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Swastik Product of Baroda Vs. Superintendent of Customs - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Application No. 803 of 1976
Judge
Reported in1989(21)LC162(Gujarat)
AppellantSwastik Product of Baroda
RespondentSuperintendent of Customs
Excerpt:
manufacture - printing/colouring of duty-paid white paper is not 'manufacture', [cesa : section 2(f)] not liable to any further duty. - .....briefly are these. the petitioner is a firm doing business of printing on papers. it purchases paper manufactured by manufacturers and colours or prints on one side of the paper, it is this colouring or printing on one side of the paper purchased by it from manufacturers, according to the respondents, that has entitled them to demand payment of excise duty in accordance with tariff item 17(4) of the first schedule to the central excise manual. before the present action was taken against the petitioner, the collector of central excise had held that the paper processed by is not liable to payment of any excise duty as it does not fall within tariff item no. 17(4) but subsequently that view was not upheld by the excise authorities. the petitioner had once before moved this court for the.....
Judgment:

S. Obul Reddi, C.J.

1. In this petition the petitioner, Swastik Products prays quashing of the impugned notices at Annexures 'A' 'B' and 'C' issued to it and the impugned orders of the respondents at Annexures 'A', 'T' and 'O'. There is a further prayer for a writ of mandamus directing the respondents to forbear from enforcing and to desist from enforcing the demands made in the aforesaid notices.

2. The facts giving rise to this petition briefly are these. The petitioner is a firm doing business of printing on papers. It purchases paper manufactured by manufacturers and colours or prints on one side of the paper, it is this colouring or printing on one side of the paper purchased by it from manufacturers, according to the respondents, that has entitled them to demand payment of excise duty in accordance with Tariff item 17(4) of the First Schedule to the Central Excise Manual. Before the present action was taken against the petitioner, the Collector of Central Excise had held that the paper processed by is not liable to payment of any excise duty as it does not fall within Tariff Item No. 17(4) but subsequently that view was not upheld by the excise authorities. The petitioner had once before moved this Court for the same relief as prayed for DOW and this Court directed the excise authorities to afford the petitioner an opportunity of being heard and pursuant to that the Assistant Collector in the first instance heard the petitioner and held that colouring or printing on one side amounts to 'manufacture' of paper as defined in Section 2(f) of the Central Excises and Salt Act, 19-44 and in that view held that Tariff Item 17(4) is attracted. That decision of the Assistant Collector which was carried in appeal by the petitioner, was upheld by the Collector of Central Excise and the Revision Petition filed against the Collector's decision was also dismissed by the Central Government. It is after the decision of the Central Government that the impugned notices and orders were served upon the petitioner calling upon it to pay duty on the goods, namely, printed paper, as provided in Tariff Item 17(4),

3. Mr. Sanjanwala, learned Counsel appearing for the petitioner, invited our attention to Tariff Item 17 and also the definition of 'manufacture' to contend that by no stretch of reasoning can, paper which is coloured by the petitioner on one side or printed on one side, be said to be a process in the 'manufacture' of paper, 'Manufacture', as defined in Section 2(f) includes any process incidental or ancillary to the completion of a manufactured product; and

(i) In relation to tobacco, includes the preparation of cigarettes, cigars, cheroots, biris, cigarette or pipe or hookah tobacco, chewing tobacco or snuff ; and

(ii) in relation to salt, includes collection, removal, preparation, steeping, evaporation, boiling or any one or more of these processes, the separation or purification of salt obtained in the manufacture of saltpetre, the separation of salt from earth or other substance as to produce elementary salt, and the excavation or removal of natural saline deposits or efflorescence ;

(iii) in relation to patent or proprietory medicines as defined in Item No. 14 of the First Schedule and in relation to cosmetics and toilet preparations as defined in Item No 14 of that Schedule, includes the conversion of power into tablets or capsules, the labelling or re-labelling of containers intended for consumers and re-packing from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer.

(iv) in relation to goods comprised in Item No, ISA of the First Schedule, includes sizing, beaming, warping, wrapping, winding or reeling, or any one or more of these processes, or the conversion of any form of the said goods into another form of such goods;

and the word 'manufacturer' shall be construed accordingly and shall include not only a person who employes hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account.

4. Tariff Item No. 17 to the extent relevant reads-

17. Paper, all sorts (including paste board, millboard, strawboard and cardboard), in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power------------------------------------------------------------------------------1 2 3-----------------------------------------------------------------------------(1) Cigarette issue. Rs. three per Kg. (2) Blottings, toilet tissue, other than cigarette Rs. one and tissue, tele-printer, typewriting, manifold, twenty paise per bank bond, art paper, chrome paper, tub- kg. sized paper, cheque paper, stamp paper, chartridge paper, waxed paper, polyethylene coated paper, parchment and coated board (including art board, chrome board and for playing cards). (3) Printing and writing paper, packing and Sixty paise per wrapping paper, straw board and pulpboard, kg. including grey board, corrugated board, duplex and triplex boards, other sorts. (4) All other kinds of paper and paperboard, Rupee one and not otherwise specified. twenty paise perkg.-----------------------------------------------------------------------------

5. What Mr. Vakharia appearing for the respondents contends is that the colouring process of the paper purchased by the petitioner would come within the sweep of 'all other kinds of paper and paperboard, not otherwise specified'. The words 'all other kinds of paper' occurring in Tariff Item 17(4) refers to 'all other kinds of paper manufactured'. Colouring a paper which is already manufactured is not a process in the manufacture of paper nor can the process be said to be one incidental or ancillary to the manufacture of paper. If the colouring was in the process of the 'manufacture' of the paper, then it would come within the expression 'paper, all sorts'. No manufacturing process is involved by printing on white paper or by colouring manufactured product, namely, the paper. We are, therefore, unable to agree with Mr. Vakharia that 'all other kinds of paper' would take in paper which has already been manufactured and on which either printing is done or colouring is done, We, therefore, hold that the respondents erred in invoking sub-item (4) of Tariff Item 17 in demanding the payment of excise duty. It is brought to our notice by the learned Counsel for the petitioner that the goods in question had already suffered excise duty and the manufacturer had paid the excise duty payable on the goods sold to the petitioner. This statement made by the learned Counsel for the petitioner is not denied by Mr, Vakharia, learned Counsel for the respondents. There is no separate item for payment of excise duty on flint paper. Therefore, the petitioner is not liable for payment of excise duty on the flint paper.

6. We, therefore, quash the impugned notices and the impugned orders and allow this Writ Petition and make the rule absolute with no order as to costs.


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