Calcutta High Court
Nayak Associates vs Union Of India (Uoi) on 1 September, 1990
Equivalent citations: 1991(55)ELT189(CAL)
ORDER Bhagabati Prasad Banerjee, J.
1. The facts of the case are as follows :-
1. The petitioner No. 1 is a partnership firm and engaged in the manufacture of wrapping paper and paper board falling under sub-item (2) of Item 17 of the First Schedule to the Central Excises and Salt Act, 1944. The said factory is situated at Nudipur Jayantigram, in the District of Burdwan which is at a remote and backward area in the State of West Bengal. The said factory of the petitioner No. 1 is a small scale industrial unit recognised by the Government of West Bengal and was set up under the Additional Employment programme of the Government as an agro-based small scale industry.
2. At the said factory, the petitioner No. 1 inter alia manufactures super mill board (referred to as the mill board) which is a variety of paper board. It is stated that the mill board manufactured since 18th November 1977 was and is still made out of mixed waste paper. The petitioner firm also uses straw and jute stalk in the manufacture of the said mill board which has a thickness exceeding 0.50 mm. It is stated that no colouring material is added in the said mill board manufactured by the petitioner firm.
3. The petitioner had challenged the show cause notice and the order of assessment as well as order passed by the Customs, Excise and Gold (Control) Appellate Tribunal, wherein it was held that the petitioner was not entitled to the benefit of the Notification No. 70/76-C.E., dated 16th March 1976 issued by the Central Government in exercise of the power conferred under Rule 8 of the Central Excise Rules, 1944 granting exemption in respect of the mill board and straw board by providing for payment at concessional rate on the quantity of the goods specified in the said notification.
4. The moot question that is raised in this writ application is whether by not using mechanical pulp and on the contrary by using straw and jute stalk the petitioner firm had contravened the provision of the notification in question for which the petitioner is disentitled to have the benefit of the said notification.
5. For proper understanding of the matter it is necessary to set out the said notification.
"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 Ministry of Finance (Department of Revenue and Insurance) No. 24/74-Central Excise, dated the 1st March, 1974, the Central Government hereby exempts straw board and mill board, falling under sub-item (2) of Item No. 17 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), taken together upto a quantity specified in column (1) of the Table hereto annexed, cleared by any manufacturer for home consumption during any financial year, from so much of the duty of excise leviable thereon as is in excess of the duty specified in the corresponding entry in column (2) of the said Table :-
THE TABLE
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Quantity Duty
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(1) (2)
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On the first 500 metric tonnes. 15 per cent ad valorem. On the next 500 metric tonnes. 25 per cent ad valorem.
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Provided that where a factory producing straw board or mill board, or both, is run at different times of any financial year by different manufacturers, the quantity of such boards cleared from such factory in any such financial year at concessional rates of duty shall not exceed in the aggregate the limits specified in column (1) of the table :
Provided further that any quantity of mill board exempted from duty of excise under the notification of the Government of India in the Ministry of Finance (Department of Revenue and Insurance) No. 181/72-Central Excise, dated the 29th July 1972 shall be taken into account for computing the quantity referred to in column (1) of the Table appended to this notification.
Explanation : For the purposes of this notification.
(a) 'mill board' means any unbleached homogenous board, having a thickness exceeding 0.50 milimetres and made out of mixed waste papers with or without screenings and mechanical pulp but without any colouring matter being added thereto.
(b) 'straw board' means a board made wholly or predominantly from partially cooked unbleached straw or bagasse or grasses or other agricultural residues or a mixture of these provided that -
(i) the quantity of any other material used shall not exceed one third in weight of the total weight of the ingredients and
(ii) such board shall not be specially compressed and shall not have any paper pasted on either surface.
Provided also that for the financial year beginning with first day of April 1975 and ending on the 31st day of March 1976, for determining the rate of duty applicable, under this notification, for straw board and mill board cleared on or after the 16th day of March 1976, the quantity of the said straw board and mill board already cleared prior to the said date under the provisions of Notification No. 24/74-Central Excise, dated the 1st March 1974, shall also be taken into account".
6. But the petitioner firm started manufactuing the mill board out of the mixed waste paper since 18th November 1977. The petitioner also used the straw and jute stalk in the manufacture of the said mill board which had a thickness exceeding 0.50 mm and no colouring matter was added to the said mill board manufactured by the petitioner. The petitioner claimed that the said mill board manufactured by the petitioner firm conformed with the definition of the mill board as provided in the notification referred to above. On 29th November 1977 the petitioner submitted the classification list in respect of the said mill board claiming exemption under the said notification. In the said classification list it was specifically pointed out by the petitioner that straw and jute stalk was used along with mixed waste paper in the manufacture of the said mill board. For the purpose of approving the classification list a sample of the said goods was drawn by the Central Excise Officer for chemical test and the result of the chemical test made by the Excise department was duly recorded on the said classification list. The fact that jute stalk was also used in the manufacture of the said mill board, was also noted in the said chemical test report. On February 17, 1978 after full and thorough scrutiny, examination, verification and investigation including the chemical test as aforesaid, the said classification list was duly approved by the Assistant Collector concerned and the petitioner was permitted to avail of the benefit of the exemption under the aforesaid notification. The petitioner duly availed of the exemption under the said notification in respect of the mill board as aforesaid on 29th November 1977. The petitioner also filed RT-12 monthly returns which were finally assessed by the Superintendent of Central Excise. It is stated that since the petitioner paid duty at concessional rate under the said notification, ;the petitioner also realised the proportionate duty from the customers. On 5th February 1979 a show cause notice was issued by the Assistant Collector of Central Excise as to why the approval of the classification list should not be withdrawn by denying exemption under the said notification hi respect of the said mill board. For the first time it was alleged that the said mill board did not conform with the definition contained in the said notification. On the same date another show cause notice was issued by the Superintendent of Central Excise requiring the petitioner to show cause why the purported differential Central Excise duty amounting to Rs. 1,20,599.48 should not be demanded in respect of the said mill board cleared during the period from 29th November 1977 to 14th December 1978 under Rule 10(1) of the Central Excise Rules. The said demand was made on the allegation that the petitioner was not entitled to the concessional rate of duty under the said notification and was bound to pay the duty at the full rate. In the said notice it was stated that by using straw and jute stalk in the manufacture of the said mill board, the petitioner had disqualified themselves from availing of the exemption under the said notification. On 12th February 1979 the petitioner duly replied to the said show cause notice issued by the Assistant Collector of Central Excise denying each and every allegation contained thereunder. The stand that was taken by the petitioner, was that the said mill board conformed to the definition contained in the said notification and that the classification list had been correctly approved. The petitioner also replied to the show cause notice issued by the Superintendent of Central Excise by which the additional duty was demanded. In the said reply it was stated that the said purported demand was also barred by limitation under the provisions of the said Act. It was also contended in the said reply that the approval of the classification list had been made after full investigation and chemical test. It was further pointed out that the said mill board fully conformed to the definition provided under the said notification which did not debar the use of any other materials with mixed waste paper. On 11th April 1979 the Assistant Collector of Central Excise Burdwan Division passed an order by which the approval form No. 2/NPBM/77 dated 29-11-1977 was revised by the modified order in which it was held that -
"It is apparent that the Mill Board must have only two ingredients waste paper and mechanical pulp. There is no mention of Straw or Jute stalk in the said notification. Waste paper contains mechanical pulp as the paper itself is made out of mechanical pulp. Pulp made out of straw and jute cannot be called as mechanical pulp, as chemicals like caustic soda was found to have been used in digesting the said pulp and super mill board manufactured by M/s. Nayak Associates consist of straw and jute stalk in addition of waste paper, this super mill board cannot be treated as Mill Board as per explanation given in the notification stated above for the purpose of extending the benefit of exemption given in the said notification."
7. Accordingly, the petitioner was debarred from getting the benefit under the said notification and the petitioner was required to pay full rate of excise duty. On 3rd May 1979 the Assistant Collector confirmed the demand of Rs. 12,01,599.48 made by the Superintendent for the period of 29th November 1977 to 14th December 1978 on the ground that the petitioner was not entitled to get exemption under the said notification for the aforesaid reasons given in the order dated llth April 1979. By the order dated 24th May 1979 the Assistant Collector of Central Excise, Burdwan rejected the petitioner's contention with regard to the submission that the demand was barred by limitation as Rule 10(1) of the Rules provides the limitation of six months. Under such circumstance, it was held that the said contention of the limitation could not be accepted "as there was suppression of facts in the declaration given in the classification list inasmuch as although they declared that they are using straw and jute stalk as raw material in addition of waste paper they 'did not ventilate that they are using chemicals for manufacturing of pulp out of straw and jute stalk thus misleading the decision."
8. On 17th May 1979 the Superintendent, Central Excise assessed the RT-12 monthly returns for the months of April and May 1979 denying the exemption under the said notification. In the assessment the Superintendent of Central Excise made demands of Rs. 57,735.% and Rs. 6,992.90 for the months of April 1979 and May 1979. Being aggrieved by the said order dated llth April 1979 and 3rd May 1979 passed by the Assistant Collector of Central Excise and the Assistant Collector made RT-12 returns for the months of April and May 1979, the petitioner preferred four appeals -before the Appellate Collector of Central Excise, Calcutta. The said appeals were heard by the Appellate Collector of Central Excise and by the order dated 24th March 1980 the Appellate Collector passed an order bearing No. 127/WB of 1980 and the said appeal dated llth April 1979 modified the classification list. In the said order the Appellate Collector of Central Excise without going into the merits of the petitioner's claim for exemption under the said notification held that the earlier classification would remain valid till May 18, 1979 when the said order dated llth April 1979 was received by the petitioner. Being aggrieved by the said order passed by the Appellate Collector of Central Excise the petitioner preferred a revisional application before the Central Government. On 24th March 1980 by another order bearing No. 127/WB of 1980 the Appellate Collector of Central Excise held that the Assistant Collector could not review his earlier order. He further held that there was no suppression of fact on the part of the petitioner as it was commonly known that the chemicals are necessary ingredients in the manufacture of papers. The Appellate Collector, however, did not decide the petitioner's claim for exemption under the said notification on its merit. On the same date, by another order bearing No. 128-129/WB of 1980 the Appellate Collector of Central Excise disposed of the appeal of the petitioner against the said purported assessment made on RT12 returns for the months of April and May 1979 and the Appellate Collector held that the purported demand for the period from April 79 to 17th May 1979 could not be sustained as the order of the Assistant Collector dated 11th April 1979 modified the earlier classification was received by the petitioner on 18th May 1979. In the said order also the Appellate Collector did not decide the petitioner's claim for exemption under the said notification on its merit. Although the Appellate Collector of Central Excise in his order bearing No. 126/WB of 1980 and 128-129/WB of 1980 did not go into the claim of the petitioner for exemption under the said notification on its merit. As the said authority specifically allowed the appeal of the petitioner, the petitioner did not file petition against the said order. The petitioner only preferred the revisional application against the order of the Appellate Collector bearing No. 127/WB of 1980 wherein the claim of the petitioner regarding the exemption under the said notification was issued and was not decided on its merit. On 13th March 1981 by a notice issued under Section 36(2) of the Central Excises and Salt Act, the Additional Secretary to the Government of India directed the petitioner to show cause why the said four orders namely 126,127,128 and 129/WB of 1980 all dated 24-3-1980 should not be reviewed and reversed. From the records of this case, the Government observed that the said product could not be treated as mill board conforming with the definition given in the Notification No. 70/76-C.E., dated 16th March 1976 as the said product contained waste paper along with semi-chemical pulp which was obtained by digesting straw and jute stalk with caustic soda, whereas the mill board under that notification should be produced either from waste paper only or from waste paper with screening and mechanical pulp, but without any colouring matter.
9. On 14th April 1981 the petitioner duly submitted a reply to the said show cause notice contained that the petitioner was eligible to get the benefit of the said notification given reasons therefor. By the order dated llth October 1982 the said revisional application, preferred by the petitioner as well as the proceeding initiated by the Central Government under Section 36(2) of the said Act was transferred to Tribunal under the provision of Section 35(P) of the said Act. The Tribunal by the order dated 28th March 1988 held that the said mill board produced by the petitioner was not the mill board that qualified for exemption under the said notification. The Tribunal held that the use of the mechanical pulp was essential in order to avail the said exemption. The Tribunal held that the Assistant Collector rightly reviewed his earlier order dated 17th February 1978 and disapproved the classification list. The Tribunal further held that there would not be any suppression of fact on the part of the petitioner since the Excise Authorities had accepted the fact that caustic Soda was normally used in the manufacture of mill board. The Tribunal held that the allegation of suppression made by the Central Excise Authorities was not correct. The Tribunal directed that the recovery of duty should be made only for the period of six months before the date of demands, as there was no material suppression on the part of the petitioner No. 1.
10. Mr. R. N. Bajoria learned Advocate, appearing on behalf of the petitioner contended that the expression with or without governs only the expression 'screening' and not 'mechanical pulp'. It is submitted that the Tribunal was wrong in holding that the Mill Board must be made of waste papers and mechanical pulp. Mechanical Pulp is not an optional material like screening.
11. In this connection reference was made to the decision of the Government of India in the case of Nitin Paper Industries v. Government of India, which is published in 1982 Excise Law Times at page 616 wherein it was observed that -
"Government agree with the petitioner's contention that the explanation to the Notification No. 70/76 dated 16-3-1976 correctly interpreted, means that the presence of both screening and mechanical pulp in the mixed waste papers is optional and therefore the benefit of the notification cannot be denied on the ground that the Mill Board manufactured by the petitioners did not contain mechanical pulp."
12. It was submitted that the interpretation put forth in the notification published in 1982 Excise Law Times was relevant and the Tribunal should have accepted the same.
13. It was further submitted that it isxnot a case of any of the parties before the Tribunal that the presence of mechanical pulp was essential. In the show cause notice issued by the Central Government under Section 36(2) of the said Act dated 13th March 1981, the specific case of the Government for reviewing and reversing the order in question was that -
"Whereas the Mill Board under the Notification should be produced either from waste paper only or from waste paper with screening and mechanical pulp, but without any colouring matter. As the impugned product was not produced either only from waste paper or from waste paper with screening and mechanical pulp, it did not appear to be eligible for exemption under Notification No. 70/76-C.E., dated 16-3-1976."
14. Accordingly, it was submitted that the Government itself was of the view that mechanical pulp was not essential ingredients of the mill board and if the show cause notice proceeds in that line, the Tribunal cannot turn round suo motu and on the basis of the state of affairs it was submitted that the Tribunal should have confined itself to the appeal before it and should not have traversed beyond the grounds urged before it. It may be mentioned that in appeal No. 127/WB of 1980 the Tribunal had inter alia held that -
"There was no room for intendment which is implied when the department said that the exemption was available only when the mill board should be made out of only the two ingredients Viz. mixed waste paper and mechanical pulp."
15. The Tribunal was of the view that the absence of mechanical pulp and the use of jute stalk and paddy straw makes the board a different one from one exempted.
16. Reference was made to the decision of this court in the case of R. L. Rajgharia v. Income Tax Officer reported in 107 ITR 347 which was confirmed in the case of I.T.O. v. R.L. Rajgharia reported in 119 ITR 872 DB. In this case Calcutta High Court held that the subject matter of the appeal was the controversy as to whether the loss claimed by the assessee was a loss in the nature of a speculative loss or business loss. The controversy was not whether the loss was a capital loss or revenue loss or whether the loss was liable to be taken into consideration in computation of the income of the asses-see. That being the controversy, the jurisdiction and the power of the Tribunal was restricted only to deciding that controversy. The Tribunal was not entitled to and was not competent to enlarge the controversy and decide an issue not before it. In so far as the Tribunal had, therefore", remanded the case to the Appellate Assistant Commissioner with a direction to find whether the loss was capital loss or not, the Tribunal....
17. Reference was also made to the decision of Allahabad High Court in the case of J. K. Bankers v. C.I.T. reported in 94 ITR 107 wherein it was held by the Allahabad High Court that - "It is not open to the Tribunal to adjudicate to give a finding on a question which is not in dispute and which does not form the subject matter of the appeal. The Tribunal cannot enhance an assessment on an appeal by the assessee. It is not open to the Tribunal to give a finding adverse to the assessee which does not arise from any question raised in the appeal nor is it open to it to raise any ground which would work adversely to the appellant and pass an order which makes his position worse than it was under the order appealed against."
18. Further reference was made to the decision of the Madras High Court in the case of C.I.T. v. A.C. Paul, reported in 142 ITR 811 wherein it was held by the Madras High Court that - "The Tribunal is an independent arbitral tribunal. The proceedings before it are adversary proceedings in which the Department, on the one side, and the assessee on the other, face each other as appearing parties. In such a situation, the Tribunal has to decide only those issues which are properly raised before it by the one or the other party in the appeal or in the cross objections."
It was further observed that -
"This, however, does not mean that the Tribunal has got to take upon themselves the responsibility of finding facts Or of points of law which are not urged by the Department or the assessee, as the case may be."
19. It was submitted that there can be no manner of issue on the plain construction of the said notification and in view of the aforesaid various authorities that mechanical pulp is only an optional raw material and is not an essential ingredients of the mill board exempted under the said notification. It was further submitted that in any event, the Assistant Collector found that the petitioner used mechanical pulp which was contained in mixed waste paper used by them. It was submitted that the notification contemplated only use of mechanical pulp which is contained in the waste paper. The waste paper is waste of paper made, inter alia, from mechanical pulp. The Tribunal had no jurisdiction to go into the question whether mechanical pulp was used or not since the Assistant Collector himself had accepted such fact in his order. It was further submitted that on proper construction of the said notification it would be seen that in order to avail the exemption thereunder user of any other material along with mixed waste papers in the manufacture of mill board is not prohibited. User of mixed waste papers in the making of mill board is essential and undisputedly the petitioners have used mixed waste papers in making the said mill board. It was further submitted that on plain meaning of the notification in question the only thing that has been excluded by the notification in question is colouring matter. It was submitted that if it was the intention of the authorities concerned that no other materials could be mixed, in that event, the authorities concerned should have provided a specific provision as that of colouring matter which has been specifically stated in the notification and excluded. When one of the materials has been specifically excluded in the notification in question, in that event, it must be held that the authorities concerned never intended other materials to be excluded from being used. Accordingly, it was submitted that if it was the intention of the Government that the notification should exclude other material, in that event, the notification should have used the expression 'only' or 'exclusively' or 'entirely' to indicate that mill board made from waste paper and mechanical pulp only or exclusively or entirely will bring it under the exemption.
20. In this connection reference was made to the decision of the Supreme Court in the case of Union of India and Ors. v. Tata Iron & Steel Co. Ltd. reported in 1977 (1) ELT page (J) 61. The Supreme Court while interpreting an excise exemption notification held as follows :-
"Second, Notification No. 30/60 grants exemption to duty paid pig iron. The High Court rightly said that the notification does not say that exemption is granted only when duty paid pig iron is used and that the exemption would not be available if duty paid pig iron is mixed with other non-duty paid material. If the intention of the Government were to exclude the exemption to duty paid pig iron when mixed with other materials then the notification would have used the expression 'only' or 'exclusively' or 'entirely' in regard to duty paid pig iron. The object of the notification was to grant relief by exempting duty paid pig iron."
21. It was further pointed out that the Tribunal itself in a later decision followed the decision of the Supreme Court and construed a similar exemption notification in favour of the assessee. The said decision of the Tribunal is . In that case the contention of the Department was that the benefit of duty was given to the finished goods if they were made out of the raw materials specified in the notification alone. The Department contended that addition of 20-30% of other materials, which were not specified in the notification, to the specified materials disentitled the assessee to the exemption. The Tribunal held in that case -
"Adjudicating authority's observation that the circular cannot override the provisions of the notification is no doubt correct but ignores the predominant character of the admixture used for the final product. Notification 208/83 does not stipulate that the final product must be manufactured wholly or entirely or exclusively out of the raw materials mentioned in column 2 of the corresponding entry of the table to the said notification. In the absence of these words finding of the adjudicating authority is not tenable in law. We are fortified in this view by Supreme Court in the case of Union of India and Ors. v. Tata Iron & Steel Co. Ltd., Jamshedpur -1977 (1) ELT (J 61) (SC)."
22. Relying upon the said decision it was pointed out that the Tribunal had taken an erroneous view in the matter. It was further submitted that while interpreting the provision of statute if it transpires that two interpretations are possible, the one which is more beneficial to the subject should be adopted. In this connection reliance was made to the decision of the Supreme Court in the case of C.A. Abraham v. I.T. Officer and in the case of C.I.T. v. Karamchand Premchand Ltd. . The said decisions of the Supreme Court are authorities for the proposition that if there is any ambiguity of language in a fiscal statute, benefit of that ambiguity must be given to the assessee.
23. Reliance was also placed to another decision of the Madras High Court in the case at Madras Rubber Factory Ltd. v. Assistant Collector, Central Excise - , wherein it was held by the Madras High Court that -
"The question for consideration is whether having passed the order of refund it will be open to the first respondent to issue the show cause notice calling upon the petitioner to state why the amount refunded should not be paid back. This action of the respondent amounts to a review of its own earlier order. It is now settled law that there is no inherent power of review in an authority while acting judicially or quasi-judicially. The power of review must be conferred expressly or by necessary implication by the provisions of the statute."
It was further held that -
"The Act or the Rules made thereunder do not confer upon the first respondent any power to review its own order. Consequently, the first respondent has no jurisdiction to issue a notice to the petitioner why the order dated 21-1-1978 should not be set aside on the ground that it was wrong in law."
24. Reliance was placed to another decision of the Delhi High Court in the case of Ajanta Iron & Steel Co. Ltd. v. Union of India wherein it was held that -
"...But once the classification list has been approved by one of the Assistant Collectors, it becomes an approved list and cannot be reviewed by the same or any other Assistant Collector for which the Excise Authorities must take recourse to some other provisions of the Act, that is appeal procedure."
25. It was further submitted that the Department should not be permitted to take different stands at different times unless there is any good or cogent reason for the change in view. In the instant case, when the decision is taken, such decision must be held to have been taken upon consideration of the relevant facts and materials on record and on the basis of the same fact, merely by change of the opinion the decision could not be unsettled by the authorities concerned. On behalf of the respondents it was submitted that the mill board has been defined and within the definition of the mill board, the mill board prepared by the petitioner do not qualify for exemption. In order to avail of exemption they have to manufacture the mill board strictly in accordance with the definition provided in the said notification. It was submitted that the writ petitioner used straw and jute stalk as well as caustic soda. This makes it chemical pulp and not mechanical pulp as required under the notification. It was further submitted that two essential ingredients of the mill board as defined in the said notification are 'mixed waste paper with or without screening' and 'mechanical pulp'. The absence of any one of the two ingredients would not make it a Mill Board within the meaning of Notification No. 70/76.
26. Reference was also made to the provisions of Rule 173(B)(5) of the Central Excise Rules which provides that - "When the dispute about the rate of duty has been finalised or for any other reasons affecting rate or rates of duty, a modification of the rate or rates of duty is necessitated, the proper officer shall make such modification and inform the assessee accordingly."
27. Mr. Sanjay Bhattacharjee also submitted that it is well settled principle of law that the tax in statute should be strictly constituted. If in the notification the word "mechanical pulp" is used, the manufacturer cannot be entitled to the benefit of the notification unless mechanical pulp was used. It was submitted that the petitioner was not entitled to the exemption under the said notification as the said mill board will be standard prescribed thereunder. The use of mechanical pulp was a must under the said notification. It was submitted that if the benefit exempted under the said notification is to be availed, the petitioner has to use only such materials which are mentioned in the said notification. It was further submitted that there is no need to provide with any expression excluding other materials if the meaning could be ascertained from the language itself.
28. Considered the rival contentions of the parties.
29. The item in question was classified under Tariff Item No. 17(2) of the Central Excise Tariff under which rate of duty on paper and paper board was 40%. This duty has to be paid by all including big industries which are encouraged in manufacture of paper board. In order to give incentive in respect of mill board prepared by the small scale industrial unit or small manufacturers having a thickness exceeding 0.50 mm and made out of mixed waste papers with or without screenings and mechanical pulp but without any colouring matter being added thereto. In such a case the rate of duty is fixed on first 500 metric tonnes at the rate of 15% ad valorem and on the next 500 metric tonnes at the rate of 25% ad valorem. The dispute centred round to the expression 'mixed waste paper with or without screening and mechanical pulp'. This expression according to the revenue is that the word 'with or without' qualifies only screening and not mechanical pulp and the expression 'with or without screening and mechanical pulp' or 'without any colouring matter' being added thereto, according to the revenue, means that the waste paper may be made with or without screening but the mill board should be made out of mixed waste paper and mechanical pulp compulsorily, or in other words, mechanical pulp should constitute compulsorily and important ingredient part along with mixed waste paper. The contention on behalf of the petitioner is that the word 'with or without' qualifies both the screening and mechanical pulp, or in other words, petitioner's case is that both screening and mechanical pulp are optional because of the prefix words "with or without." In order to ascertain what is meant by chemical pulp and mechanical pulp, it is necessary to look at the Dictionary meaning. In Encyclopaedia Britannica, 13th Edition, the paper and paper production has been explained in detail at page 966. At page 969 it appears that -
"Mechanical or ground wood pulp is made by subjecting wood to an abrading action, either by pressing the wood against a revolving grinding stone or by passing chips through a mill. The wood fibres are separated and to a considerable degree, fragmented. Chemical wood pulp is made by cooking wood chips with chemical solutions in digesters operated at elevated temperature and pressure. The chemicals used are :- (1) sulfite salts with an excess of sulfur dioxide, and (2) caustic soda and sodium sulfide (the kraft process)."
30. At page 970 - Mechanical or ground wood pulp - Pulp wood may arrive at the mill as bolts four feet (1.2 metres) in length or as full length logs. The logs are sawn to shorter length, and the bolts are tumbled in large revolving drums to remove the bark. The debarked wood is next sent to grinders, where its moisture content is important for ease of grinding and quality of pulp. Moisture content should be at least 30 per cent and preferably 45 to 50 per cent. Wood of low moisture content is presoaked in a pond or sprayed with water."....
"The pulp stock flows from the grinder pit to a series of riffler and screens, which separate the heavy foreign material and pieces of unfibred wood (shives), knots, bark, and the like."....
"Sulfite cooking liquor, as it is pumped to the digester at the start of 'cook', consists of free sulfur dioxide dissolved in water at a concentration of 4 to 8 per cent, together with from 2 to 3 per cent in the form of bisulfite. Sulfite digestion is normally carried out as a batch process in a pressure vessel, a steel shall with an acid resistant lining of ceramic tile set in acid-proof cement or stainless steel"....
"Pulp mills normally have a series of digesters arranged in a digester building. After the blow valve is closed at the bottom, the wood chips are allowed to flow into the top opening and are distributed to fill the digester completely. Hot acid from the accumulator is pumped into the digester unit, completely filling it and replacing the air. Steam provides the heat. At the end of the cook, the contents of the digester are blown to a blow pit by rapid opening of the bottom valve. The violence of the blow defibres the cooked chips."
31. The difference between the mechanical pulp and chemical pulp is that in case of chemical pulp the chemicals used are (1) sulfite salts with an excess of sulfur dioxide and (2) caustic soda and sodium sulfide. There is another type of pulp known as Semichemical pulp. Paper produced by kraft process is particularly strong and durable.
32. The object of the Notification No. 70/76-C.E., dated 16-3-1976 is very clear and this exemption has been given to small scale industrial unit manufacturing mill board according to the said notification. A large number of poor people of this country earn their livelihood by collecting waste papers from the streets and selling the same for and these are being used for the purpose of manufacturing of paper or mill board. By this process, not only a large number of poor people can earn their livelihood, but also beneficial to the society in two ways, the streets are cleared from the waste papers and secondly materials are not lost. Unless the manufacturers of mill board are big industries, they cannot get mechanical pulp. Mechanical pulp is obtained through a costly process which requires costly plants and mechanisms which cannot be had by small scale industrial units and the exemption is for the small manufacturers. In the instant case, the petitioners have manufactured the mill board out of mixed waste papers and jute stalk and paddy straw along with caustic soda.
33. The same notification also provides for exemption of 'straw board'. Straw board made wholly or predominantly from partially cooked unbleached straw or bagasses or grasses or other agricultural residues or a mixture of these, is equally being given concessional rate under the selfsame notification. The manufactures of the straw board under the said notification provide certain restriction also.
It is also firmly established principle that in order to avail concessional rate, the parties had to strictly follow the notification in question, or in other words, the conditions and restrictions that are imposed in this behalf and the principle of interpretation that is applicable in case of such notification, has been explained by me in the case of I.T.C. Ltd. v. Union of India . The Government of India in Re. Nitin Paper Industries & Co. v. Government of India reported in 1982 (10) ELT 616 passed an Order in revision No. 810 of 1980 dated 23-8-1980 which was as follows :
"Mill board and straw board - Scope of Notification No. 70/76 - Tariff Item 17(2) - The benefit of Notification No. 70/76 cannot be denied on the ground that the mill board manufactured by the petitioner did not contain mechanical pulp because as per the interpretation of Notification No. 70/76 dated 16-3-1976 the presence of both screening and mechanical pulp in the mixed waste paper is optional.
Order per : Shri D.N. Mehta, Additional Secretary, Government of India have carefully considered the submission of the petitioners in the revision application and examined the records of the case.
Government agree with the petitioners' contention that the Explanation to Notification No. 70/76 dated 16-3-1976 correctly interpreted, means that the presence of both screening and mechanical pulp in the mixed waste papers is optional and therefore the benefit of the notification cannot be denied on the ground that the Mill Board manufactured by the petitioners did not contain mechanical pulp. The Revision Application is accordingly allowed."
34. Supreme Court of India in the case of Union of India v. Tata Iron & Steel Co. Ltd. Jamshedpur reported in 1977 (1) ELT (J 61) had the occasion of examining the Notification No. 30/36 dated 1st March 1960 issued by the Central Government under Rule 8(1) of the Central Excise Rules, 1944 which exempted to steel ingots in which duty paid pig iron is used from so much of the duty leviable thereon as is in excess of Rs, 30/-per ton. In that case, duty was realised from the manufacturer on steel ingots in the making of which duty paid pig iron of rejected moulds and bottom steels were used along with non-duty paid materials. The manufacturer claimed exemption in respect of duty paid pig iron on rejected moulds and bottom stools used in making of steel ingots. The claim of the manufacturer for exemption in respect of duty paid pig iron was rejected by the Assistant Collector of Central Excise and ultimately the Central.Government by an order dated 7th July 1967 rejected the revision petition of the manufacturer. The Government held that the manufacturer was not entitled to an exemption under Notification No. 30/60 dated 1-3-1960 because remelted scrap obtained from unserviceable casting moulds viz. ingots moulds and bottom stools were used in conjunction with other non-duty paid pig iron in the manufacture of steel ingots. The High Court held that the Revenue authorities fell into the error of interpreting Notification No. 30/60 by confining exemption to steel ingots in which 'entirely, exclusively or only' duty paid pig iron is used. The High Court held that the words 'entirely, exclusively or only' were not used in the notification. The notification exempted steel ingot in which duty paid pig iron was used. The High Court also held that the notification would have to be interpreted in a manner that the statute would not cast a burden twice over for payment of tax on the tax payer unless the language of this statute is so compellingly certain to that effect. Supreme Court in that case held that the High Court rightly said that the notification does not say that exemption is granted only when duty paid pig iron is used and that the exemption would not be available if the duty paid pig iron is mixed with other non-duty paid materials. If the intention of the Government was to exclude exemption to duty paid pig iron when mixed with other materials, then the notification would have used the expressions only exclusively, or entirely in regard to the duty paid pig iron.
35. Accordingly, applying the principles laid down by the Supreme Court in the instant case also notification in question did not use such expression as 'only, or 'exclusively' or 'entirely'. To mean that mixed papers must be used only or exclusively with mechanical pulp so as to attract the provision of the said notification; If it was the intention of the Government to exclude exemption to mill board made out of mixed waste papers, if not compulsorily with mechanical pulp, in that event, such expression should have been used. Further the notification in question also clearly provides an expression that if colouring matters are added, the same should not get the exemption. In the instant case even we look at the plain language of the notification, it has specifically excluded colouring materials. If it was the intention that mixed waste papers with or without screening must be made along with mechanical pulp, then it should be exempted in such a case appropriate expression to that effect would have been made. The words screening and mechanical pulp had been made conjunctive words made along with mechanical pulp, then it should be exempted in such a case appropriate expression to that effect would have been made. The words screening and mechanical pulp had been made conjunctive words by the use of expression 'and'. Both the words screening and mechanical pulp on plain reading of the notification indicate that the mill board made out of mixed waste papers with or without mechanical pulp should be granted exemption. The notification did not provide in so many clear words if any other materials are used in the process of manufacture of paper board, the exemption would not be available. A notification in question does not say that the mill board should be made only or exclusively or entirely by mixed waste papers and mechanical pulp. Undoubtedly mixed waste paper is essential ingredient. It is therefore permissible along with mixed waste paper manufactured by mill board exempted under the said notification. The only thing that has been specifically excluded was colouring matter. If the interpretation put forth by the Respondents are accepted, that would result an anomalous and illogical result and further when such notification is issued granting exemption for the purpose of encouraging of small scale industries for the purpose of manufacture of mill board from waste paper, such interpretation as sought to be given by the revenue, would result a disproportionate result. It is well settled that the court seek to avoid construction that cure the mischief which the enactment design to remedy only at the cost of setting up the disproportionate counter mischief. The constructionof the notification as given by the Tribunal would defeat the very purpose and object of such notification. It is well settled principles of interpretation that a construction which would advance the object and purpose of the legislation should be followed and a construction which would result in reducing a provision of the Act to a dead letter or to defeat the object and purpose of the statute should be avoided without doing any violence to the language.
36. In this connection, the observation of the Supreme Court in the case of Union of India v. Tata Iron & Steel Co. Ltd. is relevant where the question was whether the product was skelp or strip. In that case the statute did not provide a uniform definition of the skelp or strip. The rules of the commodities were different. The Supreme Court of India in that case was of the view tfyat "It is not for the High Court nor for the Supreme Court to come to a conclusion on facts as to whether the product can truly come under the description of skelp. That undoubtedly would require some evidence to be taken at the level of the taxing authority provided, however, there is an identifiable, uniform and determinate test by which skelp can be properly distinguished from strip. A particular type of strip may according to certain definitions be skelp and according to others not skelp. This, however, cannot be permitted in a fiscal legislation which by all standards should adopt a clear definition of an excisable item which is incapable of giving rise to a confounding controversy unless the matter is beyond doubt in view of the popular meaning or meaning ascribed to the term in commercial parlance. In absence of any clear criterion to determine what is skelp and not strip, no useful purpose would be served by even remanding the matter to the Excise authorities for a decision after taking necessary evidence. It is only when a taxing law provides for a decision after taking necessary evidence. It is only when a taxing law provides for a clear and unequivocal test for determination as to whether a particular product would fall under strip or skelp it may be possible for the authorities to address itself to the evidence submitted by the parties in order to come to a decision on the basis of the test. This is, however, not possible when there is no identifiable standard. The best way is to define the product for the purpose of excise duty in appropriate terms demarcating clearly the distinction between the two terms. The absence of any identifiable standard would, naturally give rise to the scope for arbitrary assessment at the hands of different authorities."
37. In the instant case, apart from the fact the language is clear and the Government of India did not provide any embargo by providing with the words 'only or exclusively or entirely' in respect of mechanical pulp and under such circumstances, it cannot be held that mechanical pulp has to be used compulsorily along with the mixed waste paper for the purpose of exemption.
38. In my view, the petitioners cannot be made to suffer except under clear provisions. Merely on the basis of difference and dispute, a provision should not be interpreted to settle higher liability or responsibility upon the petitioner. It is a principle of legal policy that a person should not be penalised except under clear law which is called a doubtful penalisation.
39. Accordingly, I hold that the Tribunal was wrong in interpreting the provision of the said notification. The tribunal has wrongly found that the intendment of the notification was that mill board made of mixed waste paper without mechanical pulp was exempted under the notification. The view taken by the Tribunal was wholly erroneous. The concessional rate was introduced to encourage the Small Scale Units to prepare mill board from waste papers. The object of the notification will be frustrated if the same is interpreted in the manner it was done by the Tribunal. The mill board made by the petitioner out of mixed waste paper without mechanical pulp is eligible for exemption under the said notification.
40. The next contention on behalf of the petitioner was that the Assistant Collector had no jurisdiction to modify and review his earlier order of classification is concerned, it requires a careful consideration. It appears that the Act does not confer any power whatsoever on the Assistant Collector to sit in appeal over or review or revise his predecessor's decision. It is firmly established principle that power of review is not inherent and that it should be provided by expressed words or by necessary implication. Madras High Court in the case of Madras Rubber Factory Ltd. (supra) considered the provision of the Central Excise Act and held that power of review must be conferred expressly or by necessary implication by the provisions of the statute. In the present case, the Act or the Rules made thereunder do not confer upon the authorities any power of review its own order. Madras High Court had also considered various provisions of the Act and including the power of suo motu revision by the Central Government and came to the conclusion that when such order of refund was passed, the same was set aside.
41. Delhi High Court in the case ofAjanta Iron and Steel Co. Ltd. (Supra) held that once the classification list has been approved by one of the Assistant Collectors, it becomes an approved list and cannot be reviewed by the same or any other Assistant Collector for which the Excise Authorites must take recourse to some other provisions of the Act, tha7! is appeal procedure.
42. The decision of the Madras High Court and Delhi High Court on which reliance was placed on behalf of the petitioner, is correct and I respectfully agree with such view. Of course there is no estoppel applicable to excise matters but it is well settled that the revenue cannot change its opinion at all at its sweet will. The department should not be permitted to take different stand that there is no good or congent reason for the change of the view. If the facts are different or if further and fresh facts are brought on record or if the process of manufacture has changed or if the relevant entries in the Tariff have undergone a modification or if subsequent to the earlier decision there has been the pronouncement of a High Court or the Supreme Court which necessitates reconsideration of the issue, in that event, undoubtedly the department have power to take a different view of the matter. But in the instant case, the classification list was approved after chemical examination of the material and after going through the matters and specifically the change could be made abruptly in view of the fact that there would be a fraud or suppression of material fact on the part of the petitioner and under such circumstances there must be considering attitude of the revenue which had once been taken on consideration of relevant materials.
43. Accordingly, in my view, the subsequent decision of the Assistant Collector taken contrary to the view already taken by his predecessor in the facts and circumstances of the case was not at all proper and cannot be sustained. Such power that was raised on behalf of the revenue was that this petition should not be entertained as alternative remedy. The petitioner is a small scale industrial unit located in a backward and remote area. Further once the petition is entertained and is kept pending since May 1985 and after hearing in my view, it will not be proper to throw out the writ petition merely on the ground of alternative remedy. The alternative remedy that is available under the statute, is to file different appeal before the Supreme Court against the decision of the Tribunal. The power of the High Court had not been taken away in such matter. In this connection reference may be made to the decision of the Supreme Court in the case of Hridav Narain v. I.T. Office, Barailly reported in AIR 1971 page 33, wherein it was held that once the writ application is entertained and the matter is heard on its merits it would not be proper in High Court to reject the writ application summarily on the ground that the alternative remedy was not availed of. Alternative remedy is not a complete bar for the High Court to entertain writ application. The petitioners did not find themselves in a position to avail the remedy provided under the Act against the order of Tribunal by way of appeal to the Supreme Court, inasmuch as, it would create a financial hardship to a small scale industry to avail of such costly remedy. The petitioners do not have any office either at Calcutta or at Delhi, in the event, the petitioners went up in appeal to the Supreme Court considerable expenses, boarding, lodging, besides legal expenses. The petitioners would have suffered great hardship, trouble and expenses if required to resort to the remedy provided under the Act. I am unable to hold that the relief available to the High Court is just an alternative remedy. There is a difference between moving of High Court and Supreme Court. Delhi is far away from remote places in India whereas High Court is said to be under their control physically and financially. A rich people or a big industry can easily move the Supreme Court, but that is not easy for the poor people or a small scale industrial unit. Article 39A of the Constitution of India provides that State shall secure the operation of legal system promotes justice on the basis of equal opportunity and shall, in particular, provide free legal aid, by suitable legislation or schemes or in any other way, to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities. If it is held that the filing of appeal before the Supreme Court pending huge money for a small scale industry is the only remedy, in that event, that could, in my view, deny opportunity for securing justice by reason of economic disabilities.
44. In the result, the writ petition succeeds. The impugned order of the respondent No. 8 dated 28th March 1985 and the orders passed by the Collector of Appeals as well as the Assistant Collector, are set aside and it is hereby declared that the petitioner is entitled to grant exemption under the Notification No. 70/76-C.E., dated 16th March 1976 in respect of the mill board made out of mixed waste paper with jute stalk and straw without mechanical pulp.