1. The partnership firm run under the name and style of The Standard Packagings (the firm) is the writ petitioner. The firm owns a licence (No. L4-2/77-79) to manufacture paper goods i.e. Bituminised water proof paper (bound paper), waxed paper (kraft paper) and Bituminised polythene paper. On bond paper in the State of Tamilnadu Excise duty levied under Excise Act 1 of 1944 (the Act) by notification of Ministry and Finance (department) No. 184/76-CE, dated May 27, 1976, has been 'invalidated' by a judgment of August 27, 1980. The firm complains that as a result the bond paper is dumped in the State of Andhra Pradesh and because no duty is paid on paper manufactured in Tamilnadu the goods are sold at lower prices. The firm is apprehensive of loss of business due to lower cost price and it is represented they are likely to be elbowed out from the market. The firm lodged the writ petition in such exigencies and seeks the relevant notification to be quashed. Thus the question raised at issue is : Whether it is legal to levy duty on bond paper under the Act To be precise in formulating the question whether the bond paper is an item which falls under clause (2) of item 17 of Schedule of the Act. In support of the plea the firm has also raised the cognate question as to the plea of 'double taxation' for the Madras High Court had invalidated the impugned notification on that ground.
2. The Revenue resists the prayer in the writ petition notwithstanding the decision on August 27, 1980 by the Madras High Court. The Revenue contends duty is leviable under clause (2) of item 17 under the Schedule of Section 3 of the Act. The levy is proper and legal. The levy does not suffer and vice whatever.
3. The first and foremost question to be decided having regard to the averments of the firm is : Whether bond paper is 'manufactured' within the meaning of Section 3 of the Act 1 of 1944 The 'process' adopted by the firm in producing bond paper is not in dispute. In the 'process' two materials are used - asphalt and kraft paper. The former forms 20%. The latter forms 80%. These are the two components. As to the uses of bond paper it is used for packing goods mostly in transporting goods. The two bond paper and kraft paper are packing materials is not in dispute.
4. The bond paper manufactured by the petitioner firm was analysed by the Revenue earlier, and it was found to contain kraft paper component in the first sample 67.2%. In another sample kraft paper was 48.5%. Bitumen or asphalt was 32.8% in the first sample and 51% in the other sample. Thread as a component in small quantity was found to have been used in both the samples by the firm. As to how a bond paper in manufactured the process is described in the following words by the Revenue : 'By bonding a layer of kraft paper to another layer of kraft paper, that one roll of the kraft paper is passed on to another one on the roller of a machine and while the roll of kraft paper is being passed on, Bitumen which is kept in a tank and heated by electrical application is applied as bonding material to the paper in the roll at the lower surface, that after the paper to which the Bitumen is applied reaches the second roller another roll of kraft paper is passed on and both the rolls of kraft paper which are bonded by Bitumen come out of the machine as Bituminised water proof paper. ' On the above process the questions at issue are : Whether the process adopted is a manufacturing process Whether on such bond paper duty under clause (2) of item 17 of the Act can be levied? The counsel are agreed that the determination of the two issues decides the validity or otherwise of the impugned notification.
5. The word 'manufacture' occurs in many Statutes including fiscal enactments. This word was considered by Court times out of number. What its meaning under Section 106 of the Transfer of Property Act was considered in P. C. Cheriyan v. Mst. Barfi Devi (1) - 1979 E.L.T. (J 593). what is the meaning under Sales Tax Laws was considered Deputy Commissioner Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers (2) - 1980 E.L.T. 343 (S.C.) What is means under the Act, cases are abound. No useful purpose therefore is served in collecting all cases once over again. In considering the meaning of the work 'manufacture', its meaning the Supreme Court held when 'a change is brought about' by treatment of 'labour and manipulation' and when such finished goods are 'different articles' 'having a distinctive name, character or use' the goods are said to be manufactured. This is how the meaning was accepted in case that arose under the Act. It is from the stand-point of 'name', 'character'and 'use' bond paper whether is dutiable under item 17(2) is to be determined in the instant writ petition.
6. The firm, it was argued by the Revenue, have an alternative remedy under sections 35, 35(a) and 36 of the Act. Those remedies are not exhausted by the firm therefore should not be permitted to have recourse the proceedings under Article 226 of the Constitution of India. This plea is considered in the context of difficulties and competition experienced in marketing the goods as not efficacious. The writ petition, therefore is held maintainable.
7. The principal contention of the firm as narrated earlier it is not dutiable for bond paper is not manufactured. This result is sought to be achieved in more than one argument of behalf of the firm.
8. The firm contends the two components of bond paper, kraft paper an Bitumen (asphalt) are 'raw materials' that go to produce bond paper, Kraft paper under item-17, Bitumen under item-11 of the Act suffer duties therefore it is argued bond paper cannot be subjected to levy again. To do so, it is argued is to levy within the vice of 'double taxation'. Whether to levy twice over the duty is 'bad economics' may be debatable. Whether duty is leviable is a legal question. There is nothing to prohibit in law or in any statute including the statute of Constitution under Article 265 prohibiting double taxation or in any fiscal enactments. There is no 'inherent' invalidity 'if the legislature should choose 'to levy tax twice' (See Avinder Singh v. State of Punjab - 3 : 1SCR845 ). This argument of the firm, therefore, cannot be countenanced. In this regard the Revenue stated that by Notification dated May 27, 1976 bond paper is exempted of so much of duty - 'leviable in excess of 1.25% ad valorem - (if duty is already paid) in respect of the base paper used in the manufacture.' Further concession is offered to manufactures who avail 'special procedure in 56-A' Under the Act. These measures are referred to by the Revenue to show that as of fact there is no double taxation on bond paper.
9. It is next argued on behalf of the firm that under the scheme of the Act once goods are levied of excise duty 'the same goods' (referring to kraft paper and Bitumen) unless the two are 'processed' to different finished goods, no duty can be levied under the Act. In elaboration of the plea, it was explained that unless the finished goods 'hop' into another item of the Schedule under Section 3 of the Act the finished goods if they 'hop back' and fall on the same item of the Schedule (Item-17 in the instant case) such finished goods cannot be further subjected to duty under the same item of the Act. This in truth is a fact of the plea of double taxation which Krishna Iyer, J. hoped that after his opinion in (3) the 'contention' will 'rest in peace'. The learned Judge said in the decision that an 'epitaph' was being written in that case. Alas the argument resurfaces in the Courts. It succeeded in Madras High Court. The 'contention' is ever living and 'dies hard. ' The theory that components of finished goods have suffered duty. Such manufactured goods should 'hop' into another item before they are taxed in our jurisprudence is new and novel. There is no basis either in our fiscal philosophy to countenance such a measure nor our Statutes support such a restraint.
10. Lastly it was argued, to repeat, bond paper is manufactured from kraft paper and Bitumen. Thus the bond paper is manufactured out of kraft paper and Bitumen. The goods produced from such a process, it is argued, is nothing but a paper. 'It is the same material - same paper - and such paper is used for packages - whether it is kraft paper or bond paper the two are used for packages. The two are papers. The two are commercial commodities used for the same purpose.' Therefore it is argued that no duty is leviable' and no duty should be levied.'
11. The Bituminised water proof paper or bond paper is not kraft paper. May be bondpaper and kraft paper both are used for packing goods. The two are so different that a purchaser of bond paper cannot be delivered kraft paper. The strength of components makes the two for varying needs for packing purposes. When goods are packed vis-a-vis the distance - journey - transport - highway, water-way or by air-goods are differently packed is a matter of common knowledge. In that sense packing material varies. From that stand point kraft paper and bond paper are 'used' for varied needs. They are known with different names in commercial parlance, as per the tests prescribed in the oft repeated cases (see Union of India vs. Delhi Cloth and General Mills) (4) : 1973ECR56(SC) and South Bihar Sugar Mills vs. Union of India (5) 1968 S.C.R. 21-1978 E.L.T. (J 336).
12. In W.P. No. 495 of 1980 and batch on August 27, 1980 - 1980 E.L.T. 579 (Mad.), Madras High Court had held bond paper is 'not a new kind of paper' from that of kraft paper and further that in the levy of duty under the Act the vice of double taxation is attracted. In the aforesaid discussion on the two aspects, I have reached a different conclusion. With respect, I am unable to follow the decision reached in the above group of cases in Madras High Court.
13. The writ petition for all the aforesaid reasons fails and is dismissed. No costs.