TaxTMI 
TaxTMI 
1988 (4) TMI 61
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....pay Central Excise duty on such intermediate stage of production. 5. The Inspector of Central Excise by a letter dated 22.5.1980 requested the petitioner company to furnish particulars as to how it classified duplicating stencil papers and the process of manufacture of the goods and the raw materials used etc. The petitioner duly furnished all the said particulars by its letter dated 27.5.1980. 6. By a letter dated 22.7.1980 the Superintendent of Central Excise sent a Trade Notice dated 14.7.1980 issued by the Additional Collector of Central Excise whereby stencil paper was shown as classified under Tariff Item No. 17(2) of the First Schedule of the Central Excises & Salt Act, being a coated variety of paper. 7. The petitioner company in reply pointed out to the Superintendent of Central Excise that Tariff Item No. 17 covers paper and paper boards of different varieties and that stencil paper is not synonymous with duplicating stencils. The petitioner also pointed out to the Collector of Central Excise the difference between stencil paper and duplicating stencils and requested him to consider the issue from technical as well as commercial point of view. 8. The Superinte....
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....cil paper being a coated variety of paper was classifiable under Tariff Item 17(2). A demand was, accordingly, raised on the petitioner company to pay the differential duty under Rule 10(1) (a) read with Rule 173D of the Central Excise Rules, 1944 by a show-cause-cum-demand notice dated 20.8.1980. It was considered that the duplicating stencil paper which is a composite article consisting of coated tissue paper, carbon paper and backing paper with a head strip and also printed scale and other instructions on the stencil indicating its use etc. is classifiable under Item 68 of the Central Excise Tariff. But the tissue paper after being coated to form 'stencil paper' will pay duty under Item 17(2) with proforma credit facility under Rule 56A (Annexure 'A'). 14. As such, in view of the provision of Tariff Item 17(2), stencil paper falls within the said item whereas duplicating stencil paper which is a composite article, is classifiable under Item No. 68. 15. It is further the case of the respondents that the petitioner is required to take out licence in the prescribed form to manufacture stencil paper as coated paper in their factory. 16. Duplicating stencil paper according t....
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..... By the said letter the petitioner company was requested to furnish certain particulars regarding the manufacture, classification etc. of "Duplicating Stencil Paper". 22. The petitioner company in their reply dated 27.5.1980 (also Annexure 'C') explained the process of manufacture of duplicating stencils and while doing so, mentioned about the use of chemically coated stencil base tissue paper in the manufacture of such duplicating stencils. 23. Then came the Trade Notice (Annexure 'D') dated 14.7.1980 relating to the classification of Duplicating Stencil Papers, in paragraph 2 whereof it was clarified that stencil paper being a coated variety of paper is classifiable under Item 17(2) of the Central Excise Tariff" like carbon paper. 24. The real confusion seems to have started here since duplicating stencil, which was mentioned as "duplicating stencil paper" was ultimately mixed up with stencil paper or coated paper, which, as already seen, is totally a different item from duplicating stencil. 25. The confusion thus created, manifested itself in the letter of the Superintendent of Central Excise dated 22.7.1980 addressed to the petitioner company (also Annexure 'D') wh....
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....er was, therefore, classified under T.C. 17(2) of C.E.T. as per Tariff Advice No. 40/79 dated 25.9.1979. In the trade parlance this product is commercially known as stencil paper having a specific function of multiplying copies by duplicating machine......... but you have named this product as duplicating stencil. Mere change of nomenclature of a specific product by different persons does not exclude from the Tariff inasmuch as you may call it as duplicating stencil and others may call it by other names as distinct from the name as commercially known in the Trade parlance, but the fact remains that it is a coated variety of paper falling under T.I. 17(2)". 30. From the aforesaid letter of the Superintendent of Central Excise it will appear to be more than clear that the Central Excise authority refused to make a distinction between 'stencil paper' and 'duplicating stencil', though factually they are two distinctly identifiable items. 31. It was this confusion which ultimately resulted in the issuance of the show-cause-cum-demand notice dated 20.8.1980 (Annexure 'I'). 32. It is, as such, clear that the show cause notice is the result of a total confusion as regards to the dist....
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....ts including the decision of the Orissa High Court in State of Orissa v. Gestetner Duplicators (P) Ltd. (supra.) 39. Reference was also made to the decision of the Supreme Court in Commissioner of Sales Tax, Uttar Pradesh v. Macneill and Barry Ltd., 1986 (23) E.L.T.5. There the question that came up for consideration was whether ammonia paper and ferro paper were paper and the Supreme Court held that ammonia paper and ferro paper cannot be regarded as paper in the popular sense of the term since paper is used for printing or writing or for packing while ammonia paper and ferro paper are not employed for any of the purposes and subjected to any of the processes for which a paper, as commonly understood, is generally used. 40. Dr. Pal also referred to the decision of the Supreme Court in Union Carbide, India Ltd. v. Union of India, AIR 1986 SC 1097. In the said decision it was held that aluminium cans produced and subsequently developed into completed components for being employed as flash light cases, could not be treated as excisable goods, since aluminium cans prepared by the manufacturer, are employed entirely by it in the manufacture of flash light and are not sold as alum....
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....y Item No. 68 and not by Item No. 17(2). 46. I am, however, unable to accept this subsequent explantion sought to be offered by the respondents in their affidavit-in-opposition, since there is absolutely no indication that when the show cause notice was issued the Central Excise authority had the requisite knowledge and idea that duplicating stencil and stencil paper are two distinctly identifiable items. If the notice refers to the item as mentioned in the gate passes and if such item is duplicating stencil, the situation does not improve in anyway. This is because as already stated, the Central Excise authority before issuing the show cause notice refused to accept the contention of the petitioner company that stencil papers and duplicating stencils are two distinct commodities and it was on such assumption that the show cause notice was issued. The said position cannot, in my view, be improved at this stage by stating that the show cause notice relates to duplicating stencils and not to stencil papers. 47. It is true, that on the basis of the contention raised before me by Mr. Das, the learned Counsel representing the respondents, I could have disposed of the matter out ri....