper was a new substance falling under Item 17(2) CET. Furthermore, as it was dyed on both sides, it would not be a converted paper as described in Sl. No. 3 of the table to Notification No. 68/76-C.E., dated 16-3-1976 for the purpose of exemption. The Assistant Collector, therefore, ordered duty to be recovered and he also imposed a penalty of Rs. 250/-. The Appellate Collector agreed saying that the paper being thin, was finally coloured on both sides and so the exemption was not available.
3. The appeal was argued before us on 18-5-1984. The learned counsel for M/s. Ashoke International said that they did not want to pursue their claim that there was no manufacture. They were only interested in the other plea that they were entitled to exemption under Notification No. 68/76-C.E. He said that the paper was so thin that the dye showed through and the finished paper looked as if it had been printed on both sides. But in reality it was printed on only one side.
4. The learned counsel for the department said that a look at the paper showed that it was clear that the printing was on both sides since the colour showed clearly on both sides. He further argued that the assessee has never filed a classification list and so had not established his claim to the exemption. Until he did so, he cannot be given any exemption. It is not correct for the appellants to claim that as their paper was exempted they were exempted from licensing. The exemption under Notification No. 68/76-C.E. was conditional, and hence no licence exemption was available.
5. The arguments about licence exemption are a sterile one because the Assistant Collector says in his order that "the party has got a valid Central licence in form L4 bearing No. 2/Paper/64 renewed in the year 1977 for the manufacture of paper falling under Item 17 of the CET". So we need not go further into this subject.
6. The process of manufacture is for the white tissue paper to be passed over a guide roll. Then it passes between two touching rollers, the lower roller having its lower one-third in a dye bath. The lower roller is stained in the dye bath/solution and in its rolling motion, colours the surface of the tissue paper that presses on it. The other reciprocating roller imparts no colour as it does not come into contact with any dye or dye bath. The paper is finished without further colouring; but because tissue paper is thin, the dye permeates it and penetrates to the other side.
7. The process is not disputed. But the Appellate Collector said the paper was coloured on both sides because it was thin, meaning, obviously, that he could see colour on both sides, which, of course, was true enough. But what is not true is that the paper was "subjected to printing of colour" (see Notification No. 68/76-C.E.) on both sides.
To subject to a treatment is to consciously treat a substance or article so that it acquires some property it did not have; the article can still acquire a property without being subjected to a treatment. In that latter case, it cannot be said to have been "subjected" to that treatment. The tissue paper we are discussing here was not subjected to colour printing except on one side. The effect can clearly be seen on the paper presented by the appellant, though the department counsel resisted the sample saying no one knows where it came from; so we would not press the matter. But the process is clear enough and the department counsel does say the diagrammatic drawing put up by M/s.
Ashoke International was correct schematically. We are, therefore, of the opinion that the paper was subjected to colour printing on one side.
8. The question that arises is whether the Notification No. 68/76-C.E.was available, there having been no classification list. The record of the proceeding before the Assistant Collector and the Appellate Collector are free of this controversy. Indeed, the Assistant Collector says "as the dye is on both sides it does not fall within the purview of converted type of paper as enumerated at SI. No. 3 of the table annexed to Notification No. 68/76 dated 16-3-1976 (as amended) for the purpose of exemption from duty." There is no doubt that he would have given the exemption but for the fact that he held the paper was dyed on both sides. There is not a word about its inavailability for any other reason.
9. The Appellate Collector says "they have claimed exemption under the Notification 68/76 dated 16-3-1976". He further said that "here the issue is about giving the exemption". But he too came to the conclusion that as the paper being thin was finally coloured on both sides, the exemption was not available.
10. Seeing all this, we do not need to go behind the order to probe further. The issue was only whether the exemption should be given or not. The Assistant Collector and the Appellate Collector decided the paper was dyed on both sides and so should not be given the exemption.
But we hold that the paper was dyed on only one side and, therefore, was entitled to the concession.
11. And we order that the paper should be assessed under Notification No. 68/76-C.E. as a converted paper subjected to printing of colour on one side. The appeal is allowed and the refund shall be granted expeditiously.