Susanta Chatterji, J. - (1.) The writ petitioner an existing Company, obtained a Rule challenging the order dated March 12, 1980 passed by the Respondent No. 1, the Additional Secretary, Government of India, Ministry of Finance, Department of Revenue as well as the order dated February 23, 1977 passed by the respondent No. 3 the Appellate Collector of Central Excise, Calcutta arising out of the orders dated January 8, 1975 made by the Respondent No. 4 the Assistant Collector of Central Excise, Sambbalpur along with 6 (six) notices as described in Annexure "D" series to the writ petition and all proceedings relating thereto and to refund the sum of Rs. 33,l00.39P. and other consequential reliefs as fully indicated in the writ petition. It is stated in detail that the petitioner carries on business of the manufacturing paper and paperboard at its factory situated at Brojorajnagar, Sambbalpur in the State of Orissa under the name and style "Orient Paper Mills". In the said factory, various qualities of papers like printing and writing paper, wrapping and packing paper etc. are manufactured. It is alleged that at all material times till March 15, 1976, Central Excise Duty on manufacture of paper was leviable with reference to weight of the goods. Different types of papers were subjected to different rates of duty. Since March 16, 1976 duty on manufacture of paper is levied ad valorem. It is placed on record that in accordance with the prevailing trade practice and/or custom and convention attempts were made to avoid the enormous difficulties to include the weight of the wrapping paper in the weight of the paper contents. The said Authorities used to levy duty on the paper contents inclusive of the weight of the wrapping paper utilised for the packing paper at the rate applicable to the papers contents. The Central Excise Authorities did not levy any duty on the wrapping paper utilized for packing or wrapping of the paper at rates other than those applicable to the paper contents. It is also placed on record that from time to time Trade circulars and/or instructions were issued by the Central Excise Authorities and the respondents wherein representations were made to the effect that duty on the wrapping paper utilized for packing different varieties of the paper would be levied proper to the paper contents. Such representations and/or assurances and/or promises were made by the said Central Excise Authorities with a view that the manufacture of paper may act thereupon and adjust their affairs accordingly. The petitioner, however, received from the respondent No. 5, the Superintendent of Central Excise, Brojorajnagar, Sambbalpur, Orissa 6 (six) notices to show cause as to why the petitioner should not pay amounts mentioned thereto as to short-levy on account of duty on the wrapping paper utilized for packing the various types of papers. The said notices were allegedly issued under Rule 10/10A of the relevant Rules. The petitioner, however, replied to the said purported notices and after personal hearing the Respondent No. 4 the Assistant Collector of Central Excise, Sambbalpur rejected the contention of the petitioner and being aggrieved appeals were preferred before the Appellate Authority. The appeal was also dismissed and the petitioner made a revisional application before the Respondent No. 1 and ultimately the same was rejected. All these orders are the subject matter of the present writ petition. The petitioner's grievance is that the assessments of the packing and wrapping paper utilized for packing the different varieties of paper at the rates applicable to the packed paper were made in accordance with the well-known recognised convention and/or trade practice and steps were taken on the basis of assurance and/or representations and/or promises made by the Central Excise Authorities including the respondents but the impugned orders are contrary to such convention and contrary to law. According to the petitioner, the purported finding of the Respondent No. 1 that the petitioner would have to bear the burden of excise duty if the petitioner would have purchased the wrapping paper from some other source is wholly illegal and in total disregard of Rule 56A of the Central Excise Rules, 1944.
(2.) The Writ petition is contested by the respondents controverting the allegations of the petitioner and it is asserted that the impugned orders are well justified and the writ petition is thoroughly misconceived and it has no merit.
(3.) Mr. Bagaria, learned Advocate appearing for the petitioner has mainly argued that when wrapping paper is used for making paper reams/reels it becomes a part and parcel of such reams/reels. It is emphasized that Central Excise Duty on such packed reams/reels cannot be levied at two different rates, i.e. one for the packed paper and the other for the wrapping paper used for such packing. Since, the packing is a part of manufacture and the same is necessary to make the paper marketable, this issue is directly covered by the decision of the Hon'ble Supreme Court in the case of Collector of Central Excise v. Eastend Paper Industries Ltd. He has also argued that, in any event, at all material points of time, duty on wrapping paper was paid at the rates applicable to packed paper as per the trade notice issued and as per directions given by the respondents themselves. In the trade notice dated 25-2-1961 it was clearly stated that the duty on wrapping paper should be paid at the rates applicable to the content paper, and as such the respondents cannot demand any differential duty in respect of the period during which the said notices was in force by alleging that the directions given in the said Trade Notice were not correct. This position of law has been considered, as submitted, in the case of Union of India v. Godfrey Philips India Limited reported in 1986 (22) ELT 306. Mr. Bagaria submits further that the Hon'ble Court was pleased to hold that the respondents were bound by the representation made in their letter and the theory of promissory estoppel has been extended as would be found in the Judgment of the case of K.P. Varghese v. Income-tax Officer as reported in 131 ITR P. 597. Mr. Bagaria has also referred the cases "Guest Keen Williams Ltd. v. Union of India" and "Star Chemicals Ltd. v. Union of India". It is highlighted that even if the change of practice by the Department as alleged in the letter dated 21-2-1972 was legally tenable, this change of practice would only be made in respect of subsequent period and the same could not be given any retrospective effect. The respondents are not permitted to switch over the practice in respect of the past period during which the said trade notice dated 22-5-1961 was in force.;