Excise classification of waxed paper turns on essential character and marketability, not the timing of waxing after printing.

Waxing a printed product after printing does not change its essential character if the substance remains waxed paper; classification therefore follows the tariff entry for waxed paper rather than the entry for products of the printing industry. Marketability depends on commercial recognition and capability of sale, not proof of actual sale in the open market. On limitation, departmental uncertainty and withdrawal of an earlier show cause notice meant extended consequences were not justified, so the demand was confined to the normal six-month period and the penalty was set aside. The appeal was thus only partly allowed, with excise liability maintained on classification but relief granted on limitation and penalty.

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Issues: (i) Whether the product manufactured by the appellants was classifiable as waxed paper under Central Excise Tariff Item 17(2) or as a product of the printing industry under Central Excise Tariff Item 68. (ii) Whether the demand was time-barred beyond six months and whether penalty was sustainable.

Issue (i): Whether the product manufactured by the appellants was classifiable as waxed paper under Central Excise Tariff Item 17(2) or as a product of the printing industry under Central Excise Tariff Item 68.

Analysis: The product was found to be waxed paper in substance. The distinction sought to be drawn on the basis that waxing was done after printing, or that the goods were intended for particular manufacturers and not sold in the open market, was rejected. The process of waxing after printing still resulted in waxed paper, and actual sale in the market was not necessary where the product was commercially known and marketable.

Conclusion: The classification under Central Excise Tariff Item 17(2) was upheld and the assessee's claim to classification under Central Excise Tariff Item 68 was rejected.

Issue (ii): Whether the demand was time-barred beyond six months and whether penalty was sustainable.

Analysis: The record showed departmental uncertainty for a considerable period and an earlier show cause notice had been withdrawn. In these circumstances, extended penal consequences were not justified. The demand could not be sustained for five years and was confined to the normal period.

Conclusion: The penalty was set aside and the demand was restricted to six months.

Final Conclusion: The goods were held dutiable as waxed paper, but the assessee obtained relief on limitation and penalty, resulting in only partial allowance of the appeal.

Ratio Decidendi: Waxing a printed product after printing does not alter its essential character as waxed paper for excise classification, and excise liability depends on marketability rather than actual sale in the open market.

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