Customs, Excise and Gold Tribunal - Delhi
Dhote Printers (P) Ltd. vs Collector Of Central Excise on 17 July, 1987
Equivalent citations: 1987(12)ECR1135(TRI.-DELHI), 1987(31)ELT793(TRI-DEL)
ORDER
K. Prakash Anand, Mender (T)
1. In this case, the department alleges that the appellants are engaged in the manufacture of Waxed Paper falling under Central Excise Tariff Item 17(2). It is submitted that they have been undertaking production of this product since 8th September, 1973. The appellants purchase base paper from the market which is then printed and waxed with the aid of power. This waxed paper is mostly used for wrapping and packing of soap, bread etc. The department has demanded duty from the appellants for the period from 31.9.1977 to 30.9.1982 relying on 5 years limitation period from the date of issue of Show Cause Notice.
2. Heard Shri S.C. Srivastava, Consultant on behalf of the appellants and Shri A.K. Rajhans, JDR for the department.
3. The appellants have argued that they are really manufacturers of printed labels which are product of the printing industry. It is submitted that while it is true that they are undertaking waxing, but this is done in respect of branded labels which are meant for the individual manufacturers concerned who own the brand of the label and they are of no value in the open market. In this connection, reference is made to the decision of the Govt. of India in the case of Modern Paper Converters 1982 ELT 713 which has been relied upon in the order appealed against. It is submitted that the facts of Modern Paper Converters were quite different. It is pleaded that the products were saleable in the market as waxed paper to any one who was a user of such waxed paper. In the present case, however, it is submitted that the product is for the use of particular manufacture and waxing is in fact only of the labels and not of rolls of paper.
4. Appellants have argued that when poster paper, which has paid duty under Central Excise Tariff Item 17(2) is printed with multi-coloured branded design of labels, such printed labels become classifiable under Central Excise Tariff Item 68 and as products of printing industry, they are exempt under Notification No. 55/75 dated 1.3.1975. Further, when such labels are subjected to waxing, they continue to be classifiable under Tariff Item 68.
5. Appellants have also urged that the demand for duty is largely time-barred and there is no justification for demanding duty for 5 years period when the department was fully aware of the production of the goods. It is pointed out that a Show Cause Notice had earlier been issued to the appellants on 6.9.1981 and it was withdrawn on 21.12.1982. Accordingly, appellants contends that both the demand for oduty and the penalty may be set aside.
6. On behalf of the department, Shri Rajhans reiterated the view taken in the orders of the lower authority which he submits are detailed and self-explanatory. He has nothing further to add.
7. The facts of the case and the submission made have been fully considered. So far as the product itself is concerned, we have no doubt in our mind that it is nothing but waxed paper. Appellants have sought to make a distinction in respect of their product and the product in cases like Modern Paper Converters. We do not think that any such distinction is reasonable or feasible. It would not be reasonable to hold that the paper would be waxed paper if the waxing is done before printing and that if such waxing is done after printing, it would be only a product of the printing industry classifiable under Item 68 of the Central Excise Tariff and not waxed paper falling under Central Excise Tariff Item 17(2). If waxing is done after printing, such process also results in the manufacture of waxed paper only.
8. It is not reasonable to argue that in order to be a waxed paper, it should be in rolls. What is important is to ask the question whether the product which is processed is or is not paper, whether in running lengths or not and whether the process undertaken is waxing or not ?
9. We also do not agree that any difference is made to the liability of the product if such product is meant for and consumed by the manufacturer himself and is not actually sold in the market. This point of law is already well settled and it is not necessary to donate it at any length here. Marketability is essential to exigibility but actual marketing is not. Where a manufacturer is producing a commercial product to his own requirements and specification, he cannot claim exemption from excise on the ground that the products in question are not saleable in the open market. The fact of the matter is that, but for the products being made especially to suit the requirements of the particular manufacturer, they are otherwise commercial products well known to the market.
10. We, therefore, hold that the goods are liable to Central Excise duty under Tariff Item 17(2) as waxed paper.
11. Coming now to the arguments relating to both time-bar and the penalty, we observe that the department itself was apparently in doubt for a long time over the classification and liability of goods in question. It is therefore, that the Show Cause Notice issued on 16.9.1981 was withdrawn after more than 15 months on 21.12.1982. It cannot be said, therefore, that the department was not aware of the production of the goods and the existence of the unit for a fairly long time before the Show Cause Notice was issued. No case, therefore, is made in regard to the imposition of penalty, which is set aside. The demand for duty should also be limited to a period of 6 months.
12. Appeal partly allowed in these terms.