Central excise on waste newsprint rejected where no manufacture of a dutiable article from the waste was shown.

Central excise duty could not be fastened on a mere consumer of newsprint for selling waste newsprint, because the levy attaches to manufacture and ordinarily to the manufacturer or producer. The exemption notification for newsprint intended for printing newspapers, including its proviso on waste arising in the printing process, operated only to determine whether a dutiable article manufactured from such waste would attract duty. As no manufacture of a dutiable article from the waste was shown, the show cause notice was held without jurisdiction and unsustainable.

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Issues: Whether a consumer of newsprint could be subjected to central excise duty and proceeded against by a show cause notice for selling waste newsprint, on the footing of the exemption notification governing newsprint intended for use in printing newspapers.

Analysis: Excise duty is a levy on manufacture, and the liability ordinarily rests on the manufacturer or producer. The exemption notification protected newsprint intended for use in printing newspapers, and its second proviso dealt with genuine waste arising in the printing process only for the limited purpose of determining whether any article manufactured out of such waste would be dutiable. The petitioner was only a consumer of newsprint, not the manufacturer, and the record did not show that any other article had been manufactured from the waste. Sale of waste by the consumer could not, by itself, attract excise duty, though other consequences under the relevant newsprint control regime or other fiscal laws might arise.

Conclusion: The impugned show cause notice was without jurisdiction and unsustainable, and the writ petition succeeded.

Ratio Decidendi: Central excise duty cannot be fastened on a mere consumer for sale of waste newsprint where no manufacture of a dutiable article from such waste is shown, because the levy and the exemption notification operate only in relation to manufacture by the producer or manufacturer.

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