Bituminising kraft paper not manufacturing under Central Excises and Salt Act

The Tribunal held that the process of bituminising duty paid kraft paper does not amount to "manufacture" under the Central Excises and Salt Act, 1944. It concluded that duty paid kraft paper bonded with duty paid bitumen is not assessable to duty again under Item 17(2) or the residuary item 68. The Tribunal ruled in favor of the Appellant, setting aside previous orders and directing a refund if applicable.

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Issues Involved:
1. Whether the process of bituminising duty paid kraft paper amounts to "manufacture" or involves "any process incidental to or ancillary to the completion of manufacture" u/s the Central Excises and Salt Act, 1944.
2. If it does, whether duty paid kraft paper on bonding with duty paid bitumen is assessable to duty again u/s Item 17(2) of the First Schedule to the Act or the residuary item 68.

Summary:

Issue 1: Whether the process of bituminising duty paid kraft paper amounts to "manufacture" or involves "any process incidental to or ancillary to the completion of manufacture" u/s the Central Excises and Salt Act, 1944.

The Tribunal examined whether the process of bituminising kraft paper constitutes "manufacture" or any process incidental or ancillary to manufacture. The Appellant argued that no "manufacture" was involved and thus no duty was payable. The Tribunal referred to various judicial precedents, including the Supreme Court's interpretation of "manufacture" and High Court rulings, which indicated that mere application of substances like bitumen does not transform the original product into a new commodity. The Tribunal concluded that bituminisation of kraft paper does not amount to "manufacture" u/s the Act.

Issue 2: If it does, whether duty paid kraft paper on bonding with duty paid bitumen is assessable to duty again u/s Item 17(2) of the First Schedule to the Act or the residuary item 68.

The Tribunal analyzed Item 17(2) of the Schedule, which includes "Paper board and all other kinds of paper" subjected to various treatments. It was noted that the inclusive definition in Item 17(2) does not imply a second levy on the same product after it has undergone processes like bituminisation. The Tribunal emphasized that the legislative intent did not support a double levy on the same product. Additionally, the Tribunal found that the residuary Item 68 was not applicable as the bituminised kraft paper still fell u/s Item 17(2). Consequently, the Tribunal ruled that the duty paid kraft paper bonded with duty paid bitumen is not assessable to duty again.

Conclusion:

The Tribunal answered both questions in the negative, allowing the Appeal, setting aside the orders below, and directing the refund applied for to be made, if otherwise in order.

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