Sabyasachi Mukherji, J. - (1.) The subject matters of challenge in this application under Article 226 of the Constitution are 7 notices issued under the Central Excise Rules, 1944. The particulars of the said notices have been set out in Annexure F at page 61 of the petition. Of these notices the first three notices dated 29th of, January, 1973, cover periods from 1-7-1970 to 30-11-1971 1-10-1966 to 30 6-1970 and 1-12-1971 to 31-1-1972, respectively. The other notices impugned are also notices all dated 29th of January 1973 These cover periods from 27-7-1970 to 31-1-1972, 1-2-1972 to 31-8-1972 and September 1972 to December 1972, respectively. These notices were issued under Rule 10A of the Central Excise Rules, 1944 as it stood at the relevant time. The last notice mentioned above dated 29-1-1973 covering the period from September 1972 to December 1972 was issued on the alleged ground that overweight was found by inspection group by the inspection report No. 26/70 of 19-11-1970. As the last mentioned notice entirely comes within the purview of the Rule 10A of the Central Excise Rules, 1944 at the hearing of this application learned Advocate for the petitioner did not press the challenge so far as this notice was concerned. Therefore, I am confined to consider in this application the six other notices issued under Rule 10A of the said Rules as indicated before. The said Annexure, F, however contains particulars of 115 notices. The other notices being 8 of them were issued under Rule 10 of the said Rules. Inasmuch as the petitioner has shown cause in respect of those 8 notices in this application the said 8 notices are not under challenge. The copies of the notices which are under challenge have been set out in Annexure 'G(1)' onwards from page 62 onwards. The notices are identical in nature and after setting out the particulars of the amount claimed and the period for which these amounts have been claimed the grounds on which the amounts are sought to be recovered are indicated as follows : "Due to non-levy of appropriate rate of duty on wrappers used for reel cores." The notices contained the other particulars required to be contained in such show cause notices and it is not necessary for the present purpose to set these out. The petitioner carries on, inter alia, the business of manufacturing paper at its factory situated at Ranigunj in the Distric of Burdwan. At the said factory various qualities of paper like printing and writing paper wrapping and packing paper etc., are manufactured. At all material times central excise duty under the provision with the Central Excises and Salt Act, 1944 was and is still levied on the manufacture of paper. The different types of papers were and are subjected to different rates of duty under the said Act. General categories of paper have been grouped together for the purpose of levy of duty in particula- classes or special classes The duty on the paper was at all material times and still being levied with reference to the weight of the goods. From time to time notifications had been issued by the Central Government in exercise of the powers under Rule 8 of the Central Excise Rules, 1944 hereinafter referred to as the said rules whereby exemption in respect of part of duty for certain varieties of paper used to be granted. At all times and still, according to the petitioner duty on the packing and wrapping papers was levied at rates different from the other types of papers like printing and writing paper etc. A very insignificant part, according to the petitioner, of the packing and wrapping paper produced at the petitioner's factory used to be utilised at the relevant time for packing 'he other varieties of paper manufactured at the said factory. Sheets of packing and wrapping paper used to be put on tne other varieties of papers produced at the factory for the purpose of marketing the goods. Some qualities of the papers used to be sold after being wound on paper reel cores. Such reel cores were manufactured by the paper manufacturers including the petitioner at the paper mills themselves from the wrapping paper. For the manufacture of such reel cores Sodium Silicate to the extent of approximately 40% of the total weight of the reel cores were used. The remaining 60% of the total weight was approximately the weight of the wrapping paper utilised for the manufacture of the reel cores. It is the case of the petitioner that in accordance with the trade practice and or trade convention prevailing in this country and abroad weight of the paper was inclusive of that of the wrapper or the reel cores in which it was packed and/or wound. The weight of the reel cores or the wrapper was not taken into account separately from the weight of the paper for which they were utilised and no distinction was made in the trade. About the weight of the wrapper or reel cores utilised for packing or binding the different types of papers, the price realised from the customer and the bills and invoice raised on them was, according to the petitioner, inclusive of the weight of the wrapper or the reel cores. As the weight of wrapper or reel cores was very insignificant to the total weight of the paper that weight of the wrapper or reel cores was treated in the trade as that of the packed or wound paper duties. Indeed, according to the petitioner, it was impractical and was extremely difficult to ascertain the weight of the wrapper or reel cores in respect of each of the packages of manufactured paper. In accordance with the said trade practice, the petitioner asserts the weight of the wrapper and/or reel cores was ignored both in the cases of superior and inferior varieties of paper. The Central Excise authority, according to the petitioner, did not levy any duty on the wrapping paper utilised for packing or for the manufacture of reel cores for widening up at rates other than those applicable to the rate of the paper contents. As a result in respect of papers of higher quality then wrapping papers higher excise duty used to be recovered in respect of the wrapping paper utilised for packing in the manufacture of reel cores and in respect of the inferior grades of paper duty at lesser rate used to be levied in respect of wrapping paper. In calculating the weight of the packed paper Central Excise authorities used to include the weight of the wrapper or the reel cores as the weight of the paper contents and levied duty accordingly.
(2.) The petitioner states that there were representations made on behalf of the trade and as a result of such representation the Central Excise authorities agreed that duty on wrapping paper utilised for packing of the different varieties of paper would be levied at the rate appropriate to the paper contents. The petitioner states that such representations or assurances or promises had been made by the Central Excise authorities and the respondents with a view that the manufacturers of papers might act thereupon and adjust their affairs accordingly. The said representation or promise and/or procedure regarding the assessment was made after fully considering according to the petitioner, the practical difficulties of the paper manufacturers and the recognised trade practice and/or convention. The petitioner asserts that it was agreed on the basis applicable and weight of such wrapping paper in accordance with such representatation and/or assurance and/or agreed procedure for assessment according to the petitioner, the petitioner had paid duty in respect of wrapping paper utilised for packing or for the manufacture of reel cores at the rate applicable to the paper contents. The weight of such wrapping paper was included in the weight of the paper contents and duty was assessed accordingly. The petitioner states that the petitioner did not realise and/or recover any duty from its buyers at different rates for the wrapping papers utilised for packing and paper contents. It is the case of the petitioner that in calculating the weight of the paper on reel cores the entire weight of the reel cores used to be taken by the excise authorities. As mentioned hereinbefore, approximately 40% of the weight of the reel cores consisted of Sodium Silicate utilised for manufacture of reel cores at the rate applicable to the paper contents in respect of the weight of the reel cores relating the Sodium Silicate. The said assessment of duty was made on the basis of the said representations or assurances.
(3.) In March 1961 the Central Excise authorities wanted to change the procedure for assessing the wrapping paper utilised for packing, printing and writing paper. The Excise authorities wanted to assess the wrapping paper utilised for packing and printing and writing papers separately. The change however was not given effect to in view of the representation made by the paper manfacturers and the old practice continued. The petitioner in this connection has referred to two trade notices dated 28th of March, 1961 and 22nd of May, 1961 respectively. The said trade notice dated 28th of March, 1961 which was issued by the Collector of Central Excise, Calcutta and Orissa stated as follows : "It has been decided that the existing practice of assessment of wrapping paper at the rate appropriate to paper packed in such wrapping paper shall continue except in cases where wrapping paper is used for packing of printing and writing paper falling under item 17(3) of the Central Excise Tariff. While "Wrapping paper" used for packing paper falling under item 17(3) of the Central Excise Tariff viz. "printing and writing paper, other sorts" will be assessed to duty at the rate of 35 np per kilogram, the paper packed, namely, printing and writing paper will be assessed at 22 np per kilogram. To facilitate assessment, the manufacturers should declare the weight of packing and wrapping paper used in packing one ream of printing and writing paper of different sizes to the Central Excise Officer posted to paper Mill which subject to certain percentage test weighment by experiment by the Central Excise Officer, would be accepted. The wrapping and packing paper, the weight of which would thus be ascertained on experiment will be assessed to duty at 35 n/p per kilogram. Wrapping paper when cleared as such from the factory will be assessed to duty as heretobefore, i.e. at the rate applicable to wrapping paper. Assessment of wrapping paper used for packing, printing and writing paper falling under Item 17 (3) of the Tariff shall be regulated from 1-3-1961 in the light of this order.";