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TMI Blog1989 (9) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... rocesses on paper procured from the market or on job work basis on paper received from customers. The processes carried out by the appellants on the duty-paid paper so received from outside are :- - printing - waxing & - slitting big rolls of paper of width ranging from 330 mm to 660 mm into width ranging from 25 mm to 80 mm. The paper so slit is, according to the reply to the show cause notice dated 15-7-1988 and the Superintendent's letter dated 12-5-1987 issued to the appellants, cleared in reels. The Collector in his order, however, says that they were cleared cut to size. The appellants' claim before the adjudicating authority and before us is that the goods were classifiable under Heading 48.11, sub-heading 4811.40 of the Schedule to the Central Excise Tariff Act, 1985 ("the CET" - for short) with the benefit of duty exemption in terms of Central Excise Notification No. 49/87, dated 1-3-1987 as a converted type of paper. This claim has been negatived by the Collector who has held that the goods fall under Heading 48.18, sub-heading 4818.90 as "other article of paper", not eligible for the benefit of the notification aforesaid. 3. If the appellants' claim is sustainable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , fairly, in our opinion, did not make any submission on this point. In the state of the facts available on record, we conclude that the goods were indeed cleared in reel form and not cut to size for packing each confectionary piece separately. 6. The two headings to be considered read as follows : "48.11 PAPER, PAPERBOARD, CELLULOSE WADDING AND WEBS OF CELLULOSE FIBRES, COATED, IMPREGNATED, COVERED, SURFACE-COLOURED, SURFACE-DECORATED OR PRINTED, IN ROLLS OR SHEETS, OTHER THAN GOODS OF HEADING NO. 48.03, 48.09, 48.10 OR 48.18 .... .... ..... ..... ..... ..... 4811.40 Paper and paperboard, coated, impregnated or covered with wax, paraffin wax, stearin, oil or glycol" "48.18 OTHER ARTICLES OF PAPER PULP, PAPER, PAPERBOARD, CELLULOSE WADDING OR WEBS OF CELLULOSE FIBRES .... .... .... .... …. …. 4818.90 Other" 7. It is the submission of the Learned Counsel for the appellants that sub-heading 4811.40 squarely covers the goods in question. His alternative submission is that even if the paper is cut to size or shape, it would fall under Heading 48.17, sub-heading 4817.90 which reads as follows : "48.17 OTHER PAPER, PAPERBOARD, CELLULOSE WADDING ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /rolls made by cutting jumbo rolls of printing and writing paper amounts to manufacture for the purpose of excise levy under Item 17 of the repealed Central Excise Tariff Schedule of 1944. (Shri Sunder Rajan states that the S.L.P. filed in the Supreme Court against the Tribunal's decision was dismissed by the Supreme Court but adds that the Supreme Court decision has so far not been reported). He has also relied on the Supreme Court judgment in Ujagar Prints v. Union of India -1988 (38) E.L.T, 535 (SC) in support of the contention that slitting of the bigger rolls into smaller rolls resulting in a new product amounts to manufacture and attracts excise levy. Our attention is drawn to the Explanatory Notes under Heading 48.23 at page 689 of the Harmonised Commodity Description and Coding System of the Customs Cooperation Council ('HSN' for short) and it is submitted that twist wrap paper is fed into the confectionary making machinery in reels for packing of individual pieces of confectionary as they emerge from the process. Therefore, it is a fully manufactured product. 9. As regards Central Excise Notification 49/87, dated 1-3-1987, Shri Sunder Rajan submits that it has no applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive, in identifying the brand and the name of the manufacturers etc. But it stands to reason that the primary use of the twist wrap paper is in packaging and the printing on the paper is incidental to such use. In applying this criterion, it appears to us that the relative cost of printing compared to the cost of the unprinted paper is of no consequence. Further, the General Explanatory Notes in Chapter 49 of the 'HSN' which state that goods of the Heading 48.14 or 48.21 (of that Schedule), paper, paper board or cellulose wadding or article thereof, in which the printing is merely incidental to their primary use (for example, printed wrapping paper and printed stationary) fall in Chapter 48. Shri Sunder Rajan's contention, in this regard, are therefore not acceptable. 12. The learned D.R. has referred to Heading 48.23 of the HSN and the Explanatory Notes thereunder to support his contention that the subject goods are articles of paper under Heading 48.18 of the CET. Heading 48.23 of the HSN reads thus: "Other paper, paperboard, cellulose wadding and webs of cellulose fibres, cut to size or shape : other articles of paper pulp, paper, paperboard, cellulose wadding or webs of cellu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rresponds to the first part of Heading 48.23 of the HSN, Heading 48.18 of CET corresponds to the second part of Heading 48.23, HSN. The Explanatory Notes under headings of the HSN have, therefore, to be read in the context of the scheme of headings under HSN and cannot be relied upon to interpret the scope of the headings in the CET. Note 7 to Chapter 48 of the HSN reads thus: "Headings Nos. 48.01, 48.02, 48.04 to 48.08, 48.10 and 48.11 apply only to paper, paperboard, cellulose wadding and webs of cellulose fibres : (a) in strips or rolls of a width exceeding 15 cm; or (b) in rectangular (including square) sheets with one side exceeding 36 cm and the other side exceeding 15 cm in the unfolded state. Except that hand-made paper and paperboard in any size or shape as made directly and having all its edges deckled remains classified, subject to the provisions of Note 6 in Heading No. 48.02." This note is not to be found in the Statutory Chapter Notes in Chapter 48 of the CET. The contention of the Counsel appears to be that the subject goods, having regard to their width, namely, 25 mm to 80 mm, could, arguably, be said to be outside the scope of Heading 48.11 of the HSN becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riff, its validity cannot be questioned on the ground that such product did not involve manufacture. These considerations do not obtain in the present case. No entry has been pointed out by the Learned D.R. which specifically covers the subject goods. 16. Next, Shri Sunder Rajan placed reliance on the Supreme Court judgment in Ujagar Prints case (supra) in support of the submission that slitting amounted to a process of manufacture. The case before the Supreme Court involved the question whether un-processed cotton and man-made fabrics continued to be the same goods even after being subjected to the processes of bleaching, dyeing, printing, etc. The Court held that the bleached, dyed and printed fabric is commercially a distinct and different commodity from the unprocessed fabric out of which it is made and that, therefore, there was "manufacture" for the purpose of excise levy under the relevant entries read with Section 2(f) of the Central Excises & Salt Act. In applying the ratio of this judgment to the facts of the present case, we have to see whether the process of slitting larger rolls of paper has resulted in an article distinct and different from the paper in reels of bigg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered is whether the goods are eligible for duty exemption in terms of Central Excise Notification 49/87, dated 1-3-1987. This notification, issued by the Central Government in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise, exempts converted types of paper and paperboard falling within Chapter 48 of the CET from the whole of the duty of excise leviable thereon which is specified in the said Schedule. This exemption is subject to two provisos. The first proviso is that such converted types of paper should have been produced out of base paper on which the appropriate duty of excise leviable under the said Schedule or additional duty of customs leviable under Section 3 of the Customs Tariff Act, 1975, has been paid. There is no dispute in the instant case that the base paper out of which the subject goods have been manufactured is Central Excise duty paid. The second proviso stipulates that such base paper has not been produced out of pulp within the factory of production of the said converted types of paper. This proviso has not been invoked against the appellants by the lower authorities. Hence, we need not consider this. In any event, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /79, dated 4-6-1979 and involved the question whether certain raw materials could be considered as inputs for the manufacture of finished article. This decision does not seem to be directly relevant to the instant case. In the present instance, the base paper procured by the appellants from outside sources was subjected by them to the processes of printing and waxing. The base paper, according to Shri Sunder Rajan, DR, fell under Heading 48.05 of the CET and the printed waxed paper in rolls also fell under Chapter 48 (Heading 48.11). For the purpose of the notification, the condition was that base paper should fall under Chapter 48 which is so in the present case. The notification does not state that if the base paper is subjected to certain processes, the benefit would not be available. It does not say that converted paper should be made directly from the base paper. So long as the converted paper is made from base paper falling under Chapter 48, it would not make any difference, in our view, whether the converted paper is made directly from such base paper or base paper subjected to some processes. 20. Some discussion centred round the issue whether slitting amounts to a process ..... X X X X Extracts X X X X X X X X Extracts X X X X
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