Union of India & Anr Vs. Babubhai Nylchand
Mehta  INSC 391 (18
Kasliwal, N.M. (J) Kasliwal, N.M. (J) Agrawal, S.C. (J)
1991 AIR 407 1990 SCR Supl. (3) 559 1991 SCC Supl. (2) 348 JT 1990 (4) 790 1990
Excises & Salt Act, 1944: Section 2(f) and Schedule Item 17(2)--Processed
Kraft Paper-- Assessability to duty.
respondent is the proprietor of a company which carried on business of
manufacturing Waterproof Kraft Paper.
company purchased kraft paper as well as other material from the open market
and combined these materials with kraft paper in its factory. The company
claimed that as the manu- facturing process was not carried out in bringing
into existence various kinds of kraft papers, it was not liable to pay any
excise duty in respect of the products produced in its factory.
Assistant Collector of Central Excise held that the kraft paper marketed by the
company was bituminised water proof packing papers which were different and
distinct products than the original kraft paper and hence were liable to
payment of excise duty.
company filed a writ petition in the High Court.
1earned Single Judge held that the process carried on by the company could not
be considered as manufacture of a new commodity with a different name and
different use. On ap- peal, the Division Bench affirmed the judgment of the
learned Single Judge.
this Court it was contended on behalf of the Revenue that the case was covered
by the recent decision of this Court in laminated Packings (P) Ltd. v.
Collector of Central Excise, Guntur,  Vol. 4 SCC 51 in which, in similar
circumstances, it was held that by the process of lamination of Kraft paper
with polyethylene, different goods came into being- The learned counsel on
behalf of the company tried to distinguish the Laminated Packings case. in the
alternative, it was urged that no evidence was placed on record by the
appellant to show that the goods in 560 question were known in the market
having distinct, separate and identifiable function.
the appeal, this Court,
(1) The coating and lamination and other process applied the company in its
factory amounted to manufacture, because kraft paper did not remain an ordinary
kraft paper, and as such it was liable to excise duty under Central Excise
Tariff Item No. 17(2). [564G] Laminated Packings (P) Ltd. v. Collector of
Central Excise, Guntur,  Vol. 4 SCC 51, followed.
Packaging Nailore v. Union of India,  ECR 2639, referred to.
the facts and circumstances of this case there could be no controversy that new
goods came into being, and laminated papers were sold in the market as
distinct, sepa- rate and different goods. [565B]