Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Leatherite Industries Ltd. on 25 January, 1985
Equivalent citations: 1985(21)ELT813(TRI-DEL)
ORDER G. Sankaran, Member (T)
1. The captioned appeal was originally filed as a revision application before the Central Government which, under the provisions of Section 35-P of the Central Excises and Salt Act, 1944, has come as transferred proceedings to this Tribunal for disposal as if it were an appeal filed before it.
2. The facts of the case, briefly stated, are that M/s. Leatherite Industries Pvt. Ltd., Faridabad (hereinafter referred to as the respondents) are engaged in the manufacture of P.V.C. Coated paper falling under Item No. 17 of the First Schedule to the Central Excises and Salt Act, 1944 (CET, in short). During the period from 1-9-1976 to 28-2-1977, the respondents effected clearance of P.V.C. Coated paper valued at Rs. 2,77,329.74 paise availing themselves of complete exemption from duty in terms of Central Excise Notification No. 68/76, dated 16-3-1976. The Central Excise authorities considered that the subject paper, not being a converted paper subjected to printing of colour on one side, was not entitled to the benefit of the said notification. Accordingly, a notice dated 30-3-1977 was issued to the respondents asking them to show cause why the exemption availed of by them should not be cancelled and why they should not be required to pay a sum of Rs. 83,198.92p. towards the duty payable on the clearances of P.V.C. Coated paper during the aforesaid period. The respondents contested the show cause notice. However, after due process, the Assistant Collector of Central Excise, Faridabad came to the conclusion that the subject P.V.C. Coated paper did not come within the purview of Notification No. 68/76. Accordingly, by his order dated 22-7-1977, he disallowed the exemption availed of by the respondents and confirmed the demand for the sum set out in the show cause notice. Aggrieved with the said order: the respondents preferred an appeal to the Appellate Collector of Central Excise, New Delhi. Based on the material placed before him, the Appellate Collector came to the conclusion that the subject Coated paper manufactured with the help of rotogravure process by an off-set rotogravure print coater was printed with colour within the meaning of Notification No. 68/76. By his order dated 13-12-1977, the Appellate Collector vacated the order of the Assistant Collector and allowed consequential relief to the respondents.
3. In exercise of the powers vested in them under Sub-section (2) of Section 36 of the Central Excises and Salt Act, 1944, as it stood at the material time, the Central Government called for and examined the records relating to the proceedings leading to the impugned order of the Appellate Collector with a view to satisfying themselves that the impugned order was proper, legal and correct. The Central Government came to the tentative view that P.V.C. Coated paper was distinct from printing paper and the P.V.C. Coating could not be held as equivalent to printing of colour. Whereas P.V.C. Coating on paper imported different functional characteristics to the finished product, the colouring of paper might not be adding much to the intrinsic value of the paper used as raw material. The product manufactured by the respondents did not answer to the description given against Serial No. 3(ii) of Notification No. 68/76 and did not, therefore, qualify for duty exemption. Based on this tentative view the Central Government issued a notice dated 27-11-1978 to the respondents calling upon them to show cause why the Appellate Collector order should not be set aside and why such order as might be deemed after consideration of the submissions of the appellants.
4. The Counsel for the respondents, by a letter dated 8-1-1979, denied the allegations contained in the show cause notice. Inter alia it was submitted that, in any event, whether P.V.C. Coated paper was distinct from printing paper or not was not material and had no bearing on the interpretation of Notification No. 68/76. It was further submitted that PVC Coating was identical to the process of printing of colour which was imparted with the help of the recognised method of pricing known as Rotogravure process.
5. We have heard Shri Sunder Rajan, Departmental Representative, for the appellants and Shri Krishna Kumar, Advocate, for the Respondents.
6. Shri Sunder Rajan, at the outset, stated that there was no dispute on the point that the subject paper was a converted type of paper. The dispute was on the question whether the said paper wars one manufactured by the specified process of printing on one side with colour. What was used in the present product was not colour but P.V.C. compound containing pigments. This processing unlike the simple colouring process, imparted peculiar characteristics like strength to the subject product. He submitted that a printing and writing paper printed with colour an one side would satisfy the requirements of the notification.
Shri Sunder Rajan relied upon the "Dictionary of Printing, Paper making and Book Binding" by W.C. Kenneison and A.J.B. Spilman which defines coated paper as any paper surfaced with a composition. The term is applied in contradistinction to paper in which the clay is mingled with the pulp during manufacture. The present paper, according to Shri Sunder Rajan, was merely a coated paper Next, he relied upon the book: "Industrial and Specialities Papers by Small Business Publications which, inter alia, states that apart from the main coating ingredient, namely, adhesive and pigments, there are other materials which are also added, namely, dyestuffs, waxes, anti-foaming agents, levelling agents, wetting agents, etc. Dyestuffs are added to obtain special colours and brilliance which cannot be achieved with pigments.
Neither of the above 2 books, according to Shri Sunder Rajan mention anything about printing with the aid of P.V.C. compound. Lastly, he relied upon the book "Pulp and Paper Manufacture, Volume 2" in support of the aforesaid contention.
7. Shri Krishna Kumar, Counsel for the Respondents submitted that the notification did not spell out the method by which one side of the paper should be printed with colour. The notification should not, by a process of interpretation, be rendered meaningless or redundant. He contested the claim of Shri Sunder Rajan that the process of simple colouring of paper would result in converted paper. If it were so, there was no need for specific mention of plastic coated paper, etc. in the notification. In support of his contention that the process followed by the Respondents amounted to printing, Shri Krishna Kumar relied upon the "Encyclopaedia of P.V.C." by Leonard I. Nass (Volume 3, page 1565). This book recognises rotogravure printing of P.V.C. Referring to the show cause notice, Shri Krishna Kumar stated that what the Respondents were doing was printing of paper on one side with P.V.C. compound and by using rotogravure process. The notification in question did not bring in the concept of P.V.C. printing imparting functional characteristics to the paper different from those imparted by the simple process of printing with colour. Nor did it envisage the reduction or enhancement of the intrinsic value of the paper by the printing method adopted. This was not a relevant consideration.
8. Replying to the above contentions, Shri Sunder Rajan stated that while he agreed that P.V.C. printing was possible, the printing of the kind contemplated in the notification should be on plastic coated paper, i.e. printing of the plastic coated paper by a simple process of colour printing, not printing by P.V.C. compound containing colouring material.
9. We have carefully considered the contentions of both sides and have gone through the material on record. While we do not see anything in the technical material relied upon by Shri Sunder Rajan which would support his contention or negative the Respondents' contention, we observe that the "Encyclopaedia of P.V.C." by Leonard I. Nass relied upon by Shri Krishna Kumar states in so many words that all the printing methods in existence are capable of being used to decorate P.V.C. material provided that the inks are correctly formulated and suitable modifications are effected. The bulk of P.V.C. printing, however, is carried out as a continuous-web process by rotogravure machines.
10. The relevant portion of Central Excise Notification No. 68/76, dated 16-3-1976 reads as follows :
"3A. Following varieties of paper, namely :-
(i) Crepe paper.
(ii) Converted types of paper, commonly known as imitation flint paper or imitation leatherette paper or imitation plastic coated paper, or by any other name, obtained by one side of paper, being subjected to printing of colour, with or without design, irrespective of the fact whether or not such paper is subsequently varnished or glazed by chemicals or embossed, and falling under sub-item (2) of the aforesaid Item No. 17."
We are concerned here with Sub-clause (ii). The entry specifically mentions converted types of paper and goes on to give illustrations such as imitation flint paper or imitation leatherette paper or imitation plastic coated paper or converted type of paper, known by any other name. There is no dispute in the present case that the product in question is a converted type of paper. The only question, therefore, is whether it is one obtained by one side of paper being subjected to printing of colour. We have seen from the authority relied upon by the Respondents that PVC printing by the rotogravure method is a recognised form of printing. We fail to see, therefore, how the present converted paper which is printed with colour by the rotogravure process by mean of P.V.C. compound cannot come within the scope of entry (ii) of Serial No. 3A of the notification. During the hearing, Shri Sunder Rajan had produced a sample of what he called plastic coated paper which, if one side of it had been printed with colour, would have qualified for exemption. However, it was noticed that the sample produced was not a plastic coated paper but a plastic laminated paper in which the plastic film was capable of being easily detached from the paper with very little force. The Department has not placed before us any other material to controvert the contention of the Respondents.
11. Such being the state of the evidence, we uphold the impugned order and reject the appeal.