TMI Blog1985 (10) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ng under Tariff Item No. 17 of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter called the Act). The wrapping paper manufactured by the Company is utilised in the factory of the Company for packing other varieties of paper and paperboards. From 1972, the Central Excise Authorities had required the Company to pay the duty on the wrapping paper before using it for wrapping the other varieties of paper at the time of clearance of the ream, and accordingly duty was assessed. Since March 16, 1976 duty on the manufacture of paper was levied ad valorem. The Company was again required to pay duty on the wrapping paper used by it for packing other varieties of paper all over again by including the value of such wrapping pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r trade and commercial literature relating to the paper industry would show that packing and wrapping of paper is necessary for the convenient distribution of paper. This would clearly bear out that the company is entitled to proforma credit under Rule 56A of the Rules. The further case of the petitioner is that packing is a process incidental or ancillary to the completion of excisable goods and therefore, the respondents are bound to allow proforma credit under Rule 56A. The order of the Opp. Party No. 2 has been made without proper application of mind and in total disregard of the various decisions of the High Courts on the issue. The petitioner-Company has been denied relief by the Assistant Collector (Opp. Party No. 2) and in the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included for the purpose of computation of the value of core paper. Rule 56A has no application to the packing materials. It is applicable to such of the raw materials as the component parts which are notified under such Rules. Packing is a separate process different from the processes of manufacture of core paper. As the wrapping paper in the present case is not used for its own convenient distribution but for the distribution of other varieties of paper, Rule 56A has no application. 3. In this case the main point for consideration is whether Rule 56A has its application to the facts and circumstances of this case. It is convenient at this stage to quote relevant portion of Rule 56A of the Rules. "Rule 56A. Special procedure for moveme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally mentioned by the Central Government. 4. It is not disputed in this case that duty has been paid on the wrapping paper for which proforma credit is now claimed and the wrapping paper and other varieties of paper which are wrapped fall under Item 17 of Tariff. Rule 56A provides for special procedure for movement of the duty paid material or component parts used in the manufacture of finished excisable goods. The contention on behalf of the Company is that as the wrapping paper manufactured in its factory has already suffered excise duty and the wrapping paper is used for more convenient distribution of other paper and paper product manufactured by the Company, it is entitled to the benefit of Rule 56A. According to the petitioner, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture wrapper paper, at the time it suffered excise duty. Then again it is used for the convenient distribution of the finished product. It does not mean that the goods which had suffered excise duty must be utilised in the manufacture of the finished product. On the contrary, for the more convenient distribution paper is used for wrapping reams or reels. It does not undergo any manufacturing process at that time. Nor does law insist upon such a qualification. If this background is kept in mind, there is no difficulty in upholding the argument of the learned Counsel of the petitioner. I am totally unable to accept the reasoning given by the original authority or the Appellate Authority that there was user to undergo a process of manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e wrapped fall under the same item of tariff i.e.. Item No. 17. On a careful reading of Rule 56A it transpires that the rule provides for following a rebate in respect of duty paid product when the same has been utilised for more convenient distribution of the finished product. The Company manufactures wrapping paper and pays excise duty for it. Thereafter, is used the same for more convenient distribution of finished product (other varieties of paper). In this view of the matter the contention of the opposite parties that the products should be used for convenient distribution of the same duty paid product in order to be entitled to rebate cannot be accepted. The reason given by opposite party No. 2 in rejecting the claim of the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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