1993 (9) TMI 113 - HC - Central Excise

Waxing of base paper is manufacturing creating new product subject to excise duty

The High Court of Judicature at Madras ruled in the case involving M/s. Paper Products Ltd. and M/s. Flexo Pack that waxing of plain/printed base paper ... Manufacture - Paper Issues:1. Whether waxing of plain/printed base paper can be considered a manufacturing process for the purpose of Excise Duty under Tariff Item No. 17(2) of the Central Excises and Salt Act, 1944.Analysis:The judgment by the High Court of Judicature at Madras involved two separate actions against common respondents, with the same point of consideration. The petitioners were M/s. Paper Products Ltd. (PPL) and M/s. Flexo Pack (FP). PPL, a limited company, and FP, a partnership firm, were both involved in processing and supplying wax papers to customers, attracting excise duty under Tariff Item No. 17(2) of the Act. They filed refund claims for the excise duty paid on printed and imprinted wax paper, which were rejected by the Assistant Collector of Central Excise and the Appellate Collector of Central Excise, leading to the writ petitions seeking quashing of the orders and refund of the excise duty.The main issue for consideration was whether waxing of plain/printed base paper, subjected to excise duty under Tariff Item No. 17(2), could be deemed a manufacturing process, making the wax paper a distinct product liable to excise duty again under the same tariff. The court referred to previous Supreme Court decisions in Laminated Packings (P) Ltd. v. Collector of Central Excise and Union of India v. Babubhai Nylchand Mehta, where it was held that certain processes resulted in the creation of new goods liable to excise duty under the same tariff.The court applied the principles established in the cited Supreme Court cases to the current situation and concluded that waxing of plain/printed base paper indeed constituted a manufacturing process, creating a new product (wax paper) subject to excise duty under Tariff Item 17(2). Therefore, the court dismissed both writ petitions, ruling that the petitioners were liable to pay excise duty on the wax paper. The Rule Nisi issued was discharged, and no costs were awarded in the circumstances.