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The Sirpur Paper Mills Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Judge
Reported in(1983)LC1179DTri(Delhi)
AppellantThe Sirpur Paper Mills Ltd.
RespondentCollector of Central Excise
Excerpt:
.....of different varieties of paper as contained in indian standard specifications and in the paper trade manual by raghunaih dutta. these will be referred to later in this order. their main point was that none of these contained a criterion of 85 gms per square metre as a dividing line, and that the use of the paper was more important.8. for the department, smt. zutshi pointed out that there could be some overlappi. g between the varieties of paper covered by sub-item (2) and by sub-item (3) of item 17. it was for this reason that a grammage criterion of 85 gms per square metre had been prescribed by the board.she referred to indian standard specification no. 1848 of 1971, relating to printing and writing paper. one of the criteria was that the percentage ok mechanical wood pulp.....
Judgment:
1. This is a revision application (hereinafter called "appeal") filed before the Central Government which under Section 35P of the Central Excites and Salt Act, 1944, stands transferred to this Tribunal to be disposed of as If It were an appeal presented before the Tribunal.

2. This case relates to the classification of 17 varieties of paper manufactured by the appellants. They had submitted a classification list for these varieties of paper, claiming all of them to be classifiable under sub-item (3) of I tern 17 CET that is, as unspecified varieties of printing and writing paper. The Assistant Collector of Central Excise, however, held that these varieties of paper were classifiable under sub-item (2) ibid which covered specified varieties of paper, including cartridge paper. The only reason given for this decision in the Assistant Collector's order dated 30.6.77/ 12.7.77 was that "the above items of paper are used for a variety of purposes, such as covers and envelopes and hence they are assessable to duty as cartridge paper assessable under Item No. 17(2)".

3. For convenience, the tariff item as it stood at the relevant time is reproduced below: ["Item No. Description of Goods Rate of duty 17 PAPER, all sorts (including paste board, mill board, straw board, and card-board), in or in (1) Cigarette tissue Rs. 3.00 per Kgm.

(2) Blotting, toilet, target, tissue other than cigarette tissue, teleprinter, type-writing, playing cards).

Rs. 1.20 per Kgm.

(3) Printing and writing paper, packing and wrapping paper, straw board, and pulp sorts.

Rs. 0.60 per Kgm.

(4) All other kinds of paper and paper board not otherwise specified.

Rs. 1.20 per Kgm] 4. The appellants appealed to the Appellate Collector against the above decision. They contended that although all these varieties of paper contained substance of 85 gms. or more per square metre, they were still classifiable as writing and printing paper falling under Item 1713). They stated that during the personal hearing before the Assistant Collector they had produced evidence "through market parlours tsic) and trade" to show that in spite of the higher grammage these varieties of paper were known as printing and writing paper and were not known as papers intended for covers or envelopes or for drawing or as cartridge paper. This evidence was not considered by the Assistant Collector.

5. The Appellate Collector in his order referred to a report of the Tariff Commission and the definition of offset and cartridge paper contained therein, On the basis of this definition he held that varieties of paper weighing 55 gms, per square metre and above could run be classified as printing and writing paper. He went on to observe that writing and printing paper were not used for purposes sueh as covers, envelopes etc, i.d only heavy grammage paper and cartridge paper were used for such furposes. In this case according to him it had not been disputed that the 7 varieties of paper were also used for covers and envelopes, He went on to hold that the trade opinion referred to by the appellants had therefore no relevance. In the result he rejected the appeal.

6. in the memorandum of appeal and tit the personal hearing the appellants have argued that the Turn it Commission's report had become out-dated. They have also argued that, whatever the Tariff Commission's views night be, they had not been incorporated in the relevant tariff item, and therefore could not be read into it: since the tariff item itself did not refer to grammage or weight per square metre as the criterion, such a criterion had no legal force. In this connection they relied on an Order-in-Revision of the Government of India in a previous case relating to them (Order No. 872/.972 dt. 29.5.1972). The relevant part of this order is reproduced below: They (the Government of India) observe that the Appellate Authority has based its decision on the report of the Chemical Examiner that the samples of writing paper were not distinguishable from cream-wove and map-litho paper. At no stage, the chemical examiners' report has stated that this is cartridge paper. The tariff item does not make any distinction between printing and writing paper of 85 GSM, or above 85 GSM, The physical characteristics of paper under reference, and those of cartridge paper, as pointed out by the petitioners, have not been disputed by the Department and it has not been established that the said paper is known in the Trade as cartridge paper.

7. The appellants referred to certain definitions/specifications of different varieties of paper as contained in Indian Standard Specifications and in the Paper Trade Manual by Raghunaih Dutta. These will be referred to later in this order. Their main point was that none of these contained a criterion of 85 gms per square metre as a dividing line, and that the use of the paper was more important.

8. For the Department, Smt. Zutshi pointed out that there could be some overlappi. g between the varieties of paper covered by sub-item (2) and by sub-item (3) of Item 17. It was for this reason that a grammage criterion of 85 gms per square metre had been prescribed by the Board.

She referred to Indian Standard Specification No. 1848 of 1971, relating to printing and writing paper. One of the criteria was that the percentage ok mechanical wood pulp should be less than 20 per cert.

No evidence had been produced that in this case the mechanical wood pulp content was less than 20 per cent. She quoted the Paper Trade Manual by Raghunath Duita to show that a range of papers would be covered by that term "cartridge paper". She pointed out that the classification of paper given in this manual was generally according to its use, though sometimes reference was made to the composition. She quoted a circular letter dated 21.8.63 issued by the Central Board of Excise and Customs, which refered to the Tariff Commission's definition of offset and cartridge paper and indicated that offset cream-laid and maolitho paper of substance 85 gms per square metre and above should be classified as cartridge papor under Item 17(2).

9. In compliance with our direction, Smt. Zutshi produced before us a copy of Indian Standard Specification No. 1763 of 15-61, relating to printing and writing paper. It was found that no dividing line on the basis of grammage was contained in that specification.

10. We have carefully considered the question in the light of the arguments and evidence produced before us. It may be stated straightaway that the criterion of 85 gms per square metre has been taken from the Tariff Commission's report on the Fair Ex-Works and Fair Selling Prices of Paper and paper Boards, submitted on 8.6.1959, and no other authority, whether from the Indian Standards Institution, the Paper Trade Manual or any other reference book, has been placed before us in support of this criterion. We are not in any way wanting in respect to a recommendation contained in a report of the Tariff Commission, even allowing for the fact that it is somewhat out of date.

It is common knowledge that the statutory enquiries of the Tariff Commission were made through an elaborate process which allowed full opportunity to importers, manufacturers and all other concerned interests to make their view; known. In this case also, after preliminary enquiries the Commission held a public inquiry at which manufacturers, distributors, dealers and consumers were represented.

Therefore, as we have said, the definitions given by the Tariff Commission deserve all respect. The definition for offset and cartridge paper, as given in Appendix VII of the Commission's report, is as follows: Offset and Cartridge paper :This type of paper is suitable for the offset printing process. It is normally made from bamboo or grass stock and may contain some amount of rag and wood pulp. It may be white or coloured. For purposes of printing it is normally below 85 gms, while for drawing it is above 85 gms, and may also be tub sized. It includes ordinary litho paper.

11. Some point of importance relating to the above definition should however be noted. One is that the particular entry "offset and cartridge paper" has been given under the main heading of "printing and writing paper" (there is a separate main heading for "packing and wrapping paper"). Secondly, the words "offset paper" and "cartridge paper" appear to be used as synonyms, and the definition, which is the same for both, mentions that this type of paper is suitable for the offset printing process. The dividing line of 85 gms per square metre is also, as seen from the definition, not a rigid one, but only indicates that for purposes of printing it is normally (emphasis ours) below 85 G.S.M. Above 85 G.S.M. it appears to be normally used for crawing. A question would also arise whether paper used for drawing cannot also be considered as "writing paper".

12. While the definition is not categorical with reference to grammage, it does, however, give an indication regarding the composition of the paper. The Paper Trade Manual of Raghunath Dutta indicates (page 51) that cartridge paper is made from long-fibred chemical wood pulp, with or without rags. In this connection Smt Zutshi raised a point that for printing and writing paper the percentage of mechanical wood pulp should be less than 20 per cent, and that no evidence had been produced that the paper under consideration contained less than 20 per cent of mechanical wood pulp. It was pointed out to her that this was new point which had not been raised at any earlier stage, and could not be raised now. But even otherwise, we find it strange that there is no indication of any chemical test having been carried out on the varieties of paper under consideration, with reference to their composition. Apparently the only point checked was the grammage or weight in grammes per square metre, which could be done even by an intelligent layman, provided he had a good chemical balance. It follows that no conclusions can be drawn in this case based on the composition of the paper.

13. The appellants had sought to produce evidence from the trade regarding the use of these varieties of paper. This evidence was apparently not taken into consideration, except to the extent of treating it as an admission that the paper could be used inter alia for making covers and envelopes. We find the reasoning of the Appellate Collector in this regard strange and difficult to understand, On the one hand, he refers to the use of these varieties of paper, to the extent of mentioning that it was not disputed that these varieties of paper were also used for covers and envelopes. Having made this observation, he has shut out all evidence regarding trade opinion as irrelevant. Even assuming 'that the appellants had separately admitted that these varieties of paper were used for making envelopes etc., or that the evidence produced by them indicated that this was one of their uses, ii is not clear how the Appellate Collector could seize upon this one use and conclude straightaway that all these varieties of paper were nothing but cartridge paper. Surely in such a case it was the general or predominant use which should have been taken into consideration.

14. We now come to the order of the Government of India in revision, on which the appellants have relied. It has been correctly stated therein that the tariff item did not make any distinction between printing and writing piper of 85 GSM or above 85 GSM, The tariff item as it stood at the relevant time has been reproduced in para 3 above. The description bears out the observation in the order of the Government of India. It is true that every tariff item cannot be absolutely comprehensive, and that where an item is not specific, it could be interpreted in the light of criteria contained in such authoritative works, as standard books of reference, Indian Standard Specification etc. However, in the present case the only such authority is, that contained in the Tariff Commission's report. As we have pointed out above, that report nowhere makes a categorical division between cartridge paper and other printing and writing paper on the basis of grammage. The Government of India order rightly indicates that the physical characteristics of the paper and the question how it is known in the trade were relevant (but had not been taken into account). Many of the same considerations apply to the piesent case as well.

15. Summing up, the position is that the appellants filed a classification list claiming classification under sub-item (3) of Item 17. They produced, or offered to produce, trade opinion in support of their stand that these varieties of paper were not offset or cartridge paper, but were unspecified varieties of printing and writing paper.

The Department did not produce any evidence on the basis of chemical test (other than grammage) to show that the goods had the characteristics of cartridge paper. 1 he Department also did not examine in any detail the trade opinion or evidence on the normal or pre-dominant use of the goods, but only seized on the fact that they could inter alia be used for making envelopes etc. The Department also placed un the reliance on the grammage of the paper, to the extent indeed, of treating it as a conclusive dividing line. We consider that in these circumstances the Department was not justified in rejecting the classification claimed by the appellants. The matter goes back to 1975 and no useful purpose would be served by attempting a de novo examination on merits, particularly as in the meantime the relevant tariff item has also been amended, in these circumstances we think the proper course would be to allow the appeal accepting the classification claimed by the appellants, which has not been effectively controverted by the Department, and we order accordingly, The goods In question shall be classified under Item 17(3) as claimed by the appellants and consequential relief given to them.


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