TMI Blog1984 (6) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... plea was rejected by the Assistant Collector. On appeal, the Appellate Collector of Central Excise, Madras set aside the order of the Assistant Collector and remanded the matter for de novo disposal. On this occasion again the Assistant Collector held that the wrapping paper used for packing other varieties of paper in the applicant's factory is not entitled to the benefit of Rule 56-A. The applicant appealed. The Appellate Collector, Central Excise, allowed the appeal by his order dated 24-8-1982. Aggrieved by the decision of the Appellate Collector the Department preferred an appeal to the Customs, Excise and Gold Control Appellate Tribunal, which allowed the appeal by its order dated 30-7-1983. The Tribunal agreed with the Assistant Collector that the procedure under Rule 56-A is not available to the applicant. The Tribunal was of the opinion that inasmuch as the wrapping paper in the present case "is used not for its own convenient distribution but for the distribution of other varieties of paper," Rule 56-A has no application. It observed that Rule 56-A "intended to cover certain finished products to enable their more convenient distribution". It also observed that the inclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the value of wrapping paper used as packing is liable to be included in the value of the packaged goods for the purpose of charging of excise duty. The assessee says that this amounts to levying of duty twice over on the same goods. Item 17 of the First Schedule relates to paper and paper board. The entry reads as follows : "17. Paper and paper boards, all sorts (including paste-boards, millboard, strawboard, cardboard and corrugated board), in or in relation to the manufacture of which any process is ordinarily carried on witth the aid of power— (1) Uncoated and coated printing and writing paper (other than poster paper). Twenty-five per cent ad valorem . (2) Paper board and all other kinds of paper including paper or paper boards, which have been subjected to various treatments, such as coating,, impregnating, corrugation, creping and design printing) not elsewhere specified. Forty per cent ad valorem ." 3. Rule 56-A provides for a special procedure to provide relief against double incidence of duty. It carries the heading Special procedure for movement of duty-paid material or component parts for use i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitted, under sub-rule (2), by the Collector, to receive material or component parts or finished product on which duty of excise or the countervailing duty, as the case may be, is paid, into his factory for the manufacture of goods or for the convenient distribution of finished product and allowed a credit of the duty already paid on such material or component parts or finished product. One of the conditions for availing of such concession is that the duty must have been paid on such material or component parts under the same item as the finished excisable goods. Explanation (2) to sub-rule (2) makes it clear that the said concessional procedure is available even with respect to the material or component parts produced or manufactured in the manufacturer's factory. 5. As contemplated by sub-rule (1), the Central Government has specified certain excisable goods in respect of which the procedure prescribed in sub-rule (2) of Rule 56 shall apply. Item 8 among the goods so specified is "paper and paper boards". 6. The assessee's contention is that inasmuch as the wrapping paper manufactured in is factory has already suffered excise duty and because value is liable to be include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturer of specified goods [goods specified under sub-rule (1) of Rule 56-A] would receive a finished product for the more convenient distribution of the same finished product. The learned Standing Counsel for Central Government contended that wrapping paper which is a finished product may be received by the assessee in rolls or reams and part of it may be used for convenient distribution of the same paper after cutting it into convenient sizes. It is only in such situation, the learned Counsel contends, that Rule 56-A would apply. But the difficulty in accepting this argument is that in the example given by the learned Standing Counsel, there is no occasion for levying the central excise duty for a second time because cutting of the paper into convenient sizes for transport or distribution cannot be said to constitute production or manufacture so as to attract the excise duty. In other words, in the illustration given by the learned Standing Counsel, there is no occasion for levying the excise duty for the second time and if so Rule 56-A is not at all attracted. Rule 56-A is designed precisely to provide for a relief against double incidence of duty in certain specified situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his shall be done subject to the other conditions specified under sub-rule (2) and sub-rule (3). 9. The only decision relevant on this question is that of a learned Single Judge of the Madras High Court in Seshasayee Paper and Boards Ltd., Erode v. Appellate Collector of Customs and Central Excise, Madras and Another - 1984 (15) E.L.T. 3 (A.P.), the facts of which case are exactly identical. There also a manufacturer of paper was manufacturing wrapper paper which suffered excise duty, for convenient distribution of his other products. It was held that the beneficial procedure under Rule 56-A is available to the manufacturer. The learned Single Judge observed : "Where, therefore, in order to conveniently distribute the finished product, the wrapper paper is used it stands to reason that it cannot be subjected to excise duty once more again. To my mind, it appears the entire rule reflects one of the fundamental postulates of the law of taxation that there cannot be double taxation with reference to the one and the same transaction, unless, of course, like in a case of sales tax where at each point of sale there could be tax because of the multiple levy. But in a case on excise, d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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