RANGANATH MISRA - (1.) THIS appeal under S. 35-L of the Central Excises and Salt Act, 1944 (hereinafter referred to as the 'Act') is directed against the Appellate order of the Customs Excise and Gold (Control) Appellate Tribunal. The appellant buys white paper from the market on which duty has already been paid and manufactures flock paper out of it. According to the appellant it is registered as a Small Scale Industry with the Directorate of Industry, Government of Maharashtra and employs nine workers in all. The process of conversion of paper into flock paper is said to be as follows :- "Solution of P.V.A. Emulsion thickened with c.m.c. and coloured with dyes is applied on one side of paper manually with the help of hand-made screen; then flock is sprinkled by hand with the help of man-made sheeves. Thereafter paper is put on dryers for drying and finally when the paper is dried extra flock is removed manually by tapping with fingers and the paper becomes ready."
(2.) THE appellant had made it clear to the Assistant Collector that it had no coating or laminating machine and the process was essentially manual. It claimed the benefit of Notification No. 68/76-CE issued by the Central Government. THE Assistant Collector issued a show cause notice and rejected the claim of the appellant after cause was shown and by order dated 27th of July 1979, held that the appellant should take out the requisite excise licence and start paying central excise duty on flock paper under Tariff Item No. 17(2) of the Central Excise Tariff. He also directed the appellant to pay the duty for a period of five years preceding the date of issue of the show cause notice. A small penalty was also imposed. THE appellant carried an appeal to the Appellate Collector against the aforesaid order who by his order dated 4th of October, 1979, held :- "At the time of hearing they (appellants) produced a piece of flock paper manufactured by them, and submitted that if this flock paper was put into the glass of water, the flocking material would disappear and thereafter it would be seen that the paper which has been used for this purpose is only printed with the colour on one side. THE experiment was performed in my office and it was seen that the paper was printed with colour on one side and the other side remained as it is after the flock material has been fixed to it. THE appellants submitted that their appeal may be decided without a personal hearing as any delay in personal hearing would cause them a great hardship and that they being a small scale manufacturers their activities have come to virtual halt because of this order of the Assistant Collector. I have gone through the appeal petition and I find that the Assistant Collector has agreed that one side of the paper is coloured by printing with colour, but since the flocking material had been stuck to this paper, the Assistant Collector has held it to be flock paper and demanded the duty on it. THE wording of the Notification No. 68/76 as amended under Sr. No. 3A(ii) clearly shows that as long as the one side of the paper has been printed with the colour whatever other process is undertaken or further polishing or glazing etc. is immaterial. In this case the first operation is that of printing one side of the paper with colour which has been established beyond doubt by the appellants. What further process is done on this paper is immaterial as glazing and embossing etc. have been allowed under this notification to be done to the coloured side of the paper. In view of this, the order of the Assistant Collector is set aside so far as the classification of this material is concerned ... ... .." On 5-9-1980, a show cause notice purporting to be under S. 36(2) of the Act was issued by the Central Government to the appellant which inter alia stated : "On examination of the records of the case the Central Government are tentatively of the view that the order of the Appellate Collector is not proper, legal and correct. The process of manufacture of flocked paper cannot prima facie be considered to be equivalent to printing of colour inasmuch as use of ink appears to be inevitably linked up with a printing process as understood and no ink was used in the particular process. Hence it would appear. that the flocked paper manufactured by the assessee would be eligible for the benefit of notification No. 68/76. The Central Government, therefore, in exercise of the powers vested in them under S. 36(2) of the Central Excises and Salt Act, 1944, propose to set aside the order of the Appellate Collector of Central Excise, Bombay, or to pass such order as is deemed fit after consideration of the submissions of the assessee ... ... ... .." The appellant showed cause and with the change in the scheme of the Act, the matter came before the Tribunal for disposal. Before the Tribunal, on behalf of the appellant, two contentions were raised : firstly, the Collector was right in holding that the benefit of the Central Government Notification was available to the appellant and secondly the proceeding was barred by limitation. The Tribunal found, with reference to the opinion indicated in the show cause notice, as follows : "The Government of India was wrong to speak of ink as inevitably linked up with a printing process. This is only the character printing or word printing. But printing is not only word printing; it extends to numerous other processes whereby a surface is coated or coloured or is given an imprint, to represent, reproduce, cover, decorate etc. etc. and it is not just ink that is used for printing."
(3.) IT further found that the Appellate Collector was wrong in holding that the appellant was entitled to the benefit of the notification in question and concluded that there was no colour printing; it did not deal with the question of limitation and set aside the appellate order. Both the aspects raised before the Tribunal are reiterated before us in this appeal, namely, - (1) The Appellate Collector was right and the Tribunal is wrong in holding that the appellant was not entitled to the benefit of the notification; and (2) The show cause notice was issued after the expiry of the period of limitation and, therefore, the Tribunal had no jurisdiction to reverse the order of the Collector. ;