1. Both these appeals were heard together and are being disposed of by this common order as they involve common questions and issues.
2. The question that arises for decision in these appeals is as to which slab (slab 3 or slab 4) mentioned in Notification No. 25/84-CE is attracted for the purposes of levy of excise duty on different varieties of paper and paper board manufactured by the appellants. The answer to this question depends on whether or not "broke" arising during the course of manufacture and consumed within the factory is to be considered as paper and paper board cleared from the factory of the appellants. If broke is considered as paper/paper board, its quantity is added to the annual clearances and the appellants fall in a higher bracket and consequently pay higher rate of excise duty, as is the case now. Including the question about broke, 4 issues arise for determination in this appeal. These are as follows :- 1. Whether the quantity of Broke consumed within the factory should be included for computing the total quantity of various types of paper and paper boards cleared from the factory of the appellants? 2. Whether Art paper and chromo paper would be eligible for the exemption granted under Notification No. 25/84? 3. Whether Ledger Paper (above 85 GSM) will attract excise duty as writing and printing paper? 4. Whether art board or chromo board would be eligible for the exemption under Notification No. 25/84? 3. Shri Lakshmikumaran, the learned Advocate for the appellants submitted that broke cannot be considered to be paper and its weight cannot be included in the quantity of paper and paper board cleared by the factory. He submitted that the appellants are entitled to the exemption under the slab No. 3 in Notification No. 25/84-CE. In sup- port of his plea the learned Advocate put forward the following arguments: (i) Broke is not goods, much less excisable goods and even to a lesser extent a variety of paper and paper-board. He cited the following case laws and documents in support of this argument :-Hindustan Lever Ltd. v. Collector of Central Excise, Bombay [1985 (22) ELT 232]Union Carbide Ltd. v. Union of India [1986 (24) ELT Supreme Court] g) Trade Notice No. 19/84 referred at grounds B 9 at page 13 of the appeal memorandum.
h) Board's letter 261/17/76 CXB dated 5-10-1977 referred at Ground B8 of the appeal memorandum.
(ii) The learned Advocate also submitted that broke and paper are internationally classified under separate chapters. He pointed out that broke is classified under Chapter 47 alongwith pulp and not under Chapter 48 alongwith paper and paper board. He also relied on technical literature (pages 226 to 253 of the paper book) and in reply to a query from the Bench submitted that all these authorities were placed before the Collector (Appeals).
(iii) The third argument of Shri Lakshmikumaran was that broke is not "cleared from the factory" and is, therefore, to be excluded from the computation of clearances in view of the wording of the Notification No. 25/84-CE. He submitted that the phrase "cleared from" is different from consumption within the factory. He argued that "cleared" means removal of obstruction or encumbrances whereas removal of excisable goods after payment of excise duty alone will constitute clearances. In support of his argument the learned Advocate cited the judgment in Shri Madhav Mills v. Union of India reported in 1984 (17) ELT 310 Patna. He further submitted that broke is exempt from duty under Notification No. 77/74-CE and, therefore, the judgment of the Patna High Court covers the facts of this case.
He also emphasised that the interpretation that broke is paper/paper board and that, therefore, its clearances should be added to the clearances of paper and paper board was enforced only in respect of 2 Paper Mills in Baroda Collectorate. No where-else, in India, according to the learned Advocate, was such an interpretation applied. He also pleaded that if broke is taken into account for computing the total quantity of clearances it would mean that the broke is reckoned again and again continuously as broke is recycled.
(iv) The learned Advocate also submitted that the words "cleared from the factory" have different meaning from removal from the place of production/manufacture as referred in Rules 9 and 49 CE Rules, (v) Shri Lakshmikumaran also argued that assuming without admitting that broke is a variety of paper, since it is admittedly used in the manufacture of paper within the factory and not for manufacturing any other commodity, no removal within the meaning Rule 9 CE Rules has taken place. To support this argument the learned Advocate relied on a judgment of CEGAT in Collector of Central Excise v. Orissa Weavers Co-operative Spinning Mills 348. The learned Advocate referring to the impugned orders submitted that comparison of the wordings in Notification No. 80/80 or 83/83 with Notification No. 25/84 is not proper since the explanation added to Notification No. 80/80 etc. was only as an abundant precaution. In this context the learned Advocate referred to a judgment in Union of India v. Modi Rubber Ltd. reported in 1986 (25) ELT 849. He also referred to the legislative history of the Notification 25/84 and to the Finance Minister's speech in 1983 reproduced in the appeal memorandum. The learned Advocate further submitted that alongwith the appeal memorandum the appellants sent the affidavit filed alongwith the appeal to the respondent Collector. But these affidavits have not been rebutted.
4. On the second issue pertaining to art paper and chromo paper Shri Lakshmikumaran argued that they also qualify for exemption under Notification No. 25/84. He submitted that art paper and chromo paper are admittedly varieties of writing and printing paper and qualify for exemption under the preamble as also the table. According to him 2nd proviso to the Notification excluded cigarette tissue, glassine paper, grease-proof paper, coated paper (wax paper) and paper below 25 GSM. He submitted that the varieties of paper mentioned in the proviso to the notification are only industrial varieties of paper and not writing and printing variety. Therefore, he argued, "coated paper" excluded under the 2nd proviso to the notification, referred only to industrial varieties of coated paper like poly-coated paper, bitumanised water-proof paper, wax paper, etc. and not to art paper or chromo paper. The learned Advocate submitted that according to the doctrine of "NOCITERASOCIIS" and a number of judgments cited in the grounds of appeal the exemption should be held to apply to art and chromo paper.
5. In respect of the 3rd issue viz. ledger paper Shri Lakshmikumaran argued that ledger paper was considered by the Assistant Collector as being other than writing and printing variety and this was wrong since the ledger paper is used in banks and commercial organisations for writing accounts and, therefore, it is only writing and printing paper.
He submitted that in respect of earlier periods show cause notice was issued to the appellants but the Assistant Collector discharged the same.
6. With regard to the 4th issue relating to art board/chromo board Shri Lakshmikumaran submitted that the 2nd proviso to the notification excludes only coated paper from the scope of exemption and not coated boards. Therefore, in any case art board or chromo board would qualify for the exemption under Notification No. 25/84.
6A. Shri V. M. Doiphode, the learned SDR opposed the arguments and supported the impugned order. Referring to the appellants' arguments that broke was neither goods nor excisable or dutiable goods the learned representative submitted that the notification does not refer to excisable goods or dutiable goods. Neither dutiability nor excisability is the question. He submitted that the proviso to the notification referred to "all varieties of paper and paper board...".He submitted that they are goods in every sense of the word and referred to a judgment of the Tribunal in Aruna Industries v. Collector of Central Excise, Guntur reported in 1986 (25) ELT 580. He further argued that broke comes out of rejected paper and, therefore, it comes out of paper unlike ammonia paper of carbon paper. Therefore, according to the learned representative, it is paper. In this context Shri Doiphode submitted that fents and rags which emanate from textiles enjoy duty exemption but do not cease to be textiles. On this analogy broke also is paper.
7. Shri Doiphode referred to a judgment of the Madras High Court in Sheshasayee Paper and Boards v. Collector of Central Excise (reported inl987 (28) ELT 258 Mad.) and submitted that this judgment which referred also to the Supreme Court's judgment in Khandetwal Metal and Engineering Works (1985 (20) ELT 222 SC). In this judgment, according to the learned representative, brass scrap was held to be excisable and liable to duty. On the same ratio broke also is excisable and liable to duty though it was exempted. He further argued that recycling is not exclusive to broke in paper industry and takes place in copper industry, soap industry and many other industries.
8. Referring to the reliance of the appellants on the judgment in Modi Rubber (supra) Shri Doiphode submitted that this judgment did not take into consideration the Supreme Court's judgment in Khandetwal Metal and Engineering Works (supra).
9. Supporting the classification of broke as paper Shri Doiphode submitted that Notification No. 77/74 defined broke as waste paper and argued that for assessing the scope of an entry the aid of a notification may be taken. To support this proposition he referred to a judgment in J.K. Steels Ltd. v. Union of India (1978 ELT J 355). Shri Doiphode argued that Tariff Item 17 and the exemptions granted should be read together with the notification and not in isolation.
10. Referring to the argument of the appellants about Rule 9 and the place of manufacture the learned Representative argued that the definition of 'factory' Under Section 2(e) of the Central Excises and Salt Act, included the place of manufacture which also is, therefore, a factory. Factory includes precincts thereof and the same is the situation with the place of manufacture referred to in Rule 9.
Referring to the words "the manufacture of any other commodity appearing in Rule 9 Shri Doiphode argued that this expression is irrelevant because these words refer to durability whereas in the present appeal the question pertains to the classification and, therefore, the context is different.
11. Adverting to the reliance of the appellants on the Patna High Court judgment in Madhav Mills (supra) Shri Doiphode submitted that the Patna High Court judgment referred to excisable goods specifically whereas the Notification No. 25/84 the words employed are different and not para-materia.
12. Arguing that broke is a variety of paper Shri Doiphode submitted that end- use was not the relevant criterion for classification and cited the judgment of the Supreme Court in Dunlop India Ltd. (1983 ELT 1566). The learned Representative submitted that the Tariff Entry (Item 17) does not refer to end-use.
13. Answering the appellants' arguments that the affidavits (filed by the appellants) were not rebutted by the Collector (Appeals) Shri Doiphode submitted that affidavits and letters though filed before the Collector were not specifically permitted by the said authority.
Therefore, their admission is not permissible at this stage Under Rule 215 of Central Excise Rules.
14. Answering the arguments of the appellants with regard to separate classification of broke and paper Shri Doiphode referred to the appellants' reliance on the judgment in Modi Rubber Ltd. and observed that if two notifications cannot be compared there cannot be any comparison between two tariffs either.
15. Reacting to the submissions of the appellants that in no other Collectorate except Pune, broke is considered as paper, Shri Doiphode submitted that even if it is so it is immaterial as it is upto the Tribunal to decide the correct position and this position has to be followed all over the country.
16. With regard to chromo and art paper Shri Doiphode submitted that the doctrins of "NOCITERASOCIIS" applies only if the meaning is doubtful. There is no doubt about the meaning of coated paper and; therefore, the doctrine does not become applicable. Referring to the effect of the proviso Shri Doiphode relied on Sales Tax Officer v.Hanuman Prasad 17. In respect of art and chromo board and ledger paper the learned representative had no comments other than to reiterate the Collector's orders.
18. In his rejoinder Shri Lakshmikumaran submitted that coated paper (art paper) is printing/writing paper of cultural variety. He submitted that the claims of the appellants were advanced before the Assistant Collector and Collector. Referring to the proviso the learned Advocate submitted that writing and printing paper is mentioned in sub-item (i) and "others" do not include writing and printing papers. He pleaded that the exclusion is to industrial varieties only and that the notification was intended to encourage cultural varieties.
19. Submitting that broke is not goods the learned Advocate cited the judgment of the Supreme Court in Geep Flashlight/Industries Ltd. v.Union of India and Ors. reported in 1983 ELT 1596 SC.20. Shri Lakshmikumaran pointed out that notification No. 77/74 does not help classification because it does not mention the tariff item as is done in many other notifications. He wondered if Government themselves were not sure about the classification (intervening, the learned SDR explained that in 1974 TI 68 was not there). Shri Lakshmikumaran submitted that the notification No. 77/74 is continuing even today without change. He submitted that this notification was intended only to take care of timid minds which may treat waste of paper as paper itself. In this context Shri Lakshmikumaran recalled a judgment of the Madras High Court in Provincial Government of Madras v.Nellai Virbhadrappa (AIR 1950 Madras 521).
21. Arguing that a notification does not create a levy liability the learned Advocate cited 1976 STC 1977. He also pointed out that no cess is collected on broke and there is no exemption notification in respect of cess. Referring to the reliance on J K Steels Ltd. judgment by the learned SDR the Advocate submitted that the majority view in that judgment was different. Referring to the argument of Shri Doiphode on Rules 9 and 49, the learned Advocate submitted that these Rules were amended retrospectively to meet the judgment of the Delhi High Court that factory and place of manufacture were the same. He further submitted that the amendment to these Rules was only for the purposes of levying duty on captively consumed goods and not for any other purpose. To support his arugment the learned Advocate cited the judgment in Salco Extrusions Private Ltd., Bombayy. Collector of Central Excise, Bombay-II reported in 1984 (16) ELT 356.
22. In this context the learned Advocate referred to the judgment in Shri R. Subbiah Gounder v. Collectorof Central Excise, Coimbatore reported in 1985 (21) ELT 618.
23. We have recorded the arguments of both sides rather extensively.
The detailed arugments of both sides indicated the thoroughness and depth with which both the learned Advocate and the learned SDR prepared the matter and presented it before us. This is admirable.
24. However, for deciding the question before us it is not necessary that every- thing said by both sides need be examined. The main question in this appeal is question No. 1 which we formulated in paragraph 2 supra. This question can be resolved only on deciding whether broke is to be considered as paper or paper board. The notification No. 25/84 has the following preamble and condition in column 4 which make it necessary to examine whether broke is to be considered as paper/paper board: Partial exemption to paper and paper board produced by small paper mills using unconventional raw materials. In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 46-83-Central Excises, dated the 1st March 1983, the Central Government hereby exempts paper and paper boards of the description specified in column (2) of the Table hereto annexed, falling under sub-item (1) of Item No. 17 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), manufactured out of pulp containing not less than 50 per cent of weight of pulp made from materials (other than bamboo, hardwoods, softwoods, reeds or rags) and cleared on or after the 1st day of April in any financial year, from so much of the duty of excise leviable thereon under the said Act at the rate specified in the said First Schedule as is in excess of the amount calculated at the rates specified in the corresponding entry in column (3) of the said Table, subject to the conditions specified in the corresponding entry in column (4) thereof.
Provided that the total quantity of clearances of all varieties of paper and paper board in the preceding financial year, by or on behalf of a manufacturer, from one or more factories, or from a factory by or on behalf of one or more manufacturer(s), exceeded (3,000) metric tonnes but did not exceed (7500) metric tonnes.
25. Before we proceed to examine this question in detail, we proceed to find out the origin and nature of broke. In the book Manufacture and Testing of Paper and Board, Volume 3 (Editor-in-Chief-J. Newell Stephenson published by McGraw-Hill Book Company, INC) it is mentioned that the term 'broke' or 'broken' refers to partly or completely manufactured paper that does not leave the machine room as salable paper or board. Wet broke is that which is made before the paper reaches the dryers. Wet broke, according to this book, is wet collects on the press-roll doctors, resulting from breaks or from normal interruptions in taking the paper through the machine. Tress broke" as distinct from wet broke) is, according to the same publication put into a beater for manufacture of paper. The book further defined dry broke which is produced at the dryers, calender, rcel or winder or in the finishing room. There is also "winder broke" which, the publication records, includes shavings trimmed off edges of the sheet, paper spoiled in starting the winder or mending breaks and defective paper cut from the rolls. Cutter broke consists of trimmings, dirty paper on the outside of rolls, wrinkled paper, etc. Sheet calender broke consists mainly of turned-in corners; and, wrinkles is another variety of broke as also broke in pasting. Another book published by the same company and titled "Papermaking and Paperboard Making" (Edited by Ranald G. Macdenald, and John N. Franklin, 2nd Edition, Volume III, substantially gives the same information as above about broke. In another book (Pulp and Paper Chemistry and Chemical Technology, Third edition, Volume II by James P. Casey, Editor published by John Wiley and Sons) at page 825/826 (of this publication it is recorded as follows: "Recovery of Broke: Broke is the spoiled and damaged paper which may be produced when there are technical or other production difficulties on the papermaking machine, in particular when the wet breaks. The term broke is also used to include : (1) waste produced when the paper is not being made to the correct specification, (2) damaged paper at the ends of the reels and (3) trim and other waste from the finishing department. It is economically necessary to recover as much of this broke as possible and to reuse it preferably for the same grade of paper. The recovery and reuse of broke is a useful factor in reducing environ- mental pollution.
There are four main types of broke which may be classified as follows: (1) wet broke or couch broke produced when the sheet breaks at the couch roll; (2) press broke produced during a break at or just after the presses; (3) dry broke from the dryers; this as the name suggests is produced when the sheet breaks in the dryers or between the dryers and the reel; it has a lower moisture content than wet or press broke; (4) dry broke from the finishing department; this consists of trim, damaged paper, rejected paper or similar material produced after the machine reel.
The method of treatment of the broke and how it is conveyed back to the stock preparation plant depends largely on whether it is wet or dry broke. Couch broke is ashed off the underside of the machine wire by a water shower just after the couch roll or the forward drive roll. It falls into a pit below the couch roll known as the couch pit. The couch pit usually has an agitator which breaks up the broke and it is diluted by the shower water. From here it is pumped back to the stock preparation plant. Press broke can be handled in this way or in the same manner as dry broke. Dry broke is usually collected on a conveyor system and fed to a disintegrator that is located underneath or to one side of the dryer section of the paper machine; from here it is pumped back to the stock preparation plant.
Broke from the finishing department is also handled in this manner although the disintegrator may be located in the finishing department or the broke may be conveyed by a belt or air conveyor back to the disintegrator in the stock preparation plant. In cases where the amount of broke produced is too small to justify the v capital cost of a conveying system it is collected by hand and transported by truck, either loose or after baling, back to the stock preparation disintegrator. The amount of broke produced can vary quite widely. One of the main production aims in all paper mills is to reduce broke to a minimum; the actual figure for the amount of broke produced is usually considered as confidential costing information. The amount will vary with the grade of paper being made as well as the whether the stock preparation plant, the approach flow system and the paper machine, itself are operating well on that particular day. Less than 10 per cent of production coming out as broke is often regarded as satisfactory, over 40 per cent is a cause for considerable concern. Measurement of the amount of broke being produced is a difficult problem as it does not appear in the overall input output figures. Small amounts handled manually can be weighed directly into the pulp disintegrator with correction for moisture content. Broke handled by conveyor can best be measured by the volume and consistency drawn from the broke disintegrator or storage nest but this can present problems.
Broke should be used so far as possible to produce the same grade of paper as that from which it originated although it is sometimes necessary to use it for a different grade. Even so, the dry paper after disintegration does not produce stock with the same properties as if originally had; it is usually freer and weaker. Dry broke containing wet-strength paper or contraries such as film or foil added in a converting operation must have special treatment such as that given to secondary fibre." 26. From these writings we note that broke is of several varieties and is used for recycling in the manufacture of paper. It is the submission of the learned Advocate for the appellants that broke is not goods much less excisable goods and not at all a variety of paper and paper board.
He relied on some judgments of High Courts which we proceed to examine.
27. The learned Adovcate's reliance on the judgment of the Delhi High Court in Modi Rubber Ltd. (supra) gives the appellants only indirect support to their argument that broke is not excisable goods. The Delhi High Court in the said judgment observed that waste/scrap obtained in the course of manufacture of the end product viz. tyres, tubes, etc.
was not a subject of any transformation into a new and different article or a result of any process incidental or ancillary, and therefore, not excisable. The High Court took note that waste and scrap too fetch some price but observed that this does not mean that the waste/scrap cannot be considered to be waste/scrap. We note that in the said judgment the High Court considered waste and scrap arising out of cutting and punching tyres as also defective rubber compund and rubber cuttings.
28. We have also perused the judgment of the Bombay High Court in Indian Aluminium Co. Ltd. and Anr. (supra) and note that the High Court therein held that dress and skimmings arising during the course of manufacture of aluminium are not goods and not end-products. The Tribunal in Hindustan Lever Ltd. Bombay (supra) held that manufacture means subjecting a material or an article to a process so as to transform into a superior product - and that the end product is never a baser commodity than the material it is made of. In this judgment, the Tribunal held that spent earth arising from the activated earth during soap manufacture is not liable to duty not being the result of manufacture and being baser than the activated earth. They also held that mere sale of spent earth is not determinative of its assessability. We, however, also note that the Tribunal expressed an opinion that duty could not be levied on spent earth a second time because the same (spent earth) had already paid duty under Tariff Item 29. Another judgment cited by the appellants was delivered by the Hon.
Supreme Court in Union Carbide India Ltd. (supra). In this judgment the Supreme Court held that to become "goods" an article must be something which can ordinarily come to the market to be bought and sold and that articles in crude or elementary form are not dutiable as they are intermediate products and not goods. The Supreme Court were examining a question whether aluminium cans manufactured by the appellants therein were capable of sale/consumption. They took note of the unfinished form of the cans and the need for further process necessary to make them into flash light cases.
30. Before we could decide whether or not broke can be considered as goods and if so whether it is paper or paper board, we examine the other arguments of the learned Advocate that broke is never "cleared" from the factory, such clearance being one of the conditons laid down in the exemption notification. In Collector of Central Excise, Bhubaneshwar v. Orissa Weavers Co-operative Spinning Mills (supra) the Tribunal held that cotton yarn coning is not dutiable because coning is an intermediate stage of production of cotton yarn in hanks end cotton yarn remains cotton yarn even after reeling into hanks. They further held that so long as the respondents continue to manufacture cotton yarn in one form or the other they are entitled to pay duty on the particular form of cotton yarn in which it is removed from the factory.
They observed that there is no warrant for taxing cotton yarn repeatedly because of change in forms within the same factory and under the same Tariff Item 18-A. We note that in the present appeal the position is that the broke arising at various stages is recycled and ultimately it becomes paper. We do not find it necessary to go into the Patna High Court's judgment in Madhav Mills. The reason will be clear a little later.Aruna Industries, Visakhapatnam and Ors. v. Collector of Central Excise, Guntur and Ors.
(supra). Our perusal of this Judgement shows that the Tribunal was examining whether manufacture was involved in the fabrication of structural shapes. The Tribunal held that the fabrication activity involved was not a manufacturing process. It also held that the burden of proof that there is manufacture is on the Department. Therefore, we do not consider this judgment helpful to the Department's case.Seshasayee Paper and Boards Ltd. v. Collector of Central Excise, Madras and Ors. (supra). In this judgment the Madras High Court was examining the question of liability to duty of waste and scrap arising during the course of paper manufacture. The High Court held that causticising lime sludge was classifiable under Item 68 of the Tariff. As mentioned by Shri Doiphode the High Court referred to the Supreme Court's judgment in Khandelwal Metal and Engineering Wokrs v. Union of India and Ors. reported in 1985 (20) ELT 222 (SC) and took note that the highest court in the country held that the waste and scrap can be regarded as capable of being produced or being manufactured. However, we note that in the present appeal the question is whether broke should be considered as paper or paper board and whether for the purpose of the notification the quantity of broke should be included in the quantity of paper cleared.
We are not on the excisability of broke. Therefore, this judgment, the contents of which we note, is not practically relevant to the point here.
33. We, however, note that the learned SDR argued that broke was waste paper and, therefore, paper. We also note his argument that Tariff Item 17 and the exemption granted thereunder should be read together with the notification and not in isolation. We also take note that, as pointed out by Shri Lakshmikumaran, tariff classification was not mentioned in Notification No. 77/74 which exempted broke. Shri Doiphode referred to a judgment of the Supreme Court in the case of J.K. Steels Ltd. (supra). We have respectfully gone through this judgment wherein inter alia the Supreme Court ruled that explanatory notes regarding the working of an Act issued by a Government Department for the assistance of their officials are inadmissible for the purpose of construeing the Act, and that it is not safe to presume that subordinate legislation can be made use of in interpreting a provision in the parent Act.
Further, the Supreme Court held that for finding out the scope of a particular levy, notifications issued by the Executive Government providing for exemption from that levy can be looked into as they disclose the overall scheme. We take note of this proposition laid down by the Supreme Court but as Notification No. 77/74 does not mention that broke is classifiable under Tariff Item 17, this proposition does not help the Department to argue that it was the intention of the Government to classify broke under Tariff Item 17 as paper. We do not forget, however, that a notification cannot lead to liability to duty or decide the classification. Here, Notification No. 77/74 is not useful as an aid to classification.
34. We also examined the argument of the learned SDR that the end-use is not the relevant criterion for classification. He referred to the judgment of the Supreme Court in the case of Dunlop India Ltd. and Madras Rubber Factory Ltd. Our respectful study of this judgment indicates that it supports the appellants' arguments rather than those of the Department, for, the Supreme Court ruled in this judgment that articles should be classified on the basis of popular sense and not in scientific and technical sense. They also ruled that in interpreting the meaning of words in a taxing statute, the acceptation of a particular word by the trade and its popular meaning should commend itself to the authority. We note that in this present appeal it is not the Departments' case that broke is sold as paper, known as paper or used as paper. It is commercially known as broke and we gathered from the hearing that it is used only to be recycled in the manufacture of paper. Therefore, while Shri Doiphode's argument that end-use is irrelevant is correct, we also take note of the other principles laid down by the Hon'ble Supreme Court with regard to classification.
35. We have also perused the four documents, listed e, f, g and h of para 3(i) supra. These documents help, in a meaningful way, to come to a proper decision in this appeal. The objections raised by the learned SDR, mainly on technical grounds, are over- ruled, especially as the Collector had ample opportunity to controvert the contents of these documents. We note the contents of these documents.
36. The nature of 'broke' is such that it obviously cannot be used for writing or printing of paper. As mentioned earlier there is no allegation that such waste of paper is sold in the market as paper.
Therefore, in the light of our detailed discussions in the foregoing paragraphs we hold that for the purpose of computation of clearances with reference to notification No. 25/84, the broke cannot be considered as a variety of paper or paper board. Its inclusion in the clearances of paper and paper board is not justified. We hold accordingly.
37. That brings us to the second question whether art paper and chromo paper were eligible for the exemption granted under notification No.25/84: We have carefully considered the arguments of the appellants. We have perused the Notification No. 25/84 as amended and note that the second proviso excludes from the exemption, among others, coated paper (including wax paper). There is no denial that art paper and chromo paper are coated papers. It may be correct that these are not, like other papers mentioned in the second proviso, industrial varieties of papers and are writing and printing varieties. All the same when the proviso, as it is worded, is clear, there is no warrant for us to supply words to the proviso to the notification. We, therefore, find against the appellants in this regard and held that art and chromo paper would not be eligible for exemption under notification No. 25/84.
38. The third question to be decided is whether ledger paper above 85 GSM will attract excise duty as writing and printing paper. We note that the very name of this variety of paper ("ledger paper") indicates that its use is for writing and printing only. We hold accordingly.
39. The next and final question is whether art board or chromo board would be eligible for exemption under notification No. 25/84. A perusal of the second proviso to the notification shows that the exclusion provided in this proviso is only in respect of coated paper. Coated board is not mentioned in the same. Therefore, we accept the pleas of the appellants in this regard and hold that art board/chromo board qualify for the exemption.
40. As a result we allow the appeal in respect of broke holding that it is not includible in the computation of clearances of paper and paper board for purposes of notification No. 25/84 as amended. We allow the appeal in respect of ledger paper and art board/chromo board. We reject the arguments of the appellants in respect of art paper/chromo paper.
Both the appeals are disposed of accordingly.