TMI Blog1987 (7) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... se why Central Excise duty to the tune of Rs. 19,29,583.23 for the period from May 1980 to May 1985 should not be demanded and paid by the Company under Rule 9(2) of the Central Excise Rules (in short, the Rules) framed under the Central Excise and Salt Act, 1944 and Section 11A thereof. The allegations on the basis of which the said impugned notice has been issued are as follows :- "On scrutiny of the records of the said assessee, it is noticed that the said assessees are receiving newsprint falling under Item No. 17 of the Central Excise Tariff from different factories and enjoying exemption under Notification No. 163/67, dated 21-7-1967 the waste arising out of opening waste of the newsprint and reel ends of the newsprint are being sold by them in the market as waste. In terms of said notification the waste arising in the process of printing of newspaper may be used for any other purpose without payment of duty if the proper officer is satisfied that waste is genuine and cannot be used again. From the very name it indicates that the wastes as aforementioned are not arising in the process of printing therefore the said assessee are not entitled to get the benefit of exemption a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s waste and (c) Floor waste. 8. The opening waste of newsprint occurs in the process of transportation and handling of newsprint reels, the top portion of such reels sometimes get damaged. The reels are put on the reel stands of the rotary machine for printing purposes and if any damage is found on the surface of the newsprint reels, the same is stripped off to avoid any snapping during the run. 9. In the process of printing when the reel comes to an end, it is sometimes found that the paper close to the reel core is crumpled and is not suitable for printing purposes and such portion is, accordingly, left out. This is called reel ends waste. 10. The floor waste represents printing paper which is not usable since they are either over-inked or under-inked or damaged or when the printing is bad. 11. All the aforesaid wastage arises in the process of printing the newspaper and the same are genuine and cannot be used again in the printing of newspaper. 12. In exercise of powers conferred by Rule 8(1) of the Central Excise Rules, the Central Government by a Notification No. 163/67-CE., dated 21-7-1967 as amended by Notification No. 72/76-CE., dated March 16, 1976 exempted newsp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is liable to pay excise duty on the waste portions of the newsprint since such wastage's did not occur in the process of printing of the newspaper and this is in terms of the Notification No. 163/67, dated 21-7-1967 as amended subsequently. 20. Now, since the sole foundation of the claim of the respondents is the Exemption Notification No. 163/67-CE., dated 21-7-1967 as amended by Notification No. 72/76, dated 16-3-1976, it may be useful at the outset to refer to the said notification, which is as hereunder : "Exemption to paper containing mechanical wood pulp. - In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and in supersession of the Notification of the Government of India in the M.F.(D.R.) No. 137/62-C.E., dated 13-6-1962, the Central Government hereby exempts all paper containing mechanical wood pulp amounting to not less than 50 per cent of the fibre content, falling under sub-item (1) of Item No. 17 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from the whole of the duty of excise leviable thereon : Provided that it is proved to the satisfaction of the proper officer, as defined in the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proviso thus being fulfilled automatically in view of the relevant provisions of the Newsprint Control Order, 1962, the manufacturer of newsprint gets full benefit of the exemption notification. 27. It need not possibly be mentioned that the first proviso has nothing to do with the consumer. This is because the sole beneficiary of an exemption notification is the manufacturer and the condition laid down in the first proviso has to be fulfilled by the said manufacturer. As already seen the consumer of newsprint can only be a printer or publisher of newspapers, periodicals, text books or books of general interest. And that being so, it can safely be said that under statutory provisions newsprint is intended for such use as mentioned in the first proviso. Since the language used in the proviso is "intended for use", it is immaterial so far the manufacturer is concerned, as to how the consumer actually uses the newsprint after sale. 28. The second proviso, however, has some relation to the consumer, though remotely. 29. In the process of printing by the consumer some wastage of the newsprint may occur. The second proviso does not debar the consumer from selling such wastes to o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turer or the producer sells the goods. 34. Having thus explained the scope of the relevant exemption notification, it may now be considered how far the impugned show cause notice is sustainable in law. 35. The relevant portion of the show cause notice is as hereunder : "Office of the Assistant Collector of Central Excise : Cal. "1" Divn. 169.A.J.C. Bose Road : (C.R. Building) : 6th Floor: Calcutta - 14. C. No. V(3)(68)118/Cal. 1/85/7335, dated 3-10-1985. SHOW CAUSE DEMAND NOTICE To M/s. The Statesman Ltd., 4, Chowringhee Square, Calcutta - 700 001. Whereas it appears that M/s. The Statesman Ltd., 4, Chowringhee Square, Calcutta - 700 001 (hereinafter referred to as the said assessee) holder of Central Excise Licence in form L-4 No. 19/HES/ T.C.-68/Cal. 11/75, dated 1-4-1975 for the manufacturer of excisable goods falling under Item No, 68'I.L process blocks) of the First Schedule to the Central Excises and Salt Act, 1944 have contravened the provisions of Rules 9(1), 173F, 173G, 173B, 193C of Central Excise Rules, 1944 (hereinafter referred to as the said Rules) inasmuch as the said assessees are receiving indigenous newsprint falling under Tariff Item 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Excise authority, who have to deal with innumerable Central Excise cases and are supposed to know the basic principles of the Central Excise law, made a total confusion by mentioning in the show cause notice that the petitioner is not entitled to get the benefit of the exemption notification. It is a tried knowledge that since excise duty is a duty on manufacture of goods and is leviable on the manufacturer or producer, the sole beneficiary of an exemption notification issued in exercise of the power under Rule 8(1) of the Central Excise Rules, is the manufacturer or producer and not the consumer. 39. The petitioner is merely a consumer of the newsprint and not its manufacturer. Having purchased the newsprint for valuable consideration it is open to the petitioner to sell the wasted portions thereof to outsiders whether such wastes occur in the process of printing or not for such sate it is not at all necessary to keep the Central Excise authorities informed. 40. The second proviso to the exemption notification, as already referred to earlier has no manner of application to a, consumer. It is only when the wasted portions are used for manufacture of something else th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulty in supporting the show cause notice wholeheartedly in view of the basic principles of the Central Excise law that excise duty is a duty on manufacture of goods and the taxable event is also the manufacture and that such duty is leviable on the manufacturer or producer of the article and not on the .consumer. 47. Mr. Ghosal, however, tried to take the benefit of Chapter X of the Central Excise Rules, 1944. But, unfortunately, the said Chapter, which relates to remission of duty on goods used for special industrial purposes, has no manner of application to the facts of the instant case since the petitioner is not at all liable to payment of any excise duty so far newsprint is concerned. 48. Mr. Ghosal's further contention was that it was not open to the petitioner to challenge the show cause notice under Article 226 of the Constitution without exhausting the normal remedies available to it. 49. It appears that after the instant writ petition was filed the adjudication proceeding was allowed to continue by this Court and it is not disputed that the said proceeding has since been concluded and only the final order remains to be communicated to the petitioner. 50. But that, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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