Exemption for coloured paper upheld where flock paper retained the essential character of paper under the notification.

Notification No. 68/76-C.E. was construed to cover converted varieties of paper where one side is subjected to colour printing, with or without design, and the exemption was not lost merely because the paper was later varnished, glazed or embossed. Applying that broad language, flock paper produced by putting coloured adhesive and flocking material on one side of duty-paid paper through a manual screen process was treated as paper coloured on one side. Its essential character remained paper, and the use of adhesive and flocking material did not take it outside the notification. The paper therefore fell within the exemption and was not liable to excise duty.

---

---

Issues: Whether flock paper manufactured by applying coloured adhesive and flocking material on one side of duty-paid paper by a manual screen process was covered by Notification No. 68/76-C.E. and therefore exempt from excise duty.

Analysis: The notification extended to converted varieties of paper obtained by one side of paper being subjected to printing of colour, with or without design, and stated that subsequent varnishing, glazing or embossing would not deprive the paper of exemption. The process adopted by the manufacturer resulted in colour being applied to one side of the paper through screen printing, even though adhesive and flocking material were used in the process. The essential character of the product, after the flocking material was removed, was paper coloured on one side. The broad language of the notification was sufficient to include such paper, and the subsequent treatment did not take it outside the exemption.

Conclusion: The paper manufactured by the appellant fell within the notification and was not liable to excise duty.

---