1. This is a matter arising out of Show-Cause Notice F.No.198/19/188/78-CX. V. dated 23rd Jan., 1979 issued by the Additional Secretary to the Govt. of India, Ministry of Finance, 'Deptt. of Revenue under Section 36(2) of the Central Excise & Salt Act, 1944 to M/s. Entremonde Polyecoaters Pvt. Ltd., asking M/s. Entremonde Polyecoaters to show-cause why the order of the Assistant Collector of Central Excise, Bombay which had been over-ruled by the Appellate Collector of Central Excise, Bombay by his Order-in-Appeal No. 111/78 dated 28-2-78 should not be restored. The Assistant Collector of Central Excise, Nasik had passed an order No. V/17(17) -455/76-DA 7213 dated 30th April, 1977 that the plastic coated paper manufactured by M/s. Entremonde Polyecoaters, Nasik should be reclassified under Tariff Item 17(2) and should pay duty at the appropriate rate. He also ordered the recovery of Central Excise duty at appropriate rates on the quantities of plastic coated paper removed by the assessees for the period '74-76 till date under provisions of Rule 10 read with Rule 173-J of the Central Excise Rules. When the matter was heard on 6-9-1983 the counsel for the department, Mr. A.K. Jain said that the product under-vent no kind of printing with colour. There was merely a coating with a PVC sheet rolled on to the paper even though the PVC sheet was coloured. Printing in colour involves the use of ink to impart to the paper a colour whether by printing or by means of rollers or by a spray or by any other method. The paper itself must partake of the colour. It is only then the exemption for paper, to which printing with colour has been done, would be earned under Notification No.68/76.
2. The Counsel for M/s. Entremonde Polyecoaters, Mr. J.M. Patel, Advocate began by saying that the show-cause notice dated 23rd Jan., 1979 issued by the Govt. of India was unsatisfactory for many reasons-one being that it does not say why the Central Govt. was of the view that coating by PVC was different from printing of colour contemplated in Notification No. 68/76. In a matter of this kind it was necessary for the reviewing authority to spell out the reasons which make it think that a different view of the matter should be taken. When the reasons are not given the party is justified in feeling that the reviewer has already come to a conclusion and would not be persuaded to change. In any event when the reasons are unknown it is impossible for the notice receiver to contest and to show-cause why the action contemplated should not be taken.
3 The Counsel also argued that even on merits the PVG coating on the paper was sufficient to place the product under the category of paper with printing with colour which would, therefore, earn the exemption contemplated by Notification No. 68/76. He resisted the claim of the learned counsel for the Department by saying that colouring coating is also colour printing. It is not correct to say that it does not amount to printing, and it is not necessary that there should have been ink in the printing. Notification No. 68/76 refers to goods falling under 17(2); the Assistant Collector himself places the goods under 17(2).
They have used only duty-paid paper. In 1983 E.L.T. 1123 Golden Paper Udyog Pvt. Ltd., Faridabadv. Collector of Central Excise, Delhi, this Tribunal held that there cannot be two manufactures attracting two levies at two different stages under the same sub-item. Once a paper has paid duty as paper or paper-board under Tariff Item 17(2) it will not attract duty again after being subjected to further processes. He also said that in IS Specification for treated fabrics there is no restriction to the manner of printing. It is not in any way restricted to printing by a printing press.
4. The Show-Cause Notice of the Assistant Collector was not a notice-cum-demand nor did it show any amount and so cannot be used to confirm a demand as was later done by the Assistant Collector ordered recovery of Central Excise duty at appropriate rate from 17-4-1976 till date. The counsel for M/s. Entremonde Polyecoaters Pvt. Ltd. emphasised that both the Appellate Collector and the Assistant Collector spoke of their product as classifiable under 17(2). The Government of India itself does not seem to be of any other view but that the product was classifiable under 17(2).
5. In reply the learned Counsel for the Department said that M/s.
Entremonde Polyecoaters had accepted the Order-in-Appeal passed by the Appellate Collector. It, therefore, cannot now complain against the Show-Cause Notice. The Order-in-Appeal holds that the product is a paper and, therefore, being a paper it must be assessed in accordance with that item and with any exemptions to which it may be entitled. The Tariff Item had two sub-items (1) and (2). The goods were assessable under sub-item (1) whereas the exemption was for goods falling under sub-item (2).
6. M/s. Entremonde Polyecoaters Pvt. Ltd. at one time had attempted to have the goods assessed under Item 15A, but this does not appear to have found favour with the Appellate Collector who held that the product was definitely known as paper in the market and corresponds more to the definition of 'paper' rather than the definition of articles of plastics.
7. We will first deal with Mr. Patel's arguments that the paper already having paid duty as paper cannot be charged to duty first as paper. For this he quoted the order of the Tribunal 1983 E.L.T. 1123. However, there is a difference between that case and this. In that case the paper on which processing was carried out was a paper which had paid duty under 17(2). The question was whether that paper should pay the same duty again under the same item 17(2) when it is bituminised to render it waterproof. That paper was a kraft paper which was assessable under Item 17(2). The paper here was a paper falling under sub-item 17(1). Therefore, when duty is to be charged under the present heading 17(2) it cannot be said to be a case of charging duty twice. An article can be said to have been charged the same duty twice only when it has paid that particular duty which is leviable for it or its group in the Tariff Item or sub-item. There may be two or three articles and varieties of the same article grouped under one heading or sub-heading and one rate of duty is leviable for that group. An article is assessed under that group which specifies it by name or by any other method and style. The requisite duty having been ascertained in the assessment and after * having suffered that duty specified for that group, the article cannot be placed again in that group and made to pay the same duty which it had once paid before. This is not to say that the different articles in the group cannot be specified under their own individual headings with individual duties of their own to pay. In such a case, duty can legitimately be recovered on the same article when it moves from one group to another according as it changes its properties and qualities and if such change attracts a good to group or item or heading. In that case the article having changed and migrated from one group to another, cannot be said to be having to pay the duty of the first group when it pays the duty of the second head because of the change in its property or in any other characteristic. The learned counsel for M/s. Entremonde Polyecoaters has not produced sufficient evidence to show that duty under item 17(2) was paid by the paper before its treatment/lamination with a plastic sheet.
8. We are not impressed by the argument that the notice had no amount specified into and so, therefore, connot be used to confirm the demand.
For an assessee who is well conversant with Central Excise words and the assessment that is done on its goods, the absence of the amount of duty is not a problem and in our opinion cannot vitiate the notice.
9. We are in agreement with the argument of the counsel for the Collector that the product by M/s. Entremonde Polyecoaters is not entitled to the benefit it received at the hands of the Appellate Collector.
10. One of the arguments presented on behalf of M/s. Entremonde Polyecoaters Pvt. Ltd. is that this Tribunal has decided in the case of Golden Paper Udyog Pvt. Ltd., Faridabadv. Collector of Central Excise, Delhi (Order No. 109/83-C dated 25th May, 1983) that duty-paid kraft paper which is bitu-minised, cannot be assessed to duty again under item 17(2) after the process of bituminisation because such process does not amount to manufacture. Here also the paper used by M/s.
Entremonde Polyecoaters is duty-paid paper. Therefore they cannot be made to pay the duty again. The decision of the Tribunal in the Golden Paper Udyog is one in which the duty-paid kraft paper after processing and bituminisation remains described by the same sub-item 17(2). Since that duty has been paid, it would not be correct to demand duty again on the same article. The paper manufactured by Entremonde has been held to be dutiable under 17(2) but the base paper from which the product was made was, as recorded by the Assistant Collector in his Order-in-Original, a printing and writing paper. It is clear that it is not the same kind of case that came before the Tribunal as the Golden Paper Udyog matter. M/s. Entremonde's product has not paid 17(2) duty before ; it paid onlv 17(1) duly. It appears to have migrated, so to say, from one duty zone to a different duty zone when it was subjected to the process by M/s. Entremonde's factory. That decision, therefore, will not protect M/s. Entremonde's product from being charged to duty under 17(2), 11. To qualify as a paper that has been printed with colour must Involve imparting of colour to the paper. It is not enough that a coloured sheet of plastic should merely adhere to the paper so that one side of it appears coloured. It must be borne in mind that what is coloured is the plastic sheet, the paper itself having remained uncoloured, not having undergone any process of printing with colour.
It is only an adhesion of the laminate to the substrate and not the substrate that has been coloured or that partakes of colour. We accordingly consider that the action of the Appellate Collector was wrong and that the product presented by M/s. Entremonde Polyecoaters Pvt. Ltd. for assessment was correctly refused free assessment by the Assistant Collector.
12. We accordingly set aside the Appellate Collector's order and restore the Assistant Collector's order, as it was on the day it was passed.
14. The instant proceeding is in consequence of a notice to show-cause under Section 36(2) of the Central Excises and Salt Act as to why the order of the Appellate Collector in favour of the assessee, M/s.
Entremonde Polyecoaters, should not be set aside and the order of the Assistant Collector restored. On transfer to this Tribunal persuant to Section 35(P) of the Act, the matter was to be heard as an appeal by the Collector (at whose instance the show-cause notice was issued) against the order of the Appellate Collector. The array of parties should show the Collector as the Appellant and not M/s. Entremonde Polyecoaters. Indeed, we heard the submissions made for the Revenue first, as the Appellant and thereafter the Counsel for M/s. Entremonde in reply. I would, in the circumstances, treat and otherwise refer to the Collector of Central Excise as the Appellant and M/s. Entremonde as the Respondent.
(a) The relevant period was, as mentioned by the Assistant Collector for the first time in his adjudication order dated 13-4-1977 (it was not mentioned in the undated show-cause notice received by the Appellant on or about 12-2-1977) from 17-4-76 to 13-4-1977-the date of the order in original itself.
(b) Two classification lists dated 9-4-1976 and 17-10-1976 respectively were filed by the Respondent. They were both approved - the first on 17-4-1976 and the second on 1-11-1976.
(c) In the aforesaid approved classification lists, the goods, in question, were shown to fall within item 17(2) of the 1st Schedule and the benefit of Notification No. 46/73 dated 1-3-1973 as amended by Notification No. 68/76, dated 16-3-1976 was claimed and allowed.
(d) It is to be noted that the approval was not provisional in any manner whatsoever.
(e) Nevertheless, in February, 1977, a notice was issued to the Respondent :- (i) alleging, inter alia, that the goods in question were ineligible for the exemption in Notification No. 68/76 dated 16-3-76 for the reason that the plastic laminated paper, "was void of printing of colour which is the essential qualification" for availing of the benefit of the aforesaid Notification; and (ii) requiring the Respondent to show-cause as to why the request for exemption should not be rejected, and the duty at the appropriate rate should not be demanded under Rule 10 read with Rule 173 (J) of the Central Excise Rules, 1944.
(i) the process carried on by the Respondent amounted to coating of plastic materials on paper rather than printed-which was transfer of ink or pigment from a printing surface; (ii) consequently, the Respondent was disentitled to the benefit of Notification No. 68/76 - speaking, as it does, of printing of colour on one side of paper; (iii) the Assistant Collector is empowered to modify, in review, the orders passed earlier either by himself or his predecessors under Sub-Rule 5 of Rule 173B of the Central Excise Rules, 1944, whereunder, a modification of the rate or rates of duty could always be effected by the proper officer under intimation to the assessee whenever a dispute about the rate of duty is finalised or a modification in the rate or rates is necessitated; (iv) nor can it be contended that the product manufactured by the Respondent is not 'paper'. The product is printing and writing paper basically and it is only the process of coating that was carried out.
(i) the reclassification of the product in question manufactured by the Respondent under item 17(2) of the 1st Schedule; and (ii) recovery of duty at the appropriate rates on the paper removed during the period from 17-4-76 till the date of order under Rule 10 read with Rule 173(J) of the Rules.
(h) On Appeal, the aforesaid order was set aside and consequential relief granted to the Respondent on the grounds, inter alia, that:- (i) in terms of the notification in question, all that was required for its applicability was that one side of the paper should be subjected to printing of colour, not necessarily by means of a printing press; (ii) the notification speaks of flint paper, leatherette paper etc.
for all of which one side should be coloured. This condition has been fulfilled in this case, if printing of colour is to be treated as imparting of colour.
(i) Curiously enough, the learned Appellate Collector had himself came to an entirely contrary conclusion in another case on identical issues four days after he pronounced his order in the instant case.
That was the case of M/s. Shri Vindhya Paper Mills Ltd. heard by him a few days after the hearing in this case. This was one of the reasons that may well have prompted a review under Section 36(2) of the Act (as it read then).
(j) Be that as it may, it is in consequence of the issue of the notice for review that the Respondent came up before the Government, answered the show-cause notice, and made his submissions as well, in a personal hearing, on or about 28-2-81. No order was pronounced.
The case was transferred, however, to the Tribunal on its constitution.
16. One of the issues that were agitated right through and even before us was the question of competence and jurisdiction of the Assistant Collector to review an order of classification-his own or that of his predecessors. [Grounds 1 and 2 in the Memorandum of Appeal before the Appellate Collector and para (1) of the reply dated 14-3-1977 to the show-cause notice]. This issue was not dealt within _ the order proposed to be made by my learned Brothers, and has occasioned this dissenting order proposed by me, much to my regret.
(a) it is axiomatic in law that a power of review has to be granted expressly or by necessary implication. Approval of a classification list, being quasi-judicial, there can be no question of its review- such power not having been either expressly or by necessary implication conferred under the provisions of the Central Excise Act or the Rules. [(1) 1981 E.L.T. 565-Madras Rubber Factory v. Asstt.
Collector-of Central Excise, and the cases cited therein; (2) 1983 E.L.T. 34- Indian Organic Chemicals v. Union of India; and (3) 1977 E.L.T. 144 -Khazanchi Paper & Board Mills v. Supdt. of Central Excise, Kanpur]; (b) the Assistant Collector relied upon Sub-rule (5) of Rule 173B of the Central Excise Rules, 1944 as the specific provision empowering him to modify the classification list once approved; (c) Rule 173-B, cited in the notice dated 16-1-1982, speaks of the process of submission and approval of classification lists of excisable goods. In terms thereof : - (i) on the submission of a classification list in a prescribed form, "the proper officer [defined to mean the Centra! Excise Officer having jurisdiction over the premises of the producer of any excisable goods-Rule 2(x) and (xi) of the Rules] shall, after such enquiry as he deems fit, approve the list with such modifications as are considered necessary" and return one copy of the approved list to the assessee who shall determine the duty payable on the goods; (ii) if any delay is anticipated for the approval either on account of the enquiry or otherwise the assessee may be permitted, on request, to avail himself of the procedure in Rule 9(B) for provisional assessment; (iii) if in the list approved, an alteration becomes necessary because of the commencement of manufacture of excisable goods not listed, or the intention of removal of non-excisable goods not listed or a change in the rate or rates of duty listed or "by reason of any amendment to the First Schedule to the Act, a change in the item number and sub-item", the assessee is to file a fresh list (Sub-rule 4); (iv) when the dispute about the rate of duty has been finalised or for any other reasons affecting rate or rates of duty, a modification of the rate or rates of duty is necessitated, the officer shall make such modification and inform the assessee accordingly (Sub-rule 5); (d) once, therefore, after such enquiry as he may deem fit, the classification list is approved, it may be altered for three specified reasons only. The third of such reasons-relevant in the facts of this case- is where there is a change in the rate of duty or by reason of amendment to the 1st Schedule, a change in the item number itself; (e) a change in the rate of duty, as is well understood, is statutory.
It is not, by any means, a change in the rate of duty that could be effected by the "proper officer" on his own. Much less can it comprehend a reclassification. Rate of duty is not synonymous with classification or reclassification. Classification determines the rate of duty but every change in the rate of duty does not necessarily involve reclassification. If it were reclassification and consequent change in the rate of duty that was meant, there was no reason why it should not be adverted to specifically. Similarly, a change in the item in the First Schedule is statutory; (f) "any other reason" in Sub-rule (5) has reference only to the reasons set forth in Sub-rule (4). It cannot be reasons other than those already enumerated in Sub-rule (4). But, even if it were assumed that the reasons for alteration of the approved classification list in Sub-rule (4) are not exhaustive and there may be other reasons as well, it should, in terms of Sub-rule (5), be a reason affecting rate or rates of duty and the modification actually to be made is only in respect of the rate or rates of duty and not in regard to classification. The modification in the rate or rates in terms of Rule 173-B(5) is merely ministerial in consequence of statutory changes therein. This is. perhaps, the reason why no further enquiry is prescribed, as it should, if it were a change in classification itself; (g) in our view, therefore, Rule 173-B(5) does not amount to investing the proper officer of a power of review of an approved classification list, either expressly or by necessary implication, with a view to effect modifications therein after such enquiry as he may deem fit; (h) in 1981 E.L.T. 114 (Bawa Potteries v. Union of India), it was the question of existence of a power of review in terms of Rule 10 of the Rules, as it read at the material time (now Sec. 11-A of the Act), that came up for decision -not the power of review of a classification list. A short levy cannot occur except in the process of assessment. If, after assessment, it becomes apparent that in consequence of misconstruction or misstatement, duties had been short levied, a review of the assessment is implicit in the power expressly conferred to recover the same. The ratio of the case in 1981 E.L.T. 114 cannot be relevant to the facts of the case in hand, since there has been no short levy in consequence of an assessment.
Mere payment of duty in accordance with a classification list is not an assessment,"a quasi-judicial process which involves due application of mind to the facts as well as the requirements of law" \Assistant Collector of Central Excise v. National Tobacco Co. of India Ltd - A.I.R. 1972 S.C.2563 : 1972(2) S.C.C. 560]. Further, "it is not a factual or presumed levy which, could, in a disputed case, prove an 'assessment'. This has to be done by proof of the actual steps taken which constitute 'assessment' " (ibid). In the instant case, there was nothing to show that any assessment took place and a short levy came to light as a result thereof. It was purely a case of a review of an approved classification list and consequential demand for payment of differential duty; (i) in J. K. Synthetics v. Union of India (1981 ECR 333), the assessee applied for rectification of previous assessments and grant of consequential refund. The case for such rectification in completed assessments was ultimately allowed in Revision proceedings before the Government of India. Nevertheless, the entire amount claimed was not refunded on the basis of trade notices and circulars issued. Further the assessee was told that duty would be continued to be collected on a basis other than that approved finally in the Revision proceedings. In a Writ Petition for enforcing a refund of the amounts collected in excess earlier and for directions for assessment on an appropriate basis, it was held that, notwithstanding the axiomatic rule that the principles of Res-judicata and estoppel are inapplicable to tax cases, a decision in assessment is not to be departed from capriciously. There should he fresh facts, or change in the law or a failure to notice material facts or considerations to warrant any departure from the decision of the Central Government in Revision. It would be observed that the decision is not one in relation to competence or jurisdiction for a review. It is a case where, once a review is competent or within jurisdiction, the reasons justifying a review were laid down. Even so, it was held therein, that while the principles laid down preclude the same authority from revising an earlier decision in assessment arbitrarily, it is still open for higher authorities to exercise their powers of revision or review under the Act; (j) if no power of review of an approved classification list has been conferred on the "Proper Officer", either expressly or by necessary implication, it is not as if the Revenue are stuck with it without any remedy for rectification or modification. It could have been effected by the Collector by way of revision under Sec. 35A(2), as it read at the material lime, or presently by way of an appeal to the Collector (Appeals) under Section 35E(2); (k) further, while an approval for a classification list filed earlier can relate back to the date of filing the list, a modification in the classification list or in other words a subsequent revocation of an approval given earlier is wholly prospective. Obviously, till the earlier approval is revoked by a quasi-judicial order, it continues to subsist. A modification in the classification list or revocation of an approval of a classification list granted earlier operates from the date thereof and is not retrospective. That this is so would appear to have been accepted by the Government of India in their order in 1981 E.L.T. 958 (in re : Navin Industries, Bhavnagar). Unless the classification list is modified or approval thereof revoked there could not be a short levy, except after actual assessment in terms of Rule 10 of the Rules (now Section 11 A of the Act).
18. In the result, I for one, would think that the Asstt. Collector had no jurisdiction to review classification list, previously approved, on his own. Consequently, his adjudication order was void and subsequent proceedings arising out of it were all of no consequence whatsoever.