TMI Blog1984 (4) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants had manufactured Waxed Papers for various parties on job basis and did not pay the excise duty on the manufactured product i.e. waxed paper, and therefore, a show cause notice dated 6-4-1978 was served upon the appellants by the Assistant Collector of Central Excise, Jamnagar proposing penal action under Rule 173 Q(1) and also proposing recovery of excise duty under rule 9(2) on the Waxed Paper valued at ₹ 36,476.50 and ₹ 50,135.00 alleged to have been manufactured and cleared by the appellants during the period 1-3-1974 to 7-5-1977. 3. The appellants in their reply dated 25-7-1977 denied that they had manufactured waxed papers in contravention of the Central Excise Rules. It has been alleged that since March 1974 the appellants had been waxing and printing the paper wrappers on job basis supplied by the various soap manufacturers and Bakeries for wrapping of soaps and bread, etc. and for this job work the appellants were only charging job charges from the suppliers of the papers. They had stopped doing this work after 26-3-1977. 4. The Assistant Collector of Central Excise, Jamnagar did not accept the contention of the appellants and passed an order (o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intended to undergo manufacturing process is supplied to the job worker and that article is returned by job worker to the supplier after the article has undergone the intended manufacturing process, charging only for the job work done by him. She drew our attention towards a decision of this Tribunal in M/s. Kiran Printing and Packaging, Bombay v. Collector of Central Excise, Bombay (Order No. C 56/84 dated 27-1-1984) [1984 (16) E.L.T. 570] in which the Special Bench of the CEGAT held that waxing of papers amounts to manufacturing process and is subject to levy of excise duty under item 17(2) of the Central Excise Tariff. She also drew our attention towards a decision of the Special Bench C of the CEGAT in Collector of Central Excise, Hyderabad v. M/s Uma Laminated Products (P) Ltd. Hyderabad (Order No. C 95/84 dated 20-2-1984) [1984 (17) E.L.T. 187] in support of her contention that waxing of a duty paid paper falling under the same tariff entry would amount to manufacture as laid down under Section 2(f) of the Central Excises and Salt Act, 1944 and subject to levy of excise duty. According to the SDR a paper obtained as a result of treatment of a basic paper must fall within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether it brings out a complete transformation for the old components so as to produce a commercially different article or commodity. 14. In Civil Appeal No. 2398 of 1978 decided on 9-5-1980 (1980 - E.L.T. J 343 S.C. the Supreme Court held that :- The manufacture is the end result of one or, more processes through which the original commodity is made to pass. Although the nature and extent may vary from one case to another yet, it is only when the change, or a series of changes take the commodity to the point where commercially it is recognised as a new and distinct article that a manufacture can be said to have taken place. 15. In Nav Gujarat Paper Industries v. Superintendent of Central Excise and others (1977 - E.L.T. J 67) the appellants were manufacturing Gummed paper out of duty paid papers, purchased from the manufacturers. The Gujarat High Court rejecting the contention of the excise authorities had held as follows :- Under the circumstances, we have come to the conclusion that the intermediate product of what the revenue calls Gummed Paper is not gummed paper known to the market as such and mere application of gum on the side of paper does not convert tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pers supplied to the appellants by other parties, who used such papers for wrapping of their products such as soaps, breads, etc. The base papers on which the waxing was done by the appellants was a fully manufactured paper purchased by the suppliers from the market and which had discharged full duty liability under entry No. 17 of the excise tariff. The subject paper was nothing but ordinary paper and retained its identity as paper. The process of mere application by rollers of Stove melted wax on already manufactured base paper which has already suffered excise duty .once under entry No. 17(2) of the First Schedule to the Act cannot be considered as manufacture bringing into existence a new product with different name, character or use. The wrapping paper even after waxing remains wrapping paper and is known to the market as wrapping paper. Mere application of wax on original paper does not involve complete transformation of the paper. Paper remains paper before and after waxing, and no excise duty is at all attracted on the waxed paper as wrongly held by the Assistant Collector of Central Excise and the Collector. 19. On these allegations the appellants have challenged the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Notification fully satisfied by the appellants. The appellants were also eligible for the, benefit of Notification No. 71/76, dated 16-3-1976 (as amended) as the said notification covered waxed papers also. The authorities below have not taken into consideration these aspects of the matter and therefore, it has been prayed by the appellants that the impugned order be set aside and the appeal be accepted. 24. In this case there is no dispute about the fact that the appellants converted the base paper to waxed paper, the final product and printing was made on them. As per the contention of the appellants, the process of waxing done by them on the papers supplied by the different parties on a job work basis does not fall within the scope of the said tariff item No. 17(2) and that the provisions of item 17(2) C.E.T. would apply to the waxed papers manufactured in mills and not to those papers manufactured by them. They simply applied wax on papers supplied to them by different parties and returned them to the suppliers. 25. In view of these facts, we will have to see whether this conversion of base paper into waxed paper amounts to manufacture within the meaning of Section 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedure prescribed .under rule 56A of the aforesaid Rules in respect of the duty paid on base paper or board; or (ii) the exemption granted under the notification of the Government of India in the Ministry of Finance (Department of Revenue and Insurance) No. 67/76-C.E., dated the 16th March, 1976. Explanation :- For the purpose of this notification, the base paper or board used in the manufacture of polyethylene coated paper, polyethylene coated board, waxed paper or waxed board shall be deemed to have paid the appropriate duty of excise or the additional duty leviable under Section 2A of the said Indian Tariff Act, 1934, if it is purchased from the market. 29. The above Statutory Notification exempts certain specified varieties of treated paper including waxed paper falling under Item No. 17(2) from excise duty leviable thereon in excess of 12.5% ad valorem subject to certain specified conditions. If we were to hold that waxed paper does not fall for a second stage levy under item 17(2) we would in effect be rendering Statutory Notification No. 71/76 nugatory. While double taxation may be a vice, but multi-stage taxation is not and Rule 56A of Central Excise Rules is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers purchased from the manufacturers and it was found by the Gujarat High Court that the gummed paper so-called by the Revenue was not gummed paper known to the market as such and that. mere application of the gum on the side of the paper did not convert that paper into a new commodity known to the market as such. Here in the case before us, converting the ordinary paper into waxed paper has resulted in the production of a new article having distinct name, character and use. Waxed paper is known in the market as such and is bought and sold as such. In the Statutory Notification No. 71/76 the word waxed paper has been specifically mentioned meaning thereby the waxed paper is distinctly known as waxed paper in the trade. Statutory notification could be used an aid for interpreting tariff entries as laid down in the case of J.K. Steels Ltd. v. Union of India and others (1978- E.L.T. J 355). In Swastic Products (Supra) the question before Their Lordship was whether colouring of paper which was already manufactured was a process of manufacture of paper or not and in that context, it was held that no manufacturing process could be said to have been involved by printing of white paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 976, the item was recast into 2 sub-items, the first one covering printing and writing paper (other than poster paper) and the other, paper board and all other kinds of paper including treated paper or paper board. Sub-item (2) has an inclusive clause whereby paper or paper boards which have been subjected to various treatments, such as coating etc. are specifically brought within the purview of this sub-item. The waxed paper which has been subjected to a treatment of coating wax would fall under item No. 17(2) C.E.T. in the category of treated paper, after the amendment of the Budget w.e.f. 16-3-1976. Prior to 16-3-1976, there was a specific entry of waxed paper under tariff item No. 17(2) C.E.T. 37. The proposition of law as laid down by the decision of this Tribunal in Golden Paper Udyog Pvt. Ltd. v. Collector of Central Excise (1983 E.L.T. 123), does not help the appellants in the circumstances of the present case. 38. In the case before us, the conversion of ordinary paper into waxed paper has resulted in the manufacture of a new article having distinct name, character or use. In Golden Paper Udyog (Supra), the product bitumnised kraft paper was a different product than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the same valued at ₹ 36,476.50 and ₹ 50,135.00 during the relevant period. If the appellants were not satisfied with these amounts as arrived at by the Department, they could have challenged the same in the reply to the show cause notice giving the correct figure of the value of the goods manufactured and cleared by them. In the absence of any such assertion on the part of appellants, it cannot be accepted now at the appellants stage that the quantum of assessment was wrong. The change in tariff entry No. 17-Paper w.e.f. 16-3-1976 had made a change in the mode of duty from specific to ad-valorem basis and we see from the tariff of 1974 that the entry was partly specific (basic excise duty) and partly ad-valorem (auxiliary duty). It is not clear from the records how the lower authorities had arrived at the figure of duty leviable for the period prior to 16-3-1976 when the specific duty was replaced by ad-valorem duty. The authorities should have furnished a revised chart showing the computation of duty for the two periods-viz. before and after 16-3-1976 separately with reference to the weight of the product where the duty was partly specific in nature and with referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, the Appellant placed reliance on the Tribunal s judgment in the case of Golden Paper Udyog v. Collector of Central Excise (1983 E.L.T. 1123). The ratio of the said judgment had been referred to a larger bench for reconsideration. In the meanwhile, before the Reference could be heard, in the case of Collector of Central Excise v. M/s. Uma Laminated Products (P), both my learned brothers in this Bench along with another learned Brother, had disagreed with the ratio of the aforesaid Golden Paper Udyog case, notwithstanding that it was affirmed and followed in 1983 ECR 1949, amongst others. Accordingly, the decision in the case of M/s. Uma Laminated will also, necessarily, come up for reconsideration before the larger Bench hearing the Reference. 49. It is the case of M/S. Uma Laminated on which my Brothers rely as against the decision in the case of Golden Paper Udyog relied upon by the Appellant in this Appeal. 50. I, for one, would have liked to await the judgment of the larger Bench in the Reference case but that, however, was not to be. 51. In the circumstances, I am constrained to refrain from a consideration of the rationale or applicability of either of the two af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issing Annexure B to the show cause notice) that appeared; (ii) the others i.e. twenty-three amongst those named in Annexure `A and all but one in the missing Annexure B did not appear at all; (iii) the five customers (in all) that appeared through an Advocate supported the case of the Appellant to the extent that there has been no manufacture and the Appellant cannot be called a manufacturer within the meaning of Section 2 (f) of the Act. The others would appear to have replied to the show cause notice on similar lines; (iv) it was, nevertheless, held that since, by virtue of the inclusion of waxing of paper amongst the treatment specified in item 17(2), such process is a manufacture and accordingly, the Appellant, a manufacturer . All the customers (twenty-seven in Annexure `A and others in the missing Annexure B to the show cause) were not manufacturers since they did not engage themselves in the production or manufacture of waxed paper. In the result, while all the customers were completely exonerated, the Appellant was required to pay a fine of ₹ 200/- under Rule 173(Q)(1) of the Rules and ₹ 12,974.50 towards duty on waxing charges realise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of India. The proceeding on its transfer to the Tribunal pursuant to Section 35 (P) of the Act was heard by us as an Appeal. 54. It is of vital significance to note that the proceedings in Revision of the Adjudication order, cannot be viewed in isolation from the Adjudication order itself or the notice to show cause that preceded the Adjudication, for each of them, stems from and is occasioned by the other. There could have been no Revision without an Adjudication order. Nor could there be an Adjudication without a show cause notice. Indeed, the notice to show cause against the Revision as well as the order in Revision itself advert to the original show cause notice dated Nil, April, 1978, and the Adjudication order as occasioning the Revision. The causal relationship between each of them is too unmistakable to be ignored, even if one were not, for the time being inclined, to go into the issue as to how far a Revision and an Appeal from an Adjudication order, encroach upon each other, notwithstanding that they could be parallel proceedings. The original show cause notice and the Adjudication order therefore form the substratum for the Revision. 55. Where, in terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant-only to be satisfactorily repelled on the ground that the said notification did not apply to goods falling within item 17 of the First Schedule to the Act. The crux of the contention has been, right through, that the Appellant is not the manufacturer in terms of the definition of the said word in Section 2 (f) of the Act: Assuming that he was a manufacturer , the further contention was that the Appellant was entitled to the benefit of Notification Nos. 71/76, dated 16-3-1976 and 80/80, dated 19-6-1980. The bar of Limitation, as is well understood, although not raised, still arises for consideration in the facts and circumstances of the case. 59. The questions that arise for consideration are, therefore,- (a) Is the Appellant, the manufacturer within Section 2(f) of the Act, in the facts and circumstances of the case ? (b) Is the Appellant entitled to the benefit of the notifications (i) 71/76, dated 16-3-1976 and (ii) 90/80, dated 19-6-1980 and (c) Is the demand for payment of duty not barred by Limitation in terms of Rule 9(2) of the Central Excises and Salt Rules, 1944 ? 60.(a)As already observed, it was not the allegation in the show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he ceased to do the job work after 26-3-1977. This contention does not appear to have been gone into either in the Adjudication Order or the Order in Review. (c) Be that as it may, Notification No. 71/76, dated 16-3-1976, relied upon by him became applicable only for the period between 16-3-1976 and 7-5-1977, if at all and not for the earlier period. The second Notification relied upon by the Appellant (No. 80/80, dated 19-6-1980) is altogether inapplicable in the facts and circumstances of the case. (d) All that the Notification No. 71/76, dated 16-3-1976 prescribed for its applicability was that- (i) the base paper should have been duty paid, and (ii) the manufacturer should not have availed of the special procedure prescribed under Rule 56A of the Rules or the exemption granted in terms of the Notification No. 67/76, dated 16-3-1976. (e) Indisputably, the aforesaid conditions for the aforesaid Notification No. 71/76, dated 16-3-1976 are fulfilled in this case even on the allegations in the show cause notice. Admittedly, the base paper was purchased from the market and was accordingly duty paid. Nor was the Appellant availing himself of the procedure in Rule 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1983 E.L.T. 1927) as well as G.D. Industrial Engineers, Faridabad v. Collector of Customs and Central Excise, Chandigarh; (1983 E.L.T. 1994) and it is unnecessary to recapitulate the whole of it. Suffice it, to repeat, However, that- (i) fraud as well as misstatement and suppression of facts have not only to be alleged but particulars thereof have necessarily to be furnished in the show cause notice and proved in the adjudication proceedings, (ii) equally, it has to be proved that contravention of the rules, if any, was with intent to evade payment of duty. (f) None of these essential pre-requisites for the applicability of the larger period of limitation have even been alleged in the notice to show cause-much less proved. (g) In the premises, it has to be held that the demand pursuant to the notice to show cause in April 1978, was barred by limitation. 63. The Adjudication order is, thus, seriously erroneous on all the issues that arise for determination. The first of them on the question as to whether the Appellant was a manufacturer is fundamental and a Revision of the Adjudication Order, even if it be on other issues, cannot sustain, once the decision on sai ..... 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