Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Reelco Paper Products (P) Ltd. on 3 May, 1988
Equivalent citations: 1989(40)ELT435(TRI-DEL)
ORDER D.C. Mandal, Member (T)
1. The issue to be decided in this appeal in whether the cutting of jumbo rolls into strips amounts to manufacture. It is stated in the impugned order that the respondents are engaged in the production of "Key Board paper in spools for use on the monotype machine'', also known as "keyboard paper spools for use on the Monotype machine", "keyboard paper spools", "Monospool paper" or "Monotype paper". The manufacture of these items comprises of two stages, viz., (i) slitting and rewinding of Monospool paper received in jumbo sized reels from the paper mills to reels of lesser width and diameter, and (ii) perforation of the lesser sized reels along the edges. The Monospool paper in jumbo rolls are duty paid under Item 17(1) of the Central Excise Tariff. The Collector of Central Excise (Appeals) has held that the process of slitting, re-winding and perforation is not a process of manufacture within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944 and hence, no further duty is chargeable.
2. Appearing for the appellant-Collector, Shri Sunder Rajan has argued that the process of slitting into strips amounts to manufacture. He has relied on the decisions reported in 1982 ELT 253 (Bom.), Kores (India) Ltd. v. Union of India and Ors., 1985(19) ELT 193 (Tribunal), Ramsay India (Pvt) Ltd., New Delhi v. Collector of Central Excise, New Delhi and 1987(28) ELT 438 (Tribunal), SAI Giridhara Supply Co. v. Collector of Central Excise, Bombay. Arguing for the respondents, Shri Sridharan has stated that the process does not amount to manufacture. The goods are not sold before perforation. Duty has been demanded before perforation at the slitting and winding stage. He has also stated that slitted paper is also printing paper falling under Item 17(1) and not 17(2) of the Central Excise Tariff. Taxing the same product for a second time under Tariff Item 17(1) is not lawful. In support of his arguments, he has placed reliance on the decisions reported in 1986 (25) ELT 939 (Cal.), Calcutta Paper Mills Manufacturing Company v. Customs, Excise and Gold( Control) Appellate Tribunal and Ors., 1987(29) ELT 751 (S.C.), Lathia Industrial Supplies Co. Pvt. Ltd. v. Collector of Central Excise, Baroda, AIR 1978 S.C. 945, Alladi Venkateswarlu and Ors. v. Govt. of Andhra Pradesh and Ors., and 1983 ELT 1582 (Tribunal), State of Tamil Nadu v. Pyare Lal Malhotra.
3. We have considered their arguments. In the case of Kores (India) Ltd., Bombay High Court held on 17.11.80 that the process of cutting large rolls of paper into specific sizes and dimensions and to roll them into teleprinter rolls with the aid of power driven machines amounted to manufacture under Section 2(f) of the Central Excises & Salt Act. It was held that if the printing and writing paper on which duty had been paid was used in the manufacture of teleprinter rolls, it did not remain the same as classifiable under Item 17(3) of Central Excise Tariff, but because entirely a different product having a distinctive name, characteristics and used under Item 17(2). In the decision reported in 1987(28) ELT-438 (Tribunal), this Tribunal held that carbon paper was an article of stationery classifiable under Central Excise Tariff Item 68 and not under item 17(2) ibid before the latter's amendment on 27.2.82, but carbonised adding machine rolls were different, in character and use, from the carbon paper and would be classifiable under Item 17(2) ibid.
4. Shri Sridharan has argued that in the present case, duty was demanded after the slitting stage and before perforation. Undoubtedly, the mere slitting and re-winding of jumbo reels of duty paid paper into reels of smaller sizes is not a process of manufacture resulting in the emergence of a new product having a distinct name, characteristics and use. Whether slitting, rewinding and perforation of such duty paid jumbo reels into reels of smaller sizes would amount to manufacture within the meaning of Section 2(f) of the Central Excises & Salt Act warranting levy of fresh duty, is required to be considered with reference to the test laid down by Supreme Court in the case of Empire Industries Ltd. and Ors. v. Union of India and Ors.. According to this test, any process creating something else having distinct name, character and use would be manufacture (ref. para 31 of the judgment). After slitting and perforation Monotype paper continues to be Monotype paper. There is no change in the name, character and use of the paper, and no transformation into a distinct and separate commodity takes place. The process of slitting, rewinding and perforation is not, therefore, a process of manufacture under Section 2(f) of the Central Excises & Salt Act requiring payment of duty for the second time.
5. In the result, we find no infirmity in the order of the Collector of Central Excise (Appeals). Accordingly, we uphold the same and dismiss this appeal.
ORDER P.C. Jain, Member (T)
6. I have carefully perused the order passed by my learned brother Shri D.C. Mandal, Member(T) and concurring in by the Vice-President(J). While I agree with the conclusion that the appeal deserves to be dismissed for the reasons stated in the order dated 21.4.88 passed by the Technical Member, I may dwell upon a few points taken up by the learned JDR appearing for the appellant-Collector. He had placed a strong reliance on the decision of Bombay High Court in the case of Kores (India) Ltd. and the decision of the Tribunal in the case of Ramsay India (Pvt.) Ltd., New Delhi mentioned supra. He had also stressed that if the Bench decides to disagree with the decision in Ramsay India (Pvt.) Ltd. mentioned supra, the matter requires to be referred to a larger Bench inasmuch as there would a difference of opinion between two Benches. I have carefully considered this plea of the learned JDR but I do not find any merit in the same. On going through the decisions of both the Bombay High Court and of the Tribunal in the cases mentioned above, it is apparent that the decision related to the period prior to 1976 before amendment of the Tariff Item 17 pertaining to paper and paper board in the Budget of 1976. Prior to this amendment teleprinter paper was specifically included within sub-item (2) of Tariff Item 17 whereas the printing and writing paper from which teleprinter paper was produced was mentioned in sub-item (3) of the said Item 17. It is in this context that both the decisions of Kores (India) and Ramsay India were rendered and it was held that by converting the duty paid printing and writing paper into teleprinter paper another commodity known to the marked was produced and therefore, the duty liability again arose on the teleprinter paper. The case before us, however, relates to the Tariff Item 17 as it stood after amendment in the Budget of 1976. Therefore, the ratio of the decisions of Bombay High Court and of the Tribunal in the cases of Korcs India and Ramsay India respectively would not apply to this case. The plea of the learned JDR appearing for the appellant-Collector, therefore, that in case of disagreement with the decision of the Tribunal in Ramsay India, the matter requires to be referred to a larger Bench does not hold good.
7. With the above observations, I concur with the decision rendered by the learned Technical Member Shri D.C. Mandal and concurred in by the Vice-President(J).