Skip to content


Andhra Pradesh Paper Mills Ltd. Vs. Asstt. Collector of Central Excise, Rajahmundry and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petition No. 7558 of 1982
Judge
Reported in1985(4)ECC289; 1984(17)ELT300(AP)
ActsCentral Excise Rules, 1944 - Rules 8, 8(1), 8(2) and 173B; Central Excise Act, 1944 - Sections 2, 3, 3(1), 4, 37 and 37(2)
AppellantAndhra Pradesh Paper Mills Ltd.
RespondentAsstt. Collector of Central Excise, Rajahmundry and ors.
Appellant AdvocateV. Jogayya Sarma, Adv.
Respondent AdvocateK. Jagannadha Rao, Standing Counsel and ;Central Government
Excerpt:
central excise - tariff items--construction of statutes--poster paper falls within item 17(2) and is liable to duty--is not covered by item 68--central excises and salt act (1 of 1944), sections 2(d), 3(1); schedule i, items 17, 68--finance act (66 of 1976)--finance act no. 2 (44 of 1980). - - sub-rule (2) of rule 8 empowers the central board of revenue by special order in each case to exempt from payment of duty under circumstances of exceptional nature, any excisable goods. union of india (1) supra where the learned judges dealing with the ambit and scope of item 68 observed as follows :the expression 'not elsewhere specified' referred to in item 68 means the total omission of failure to specify goods in the schedule to the central excise act either for the purpose of taxability or..........triplex boards, other sorts. 0.90 ps. per kg.(4) all other kinds of paper and rs. 1.20 ps. per kg.'paper board, not otherwise specified.------------------------------------------------------------------------4. all varieties of paper and boards including poster paper were excisable under the said tariff item no. 17. it is common ground that poster paper is a kind of printing and writing paper, prior to 16-3-1976, poster paper was being assessed to excise duty under item 17, sub-item (3). 5. by finance act 2 of 1976, tariff item 17 was amended as follows : '17. paper and paper board, all sorts (including paste board, mill board, straw board, card board and corrugated board) in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. (1).....
Judgment:

Ramachandra Rao, J.

1. The petitioner, a public limited company registered under the Companies Act and licensed under the Central Excises and Salt Act, 1944, manufactures different varieties of paper including 'poster paper' which are excisable goods within the meaning of Section 2(d) of the Central Excise Act. Section 2(d) defines excisable goods as meaning 'goods' specified in the First Schedule as being subject to duty of excise and includes salt. Section 3 of the said Act provides for levy and collection of excise duty and it reads as follows :

'3. Duties specified in the First Schedule to be levied :

(1) There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates, set forth in the First Schedule.

(1-A) The provisions of sub-section (1) shall apply in respect of all excisable goods other than salt which are produced or manufactured in India by, or on behalf of, Government as they apply in respect of goods which are not produced or manufactured by Government.

(2) The Central Government may, by notification in the Official Gazette, fix, for the purpose of levying the said duties, tariff values of any articles enumerated, either specifically or under general headings, in the First Schedule as chargeable with duty ad valorem and may alter any tariff values for the time being in force.'

(Rest omitted as not relevant for the purpose of this case).

2. Section 4 provides for valuation of excisable goods for the purpose of charging of duty of excise.

3. Tariff Item 17 of the First Schedule to the Act relates to paper. Prior to 16-3-1976, Item 17 reads as follows :

'17. Paper :- ------------------------------------------------------------------------Description of goods Rate of duty------------------------------------------------------------------------Paper, all sorts (including paste board,mill board, strawboard and card board) inor in relation to the manufacture of whichany process is ordinarily carried on withthe aid of power.(1) Cigarette tissue Rs. 3/- per kg.(2) Blotting, toilet, target, tissue otherthan cigaretee tissue, teleprinter, typewriting,manifold, bank, bond, art-paper, chromepaper, tubsize paper, cheque paper, stamppaper, cartridge paper, waxed paper, Rs. 1.20 ps.polythylene coated paper, parchment and per kg,coated board (including art board, chromeboard and for playing cards).(3) Printing and Writing paper, packingand wrapping paper, strawboard and pulpboard including grey board, corrugated board,duplex and triplex boards, other sorts. 0.90 ps. per kg.(4) All other kinds of paper and Rs. 1.20 ps. per kg.'paper board, not otherwise specified.------------------------------------------------------------------------

4. All varieties of paper and boards including poster paper were excisable under the said Tariff Item No. 17. It is common ground that poster paper is a kind of printing and writing paper, Prior to 16-3-1976, poster paper was being assessed to excise duty under Item 17, sub-item (3).

5. By Finance Act 2 of 1976, Tariff Item 17 was amended as follows :

'17. Paper and paper board, all sorts (including paste board, mill board, straw board, card board and corrugated board) in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. (1) Uncoated and coated printing paper 20% ad valoremand writing paper (other than poster paper).(2) Paper board and all other kinds ofpaper (including paper or paper boards, whichhave been subjected to various treatments,such as coating, impregnating, corrugation,creping and design, printing) not elsewherespecified. 40% ad valorem

6. Excise duty was being levied on the poster manufactured by the petitioner as falling under Item 17(2) as it was excluded from sub-item (1) of Item 17. Item 68 of the Act is a residuary item and provides for levy of excise duty at 8% ad valorem on 'all other goods not elsewhere specified' excluding the items mentioned therein. By Finance Act 2/80, an Explanation was added to Item 68, which reads as follows :

'Explanation. - For the purposes of this item, goods which are referred to in any preceding item in this Schedule for the purpose of excluding such goods from the description of goods in that item (whether such exclusion is by means of an Explanation to such Item or by words of exclusion in the description itself or in any other manner) shall be deemed to be goods not specified in that Item.'

7. The petitioner was being assessed to excise duty on poster paper under Item 17(2) from 16th March, 1976 and the petitioner never claimed that poster paper was totally exempt from levy of excise duty under Tariff Item 17. The petitioner states that it came to know in the third week of July 1982 about the decision of the Gujarat High Court in Darshan Hosiery Works v. Union of India (1980 Excise Law Times 390) where the expression 'not elsewhere specified' in Tariff Item No. 68 was interpreted, and that from the aforesaid decision, the petitioner learnt that the levy of excise duty on poster paper from 16-3-1976 to 18-6-1980 was not valid, and that the poster paper became liable to excise duty under Tariff Item 68 only from 19th June, 1980 after the introduction of the explanation to Tariff Item 68 by the Finance Act 2 of 1980. The petitioner submitted a classification list in Form I under Rule 173-B of the Central Excise Rules to the Asst. Collector of Central Excise, Rajahmundry contending inter alia that under mistake of law, poster paper was included in Tariff Item 17(2), and that the assessment so made, and the excise duty levied and collected from the petitioner from 16-3-1976 to 18-6-1980, were all illegal and void, and that the petitioner was entitled to refund of excess excise duty paid on poster paper under mistake of law since 16-3-1976 onwards, and that the poster paper became liable to excise duty under Tariff Item 68 from 19-6-1980 after the introduction of Explanation to the said item by the Finance Act 2 of 1980.

8. The Asst. Collector of Central Excise, Rajahmundry by his adjudication order No. 15/82 dated 6-8-1982, after considering the representations of the petitioner held that though poster paper has been excluded from Tariff Item No. 17(1), the said paper could be classified under Tariff Item No. 17(2) for the reason that all other varieties of paper other than those mentioned in sub-item (1) of Item 17 would fall under sub-item (2) of Item 17, and that no mistake of law was committed in assessing poster paper to excise duty under Tariff Item 17(2), and that Tariff Item No. 68 comes into play when the commodity is not covered by any of the Tariff Item Nos. 1 to 67, and that the poster paper cannot fall under Tariff Item No. 68, as poster paper is a kind of paper for which the main tariff in the First Schedule is item 17 and he accordingly held that poster paper has been correctly classified under Tariff Item No. 17(2) of the First Schedule to the Act.

9. Against the said order, the petitioner preferred an appeal to the Appellate Commissioner, Central Excise, Madras who by order in Appeal No. 298/82(c) dated 30-9-1982 confirmed the order of the Assistant Collector and rejected the appeal. The petitioner has thereupon filed this Writ Petition for the issue of a writ of mandamus declaring that poster paper falls under Tariff Item 68 on and from 19-6-1980, and that poster paper was not dutiable under Tariff Item 17(2) between the period 16-3-1976 to 18-6-1980 and for grant of consequential benefits arising from the above declarations.

10 The contention of Sri Jogayya Sarma, the learned counsel for the petitioner is, that poster paper is 'specified' in item 17(1), and that Item 17(2) applies only to paper board and all other kinds of paper not elsewhere specified, and that Tariff Item 68 also applies only to all other goods not elsewhere specified prior to the introduction of the Explanation in June 1980, and, therefore, poster paper is totally exempt from levy of excise duty under Tariff Item 17 from 16-3-1976 to 18-6-1980, and that it became leviable to excise duty only after the introduction of the explanation to Item 68 in June 1980.

11. On the other hand, the learned Central Government Standing Counsel contended that prior to 1976, poster paper was treated as writing paper falling under Tariff Item 17(3) and Excise duty was being levied accordingly on poster paper. After the amendment of Tariff Item 17 by Finance Act 2/76, poster paper was excluded from sub-item (1) of Item 17, but it falls under sub-item (2) of Item 17 which is a residuary item for all kinds of paper not covered by sub-item (1) of Item 17. He further submitted that the residuary Tariff Item 68 applies only to excisable goods which are not covered by items 1 to 67, and as poster paper falls under Tariff Item 17(2), the Tariff Item 68 does not apply to poster paper.

12. The contention raised on behalf of the petitioner is two-fold. The first is, that poster paper is totally exempted from levy of excise duty from 16-3-1976 to 18-6-1980 by virtue of the amendment of Tariff Item 17 by Finance Act 2 of 1976, and secondly, that poster paper has become dutiable under Tariff Item No. 68 on and from 19-6-1980 after the introduction of the Explanation to Item 68 by Finance Act 2/80. But, we are unable to uphold both the aforesaid contentions. There is no dispute that prior to the amendment of Tariff Item 17 by Finance Act 2/76 on 16-3-1976.

13. Tariff Item No. 17 which contained 4 sub-items with different rates of duty has been amended by prescribing two different rates of duty. The main head of the Tariff Item 17 covers paper and paper board, all sorts (including paste board, mill board, straw board, card board and corrugated board) in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. Thus, poster paper which is also admittedly a kind of printing and writing paper is covered by the main Tariff Item 17 inasmuch as it covers paper and paper board of all sorts. But, for the purpose of fixing the rates of duty on ad valorem basis, the paper covered by the main head has been divided into two sub-items. The first sub-item covers uncoated and coated printing paper and writing paper (other than poster paper) for which the rate of duty is fixed at 25% ad valorem. Sub-item (2) of Item 17 covers 'paper board and all other kinds of paper x x x x not elsewhere specified' and the rate of duty has been fixed at 40% ad valorem. Therefore, sub-item (2) covers all kinds of paper not covered by sub-item (1) and poster paper which has been excluded from sub-item (1) will necessarily fall under sub-item (2) of Item 17. Merely because poster paper has been mentioned in sub-item (1) of Item 17 for the purpose of excluding it for applying the rate of duty applicable to the paper mentioned in sub-item (1), it cannot be inferred that poster paper has been exempted from the levy of excise duty. According to the definition in Section 2(d), 'excisable goods' means goods specified in the First Schedule as being subject to a duty of excise. As the main Tariff Item 17, paper and paper board of all sorts, covers poster paper also, poster paper is also excisable goods under Section 2(d) read with Section 3(1) of the Act. The expression 'other than poster paper' occurring in sub-item (1) of Item 17 is not for the purpose of granting exemption to poster paper from the levy of excise duty, but is only intended for the purpose of bringing it under sub-item (2) of Item 17 which is a residuary item and applying the rate of duty of 40% ad valorem. Poster paper is used mainly for commercial purposes and hence a higher rate of duty is sought to be imposed by including it in sub-item (2) and it could not have been the intention of Parliament to grant complete exemption to poster paper used for commercial purposes from the levy of excise duty.

14. Further, the residuary Item No. 68 applies to all goods not elsewhere specified and inasmuch as poster paper is covered by sub-item (2) of Item 17, it does not fall under Tariff Item 68. When the specific Item 17 relating to paper covers poster paper, the residuary Tariff Item 68 does not apply to paper covered by sub-items 1 and 2 of Item No. 17.

15. Further, under Section 37, power is given to the Central Government to make rules to carry into effect the purpose of the Act and also with regard to the particular matters mentioned in sub-section (2), clause (xvii) of Section 37(2) empowers the Government, to make rule providing for exempting any goods from the whole or any part of the duty imposed by this Act. Rule 8(1) of the Central Excise Rules, 1944 empowers the Central Government, by notification in the Official Gazette to exempt subject to such conditions as may be specified in the notification any excisable goods from the whole or any part of duty leviable on such goods. Sub-rule (2) of Rule 8 empowers the Central Board of Revenue by special order in each case to exempt from payment of duty under circumstances of exceptional nature, any excisable goods. It is common ground that no such exemption was granted to poster paper either by the Central Government or by the Central Board of Revenue in exercise of the powers conferred by Rule 8. Therefore, it is not possible to accept the contention of the learned counsel for the petitioner that the poster paper was exempt from payment of excise duty during the period 16-3-1976 to 18-6-1980. Both the Asst. Collector and the Collector have rightly held that poster paper is dutiable under Tariff Item 17(2).

16. The further contention of the learned counsel for the petitioner that poster paper became liable to excise duty under Tariff Item 68 with effect from 19-6-1980 after the introduction of the explanation to Tariff Item 68 by the Finance Act 2/80 is also devoid of any merit. As already held by us, poster paper falls under Tariff Item 17 and the rate of duty payable is according to the rate fixed in sub-item (2) of Item 17. Therefore, the introduction of the explanation to Tariff Item 68 by Finance Act 2/80 does not have the effect of making poster paper liable to excise duty under Tariff Item 68 after the introduction of explanation to the said Item by Finance Act 2/80.

17. The learned counsel for the petitioner relied upon the decision of the Gujarat High Court in Darshan Hosiery Works v. Union of India (1) Supra where the learned judges dealing with the ambit and scope of Item 68 observed as follows :

'The expression 'not elsewhere specified' referred to in Item 68 means the total omission of failure to specify goods in the Schedule to the Central Excise Act either for the purpose of taxability or for the purpose of exemption from liability to duty. Therefore, once an article or goods is specified in any of the Tariff Items between Items one to sixty-seven, irrespective of the purpose for which they are specified, item 68 does not come into play and does not render such goods liable to duty.'

But, the aforesaid observations do not render any support to the contention of the learned counsel for the petitioner. All that was laid down in the said ruling is that where goods are specified for the purpose of taxability or for the purpose of exemption from liability to duty in any of the Tariff Items 1 to 67, Item 68 would not be attracted to such goods. In the instant case, we have come to the conclusion that poster paper falls under Tariff Item 17 and it is liable to duty at the rates specified in sub-item (2) of Item 17 and, therefore, Tariff Item 68 read with the explanation is not applicable to poster paper which is dutiable under Tariff Item 17.

18. Thus, all the contentions raised on behalf of the petitioner fail and the Writ Petition is liable to be dismissed and it is accordingly dismissed with costs. Advocate's fee Rs. 200/-.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //