- (1.) THE prayer in the writ petition runs in the following lines :- "For the reasons stated in the accompanying affidavit, it is humbly prayed that this Honourable Court may be pleased to issue a Writ of Certiorarified Mandamus or any other Writ, Order or direction in the nature of certiorarified Mandamus calling for the records relating to the Notification in M.F. (D.R.B.) No. 71/77-C.E., dated 28-4-1977, as amended by Notification No. 25/79-CE, dated 1-3-1979 and Notification No. 109/80-CE, dated 19-6-1980 on the file of the 1st respondent and quash the same insofar as it relates to the petitioner and restrain the respondents herein from collecting Excise Duty again from the petitioner herein under the same Tariff Item No. 17(2) of the Central Excises and Salt Act, 1944 insofar as it relates to the petitioner and pass such further or other orders as it may deem fit."
(2.) THE petitioner is licenced to produce bituminised polythene lined kraft paper, waxed kraft paper and other similar products. THE petitioner is producing polythene lined kraft paper and waxed kraft paper for the last 10 years as per the conditions of the licence. THE petitioner is purchasing the main raw material required for its production viz., MG Kraft Paper, Wax Bituman, etc. At the time of purchase the petitioner is paying excise duty for the Kraft Paper, Wax and Bituman. Duty for the Kraft Paper is paid at 30% under Central Excise Tariff Item No. 17 (2) of Schedule 1 to the Central Excises and Salt Act, 1944. THE Kraft Paper as well as the finished product are used for the same purpose, namely packing and wrapping. The raw material, namely, Kraft Paper as well as final products are used for the same purpose, namely, as packing and wrapping paper. In the final products Kraft Paper content is more than 80% and the other contents like polythene constitute the remaining 20%. The petitioner pays duty at 30% for the Kraft Paper and 45% for the ploythene and all the materials used by the petitioner for manufacturing the products suffer excise duty before they reach the petitioner. The final products are utilised for the same packing and wrapping purpose like the basic materials purchased by the petitioner. The first respondent herein issued a notification in M.F. (D.R.B.) No. 71/77-C.E., dated 28-4-1977 and under this notification the first respondent has fixed a duty of 12-1/2% for the ploythene coated paper, polythene coated waxed paper, waxed kraft paper under item No. 17(2) and exempted any further duty over and above 12-1/2% on these products. This was amended and the duty was increased to 15% by Notification No. 25/79-C.E., dated 1-3-1979. This notification was further amended by Notification No. 109/80-C.E., dated 19-6-1980. The production of polythene coated paper, polythene coated waxed paper, waxed kraft paper is not a manufacture as contemplated under the provisions of the Central Excises and Salt Act, 1944 The point for consideration is whether the relief prayed for by the petitioner can be granted under the circumstances. Mr. T. Somasundaram, learned Additional Central Government Standing Counsel, submits that M/s. Standard Paper Industries Corporation, Madras, the petitioner herein, are manufacturers of polythene linked kraft paper and waxed kraft paper falling under T.I. 17(2) out of duty paid inputs viz., M.G.Kraft Paper, Wax, bitumen, polythene, etc., and that however during the material time they were manufacturing only waxed kraft paper. The Government of India in its Notification 71/77, dated 28-4-1977 fixed a duty of 12-1/2% for the polythene coated paper, polythene coated board, waxed board, polythene sandwiched paper and polythene waxed paper and sandwiched board falling under T.I. 17(2). This notification, according to the petitioner, shall not apply to a manufacturer who availed of (i) special procedure prescribed under Rule 56A of the aforesaid Rules in respect of the duty paid on base paper or board; (ii) the exemption granted under the notification of the Government of India in the Department of Revenue and Banking No. 67/71-CE, dated 16-3-1976. Notification No. 71/77 was further amended by Notification No. 25/79-CE, dated 1-3-1979, which substituted 15%ad valoremfor 12.5%ad valorem.It is in this writ petition the petitioner challenges the said notification of the Government of India on the grounds that the production of polythelene coated paper, polythelene coated waxed paper, waxed kraft paper, is not a manufacture as contemplated under the provisions of the Central Excises and Salt Act, 1944 and that the raw materials, namely, paper which forms part of the above 70% of the finished products had already suffered excise duty at 30% at the hand of supplier under Tariff Item 17(2), which contention we have already incorporated at the earlier portion of this order. According to the respondents, the contention of the petitioner cannot be accepted in the light of the judgment of this Court inM/s. East Coast Papers. Madrasv.Union of India[W.P. No. 6973 of 1980, dated 16-2-1987 1987 (30) ELT 248(Madras)] wherein it has been held that the 'base paper' and 'treated paper' are known with different names in commercial parlance, and, also due to the fact that the 'use' of these two papers varies according to the needs of the customers, and that the 'treated paper' is a manufactured product and is therefore liable to duty under T.I. 17(2). Further, the petitioner has neither applied for Rule 56A procedure nor exemption under Notification No. 67/76-CE, dated 16-3-1976. According to the counter affidavit filed, as per notification No. 71/77 waxed paper and polythelene coated paper and board are subject to concessional rate of 12.5%ad valoremprovided that 56-A Procedure is not followed and the Notification No. 71/77 was further amended by Notification No. 25/79-CE, dated 1-3-1979 which substituted 15%ad valoremfor Rs. 12.5%ad valorem.7.Learned counsel for the petitioner Mr. A. Muthukrishnan, submits that the case is clearly covered by the judgment of this Court in W.A. No. 326 of 1981, dated 2-7-1987, and as such the petitioner should be given an opportunity to put forward his case by remanding it for further consideration by the authorities concerned. On the other hand Mr. T. Somasundaram, learned Additional Central Government Standing Counsel, submits that the case is covered by the decision reported inEast Coast Papers, Madrasv.Union of India and Another 1987 (30) ELT 248 (Madras)], which in turn was confirmed by a Division Bench in W.A. No. 284 of 1987, on 12-3-1987. Nainar Sundaram J., held in asCoast Papers, Madrasv.Union of India and Another 1987 (30) ELT 248 (Madras)] as follows :- "Paper - Polyethelene sandwich paper and board liable to duty under Item 17(2) of the Central Excise Tariff. There are three ingredients which go to make the ultimate output polyethelene sandwich board viz., board, paper and polyethelene granules. These basic raw materials the petitioner procures from outside. The process that is being adopted is bonding the paper and the board with polyethelene. The inding agent, namely, polyethelene granules are melted in the extruder and is fed in a thin sheet in between the paper and the board and the same is immediately passed through a chill roll. The moulten polyethelene is solidified and thereby holds the paper and the board together. There cannot be any ambiguity in one's mind that it certainly falls within the definition of manufacture under Section 2(f) of the Central Excises and Salt Act, 1944 *
(3.) EVEN in the counter filed by the respondents it is stated that the intention of the Government to bring the 'base paper' and 'treated paper' under the same tariff item, has been found justifiable by this Court inM/s. East Coast Papers, Madrasv.Union of India[in W.P. No. 6973 of 1980, dated 16-2-1987 - 1987 E(LT) 248 (Madras)] on the basis that the 'base paper' and 'treated paper' are known with different names in commercial parlance and also due to the fact that the use of these two papers varies according to the needs of the customers and held that the 'treated paper' is manufactured product and is therefore liable to duty under Tariff Item 17(2). It is relevant in this connection to note that on behalf of the petitioner it is contended that the Notification No. 71/77-C.E. was issued without jurisdiction. This is not correct since it is seen that the finished paper although falling under the same Tariff Heading 17(2) is quite different in its possible end uses and therefore duty is correctly chargeable on the same. As against the judgments of this Court in W.P. No. 495 of 1978, dated 27-8-1980 and W.P. No. 165 of 1979, the Department filed appeals in W.A. Nos. 118 and 326 of 1981 and the writ appeals have been allowed by the Division Bench of this Court on 2-7-1987. It is this judgment that is relied on by Mr. A. Muthukrishnan, learned counsel for the petitioner. I prefer to follow the decision of Nainar Sundaram J., inEast Coast Papers, Madrasv.Union of India and Another 1987 (30) ELT 248(Madras)], because the facts of the instant case are similar to the facts of the said decision. In view of the judgments of this Court in W.P. No. 6973 of 1980, dated. 16-2-1987 and in W.A. Nos. 118 and 326 of 1981 - W A 118/81. 1. The Government of India rep. by Secretary Ministry of Finance, Department of Revenue and Banking. 2.The Asst. Collector. Central Excise, I.D.O., Maduraiv.Kwality Coated Products rep. by Partner S. Arasakasari, W.A. 326/81. Government of India rep. byMinistry of Finance, Department of Revenue and Banking and Anotherv.National Paper Products by its Managing Partner, Virudhunagar, dated 2-7-1987, this Court is of the opinion that the present writ petition is liable to be dismissed and is hereby dismissed. However the petitioner herein is at liberty to put forward his representation to the Departmental authorities who will consider and pass orders on merits of those representations. There will be no order as to costs.;