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TMI Blog1988 (5) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... from so much of excise duty as is equivalent of the duty of excise already paid on the inputs. 2. The Learned J.D.R. for the department, Shri C.V. Durghayya pleaded that the Collector (Appeals) had erred in holding that paper reel cores on which the paper is wound are component parts of the paper cleared from the factory. He stated that the paper as it emerges from the paper machine is wound over long steel rollers. However, the paper for the purpose of marketing is cut to desired sizes and the paper from this reel after the paper making stage is re-wound on to paper reel cores of desired sizes. He pleaded that the reel cores were in the nature of packing material on which the paper was wound for marketing and could not be considered as a component part of the paper. 3. He drew our attention to the respondents own submissions before the Assistant Collector as to the details of the use of paper reel cores in the manufacture of paper as set out in the grounds of appeal. For convenience of reference, the relevant portion is reproduced below :- "Paper cores : Paper cores are used in paper mill on re-winding and cutting machines. The full width of paper manufactured on paper machine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il rates of duty." A careful reading to the notification would show that the term "inputs" has not been used in it in the ordinary sense of the term but as a term of reference to goods falling under Item No. 68 of Central Excise Tariff used in the manufacture of other excisable goods. The term "inputs" itself is one of wide scope and not, as the Department contends, of restricted or narrow scope. What the notification requires is that the Item 68 goods which are referred to as "inputs" are used in the manufacture of other excisable goods. The Department wants to interpret the notification to mean that the Item 68 goods should enter into the composition and form part or ingredients of the finished product. In other words, they should be used as raw-materials or components. But then this requirement that Item 68 goods should be used as raw materials or component parts was written into the notification only on 28-2-1982 by the amending Notification No. 105/82. The amending notification, in our view narrows down the scope of the 1979 notification and incidentally, also the scope of the expression "inputs" as contemplated in it. In other words, with this amendment, the finished excisab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Others -1979 ELT (J 461) (1975 Cen-Cus 67 C) (iii) Madras High Court in E.I.D. Parry Ltd. and Another v. UOI -1978 ELT (J 18) (1975 Cen-Cus 67 C) (iv) Madras High Court in Seshasayee Paper and Boards Ltd., Erode v. Appellate Collector of Customs and Central Excise, Madras - 1984 (15) ELT 3 (MAD.) (1984 ECR 846). (v) Madras Bench of this Tribunal in Collector of Central Excise, Hyderabad v. Bhadrachalam Paper Board Ltd. -1983 ELT 2090. (vi) Supreme Court in UOI and Others v. Bombay Tyre International Ltd. etc.-1983 ELT 1896 (SC) (1983 ECR 1627D and 2233D). (vii) Special Bench-D of this Tribunal in C. C.E. Calcutta v. Kanoria Jute Mills, Calcutta Appeal No. 1418/81-D (Order No. 146/84-D, dated 8-3-1984) (1984 ECR 1553). We took the view that normal minimum packing (not any special packing or durable returnable containers) without which a manufactured product could not be delivered whether for reasons of transport or otherwise, should be treated as a process incidental or ancillary to the completion of that product and that it would not be correct to say that such packing materials were not used in an incidental or ancillary process to complete the manufactured product by turnin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricity or any other form of power: It was while construing these two provisions read together, that the Supreme Court held, among other things, that there was no warrant for limiting the meaning of the expression "in the manufacture of goods" to the process of production of goods only but that it would take within its compass all processes which are directly related to the actual production such as equipment used in the process of designing, electrical equipment such as humidifiers, exhaust fans and similar equipment. It can easily be seen from the two provisions that the expression "in the manufacture of goods" has, by law, been given a wide amplitude. There are no similar provisions in the Central Excise law. Section 2(f) of the Central Excise Act gives only an inclusive definition - "includes any process incidental or ancillary to the completion of a manufactured product". In our view, the ratio of the decision cited has no application to the facts of the case before us." 5. He pleaded that the process of manufacture of paper is complete only after reeling of the same is done for the purpose of clearance and sale. He pleaded that the reel core comes into the manufacture of pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s has been paid under Item 68 on the raw-materials going into their making or on the component parts as are used in their manufacture. Excisable goods in question before us, are paper. When paper emerges from the paper machine, all processes relating to the manufacture of paper as such are complete at that stage. However, for the purpose of marketing, this paper is required to be cut to required sizes and put on the reels for the purpose of sale. These processes are carried out after the paper has completely taken shape. Reeling is done, therefore, only for the convenience of marketing. Nothing more remains to be done with reference to the making of the paper as such. As conceded by the Learned Advocate for the respondents and as pleaded by Revenue, the reel is only a packing material for paper. After the paper is removed from the reel, the reel remains as such and emerges again as an independent identity. Taking into consideration the meaning of component part in the ordinary sense, as seen from the same in the Dictionaries referred to above, the reel cannot be considered as a component of paper. The plea of the respondents is that packing is a process incidental to the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or biscuits in a paper wrapper or in a tin container, must be regarded as falling within Section 4(4)(d)(i). This is indeed conceded by learned counsel for the assessee. It is the cost of secondary packing which has raised serious dispute. Secondary packing is of different grades. There is the secondary packing which consists of larger cartons in which a standard number of primary cartons (in the sense mentioned earlier) are packed. The large cartons may be packed into even larger cartons for facilitating the easier transport of the goods by the wholesale dealer. Is all the packing, no matter to what degree, in which the wholesale dealer takes delivery of the goods to be considered for including the cost thereof in the "value" or does the law require a line to be drawn somewhere? We must remember that while packing is necessary to make the excisable article marketable, the statutory provision calls for strict construction because the levy is sought to be extended beyond the manufactured article itself. It seems to us that the degree of secondary packing which is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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