1. Originally preferred as a revision application before the Central Government, on transfer to this Tribunal the same is being treated as an appeal.
2. Shri Menon, the learned consultant while arguing the case for the appellants, submitted that by recovering duty on the wrapping paper manufactured by the appellants in their own factory for captive consumption, duty was being recovered twice over in respect of such wrapping paper. He submitted that after the appellants had manufactured the wrapping paper and paid duty due thereon, they had discharged their liability towards excise duty on such paper. The Department was, however, insisting that duty on such wrapping paper should be collected for the second time when such wrapping paper was removed from the factory premises for being used as wrapping material for other varieties of paper. This had resulted in double payment of duty on the same goods and this action of the department was bad in equity as well as law. Shri Menon submitted that he would heavily rely on the CEGAT's judgment dated 6-1-83 in the case of Sree Rayalaseema Paper Mills Ltd. v. Collector of Central Excise, Hyderabad, 1983 ECR 281-D (CEGAT).
While disposing of the said appeal, Special Bench 'A' of this Tribunal had held that once dutyon wrapping paper, used for captive consumption was recovered, the same paper could not be subjected to duty as wrapping paper for a second time when removed a wrapping material for other varieties of paper. He submitted that this judgment of the Tribunal squarely covers the facts in his case and, therefore, prayed for the appeal being allowed.
3. Shri Mahesh Kumar, the learned SDR who argued the case for the Department, submitted that he would like to invite our attention to an order of the Special Bench 'C reported as 1983 E.L.T. 1813 (CEGAT) in the case of Orient Paper Mills v. C.C.E., Calcutta. Not only had this order been issued subsequent to |the order passed in the case of Rayalascema Paper Mills, the same had also taken into account the pronouncement of the Hon'ble Supreme Court reported as 1983 ELT 1896 (SC) in the case of Union of India etc. v. Bombay Tyres International etc. etc. It was contended by Shri Mahesh Kumar that in the light of the detailed judgment of the Supreme Court it was quite clear that the Tribunal's judgment in the case of M/s Rayalaseema Paper Mills could not hold the field any longer.
4. Shri Mahesh Kumar submitted that applying the ratio of the Supreme Court's judgment supra it was quite clear that there was nothing inequitable or illegal in the duty being recovered on the wrapping paper when used for clearance of other varieties of paper. When such paper was used as wrapper for other varieties of paper it lost its identity as wrapping paper per se ; when used as wrapper it became an integral part of that variety of paper in the use of which it had been employed. Shri Mahesh Kumar pointed out that in para 9 of their memorandum of revision dated 5-4-80 the appellants themselves had conceded this position in the following words : "Therefore, for purposes of trade, the wrapper paper has to be deemed as an integral part of the paper wrapped and that there is no question of wrapper paper being sold as such, as distinct from the contents paper cleared by the applicants." Shri Mahesh Kumar submitted that the S.B. 'C in their order referred to earlier, had covered all facets of the issue in great detail. He wanted us to fall in line with this judgment because it was passed keeping in view the observations of the Supreme Court which were not available before the S.B.'A' when they disposed of the appeal of M/s Rayalaseema Paper Mills. Shri Mahesh Kumar also led stress on the fact that while disposing of the appeal of M/s Rayalaseema Paper Mills the Special Bench 'A' had only thought it proper to follow the judgment of the Hon'ble High Court of Andhra Pradesh in the case of M/s Andhra Pradesh Paper Mills [1983 ELT 86 (A.P.)]. He read out the following portion from the Special Bench 'A' order to support his point:- "...the facts of the present case are on all fours with the facts of the case of Andhra Pradesh Paper Mills Ltd. Since the appellant's factory and the Andhra Pradesh Paper Mills Ltd. fall within the jurisdiction of the same High Court, it is appropriate that the procedure being followed by the Andhra Pradesh Paper Mills in pursuance of the decision of the High Court of Andhra Pradesh.should also be allowed to be followed by the appellant. We, therefore, direct that the wrapping paper in question be charged to excise duty only once in accordance with the ruling given by the Hon'ble High Court of Andhra Pradesh, in their judgment referred to above." 5. Shri Mahesh Kumar submitted that keeping in view the submissions made by him we should follow the Special Bench 'C judgment and reject the present appeal.
6. We have heard both sides. We see lot of force in the submissions made by the S.D.R. It is very relevant to observe here that subsequent to the issue of the Special Bench 'C order supra, the detailed judgment of the Supreme Court in the case of Union of India v. Bombay Tyres International etc. etc. was pronounced in October, 1983. It has been reported in 1983 E.L.T. 1896 (SC). The above mentioned judgment gives detailed reasoning with regard to the main conclusions which were reported in the Supreme Court judgment of May 1983. Keeping in view the observations of the Hon'ble Supreme Court (c.f. para 51) it is clear that the wrapping paper in the context of the present appeal acquires the character of primary packing material (not being durable or returnable in character) and therefore, its value has to be taken into account in arriving at the assessable value of the other varieties of paper for which it is used. We, accordingly, following the detailed reasoning contained in the Special Bench C's order referred to earlier with which we are in full agreement and keeping in view the guidelines set out by the Supreme Court, see no merit in the present Appeal and reject the same.
8. It is Section 3 of the Central Excises and Salt Act, 1944, that charges to duty the goods enumerated at the rates specified in the First Schedule to the Act.
9. Where the duty is specified ad valorem, the assessable value is to be determined in accordance with the provisions of Section 4 of the Act. That Section provides that the value of packing is to be added to the value of the goods to be assessed to duty, where they "are delivered in a packed condition at the time of removal". The exception is in the case of durable and returnable packing.
10. If, therefore, in the determination of the assessable value of the goods, in question, the value of the packing, assessed to duty already, is also to be included, it is not as if duty is being levied all over again on the packing. Duty is being levied only on the goods in question at the rates applicable thereto. The assessable value thereof, however, includes the value of the duty paid packing in terms of Section 4(d) (i) of the Act.