Customs, Excise and Gold Tribunal - Delhi
Cce vs Eastend Paper Industries Ltd. on 17 February, 1992
Equivalent citations: 1992(40)ECR190(TRI.-DELHI)
ORDER P.K. Kapoor, Member (T)
1. This is an appeal against the order passed by the Collector of Central Excise (Appeals), Calcutta. Briefly stated the facts of the case arc that the respondents claimed proforma credit of duty paid on wrapping paper brought from outside for use as wrapping of finished paper reams. The Assistant Collector held that benefit in terms of Rule 56A was not admissible in respect of wrapping paper since it could not be deemed either as component or raw material for the manufacture of paper. Being aggrieved by the order passed by the Assistant Collector the respondents filed an appeal before the Collector of Central Excise (Appeals), who in the impugned order held that benefit of proforma credit in respect of duty paid on wrapping paper was admissible in terms of Rule 56A since such paper when used for wrapping of reams of finished paper could be deemed as having been used up in a process incidental or ancillary to the completion of the manufactured product. The Collector (Appeals) in arriving at his finding placed reliance on the Tribunal's decision in the case of Collector of Central Excise Indore v. Orient Paper Industries Ltd. .
2. On behalf of the Revenue the learned JDR Shri L.N. Murthy staled that wrapping paper was neither a raw material nor component part of finished paper in the form of reams. He contended that wrapping paper not being in the nature of durable and returnable packing the value of such paper would form a part of the assessable value of the finished paper reams and the benefit of Rule 56A would not be admissible in respect of such paper. On these grounds he argued that the order passed by the Collector (Appeals) was not legal or proper.
3. On behalf of the respondents the learned Advocate Shri N.C. Jain appeared before us. He drew our attention to the order No. 5/88-A dated 6-1-1988 in the respondents' own case wherein relying upon the Tribunal's decision in the case of Collector of Central Excise Bhubaneshwar v. Orient Paper Mills Brajraj Nagar it was held that wrapping paper captively consumed in a factory for wrapping of printing and writing paper can be deemed as raw material or component part of printing and writing paper. He added that the issue involved in this case had been finally settled by the decision of the Supreme Court in the case of CCE v. Eastend Paper Indus. Ltd. .
4. We find that the matter is covered by the Hon'ble Supreme Court's decision in the case of CCE v. Eastend Paper Inds. Ltd. wherein it was held that wrapping paper used in wrapping of paper is to be treated as raw material or component for the variety of paper which is packed since paper is marketed in packed or wrapped condition. Para 6 and 7 of the judgment is reproduced below:
6. To be able to be marketed or to be marketable, it appears to us, in the light of facts in the appeals, that it was an essential requirement to be goods, to be wrapped in paper. Anything required to make the goods marketable, must form part of the manufacture and any raw material or any materials used for the same would be component part for the end product. In our opinion, the Tribunal was right in the view it took. There is no ground to interfere in these appeals.
7. Before we conclude, we must further observe that Shri Bajoria drew our attention to the judgment and order of the Tribunal in Appeal No. ED(SB) A No. 2734-83C (Collector of Central Excise v. Orient Paper Mills) where the appeal has been preferred and in the petition in appeal to this Court by the revenue under Section 35L(b) of the Act, where the question involved was whether the proforma credit under Rule 56A of the Central Excise Rules, 1944 in respect of said packing and wrapping paper used for packing admissible or not is punishable or not, the revenue has pleaded that the unit of paper for sale was 'ream' duly packed in wrapping paper. Therefore, from that statement, it further appears that such ream or reel arc wholesale packages and arc stored in packed condition. If that is the stand of the revenue, then it cannot be contended that wrapping paper is not integral part of the manufacture. If that is so, any material utilised must be component part of the raw material used or consumed in the finished products. Apart from that under Rule 56A of the Rules, the assessee would be entitled to the benefit of deduction of the duty to be charged on all wrapping papers, if any. Nothing contrary to the aforesaid was indicated to us by the revenue though asked to do so. In the aforesaid view of the mailer, this question involved in these appeals is really of academic interest.
On the ratio of the Supreme Court's decision referred above, it has to be held that proforma credit under Rule 56A of the Central Excise Rules, 1944 was admissible to the respondents in respect of packing and wrapping paper used for packing reams of paper manufactured for sale.
5. In view of the above discussion the appeal is rejected.