- (1.) The grievance of the petitioner - a public limited company - engaged in the business of manufacture and sale of wrapping paper and paper of other varieties is that the respondents have illegally levied and collected excise duty on the wrapping paper twice over.
(2.) The duty on paper is payable under the Tariff Item No. 17(1) of the Schedule attached to the Central Excises and Salt Act, 1944 (briefly, the Act). The contention of the petitioner is that the wrapping paper manufactured by it, is captively used for wrapping the paper of other varieties, which cannot be marketed without being wrapped; that the petitioner is not trading in the wrapping paper that in view of the Third Proviso to Rule 9 of the Central Excise Rules, 1944 (briefly, the Rules), the goods may be removed without payment of duty leviable thereon if they are consumed or utilised in the place where such goods are produced or manufactured either as raw material or a component part of the manufacture of any other commodity which is excisable goods specified by the Central Government by notification under Sub-rule (1) of Rule 56A; that 'paper' is specified by the Central Government by notification under Sub-rule (1) of Rule 56A, that in view of Sub-rule 4 of Rule 49, payment of duty shall not be required in respect of excisable goods made in a factory if they are consumed or utilised in the same factory either as raw material or as component parts for the manufacture of any other commodity, which is excisable goods, specified by the Central Government by notification under Sub-rule (1) of Rule 56A; that wrapping paper which is captively used, cannot be subjected to excise duty when that is removed to the wrapping section in the factory for being used in the wrapping of the paper of other varieties; that duty can be levied and collected on the wrapping paper only after the wrapping paper having been used for wrapping the paper of other varieties when the paper of other varieties packed by a wrapping paper is removed from the factory gate; that the petitioner has been paying the duty on the wrapping paper when the packings with contents are removed from the factory gate; that the petitioner deposited under protest the duty on the wrapping paper for the period from 22-1-1978 to 31-10-1983 to the tune of Rs. 25,39,940.70 when that was removed to the wrapping section for being, used in the wrapping and that was again subjected to excise duty when packings with contents were removed from the factory gate; that this how the petitioner was compelled to pay duty on the wrapping paper twice-once at the time of transfer of the wrapping paper from the manufacturing room to the finishing room and again at the time of clearance of the packings of the paper of other varieties from the factory gate; that the petitioner then made an application dated 25-10-1981 to avail a credit of duty in accordance with Rule 56A of the Rules; that prior to that the petitioner had made one more application dated 27-1-1978 to the same effect; that when nothing was heard from the respondents on the said applications, the petitioner made another application dated 3-9-1983, Annexure-5 to the writ petition; that all these applications to avail a credit under Rule 56A are still pending with the respondents and, therefore, one of the prayers of the petitioner is that respondent No. 1 be directed to decide the aforesaid applications of the petitioner to avail a credit of the duty paid on the wrapping paper under Rule 56A(2) of the Rules.
(3.) The writ petition was amended by the petitioner and then paragraph 43A(a) to paragraph 43A(a) were inserted. In paragraph 43A(b) of the petition, it is stated that by virtue of the orders of the Custom Excise and Gold (Control) Appellate Tribunal (CEGAT) it was held that the petitioner was entitled to the benefit of credit of duty paid on the wrapping paper under Rule 56A and accordingly for the period prior to September, 1984 the petitioner has availed credit of duty paid on the wrapping paper. Thereafter for the period from 26-4-1984 to 8-5-1989, the petitioner by virtue of an order of this Court dated 16-4-1984 did not pay any duty on the wrapping paper. However, the petitioner was required to furnish bank guarantee for the duty allegedly payable on the wrapping paper under the interim order dated 16-4-1984, passed by the Court.;