ivil Appeal No 1589 of 1988 etc
From the Order dated 611988 of the Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal No 2085 of 1985A in Order No 5 of 1988 A K Parasaran Attorney General AK Ganguli K Swamy P Parmeswaran and Sushma Suri for the Appellant
RN Bajoria SK Bagaria Padam Khaita Vivek Gambhir Praveen Kumar SK Bagga and RK Mehta for the Respond ents
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
These appeals are at the in stance of the revenue under section 35 L of the Central Excises  Salt Act 1944 hereinafter referred as to the Act 
Civil Appeal No 1589 appeal arises out of Order No 5 of 1988 A passed by the Customs Excise and Gold Control Appellate Tribunal New Delhi hereinafter referred to as the Tribunal 
The respondent used to manufacture different varieties of printing paper including wrapping paper falling under Item No 171 of the erstwhile Central Excise Tariff in their factory at Bansberia District Hubli
It is the appel lant s case that the respondent had violated the 1020 provisions of Rule 91 Rule 173 F and Rule 173 G of the Central Excise Rules 1944 inasmuch as they had removed 4000 kgs
of wrapping paper under Gate Pass No A 460 dated 9th February 1984 and 485 dated 17th February 1984 valued at Rs 13200 without payment of central excise duty
Show cause notice was issued to the respondent as to why appro priate duty of excise amounting to Rs3600 basic Rs 180 special and Rs 1650 cess totalling Rs379650 should not be recovered from them on the said quantity at the rate of Rs900 per MT and special duty at the rate of 5 of basic duty and cess 18 on value
Notice to show cause as to why penalty should not be imposed was also issued
Cause was shown by the respondent
It was the contention of the respondent that there was no infringement of the impugned provision and no duty was required to be paid on the excisa ble goods if it was captively consumed or utilised in the same factory as component part of the finished goods falling under the same tariff item and specified in Rule 56a of the Central Excise Rules 1944
It was further stated that in the instant case wrapped paper manufactured was captive ly consumed and utilised as component part of other varie ties of paper
Wrapping it was contended of finished product by wrapping paper is a process incidental and ancil lary to the completion of manufactured product under section 2f of the Act and wrapping is used as a component part of finished excisable goods attracting the benefit of the notification No 18A 83 CE dated 9th July 1983
The Super intendent Technical of Central Excise held otherwise
The respondent preferred an appeal before the Collector Ap peals Calcutta
The respondent contended before the Col lector that they were entitled to the benefit of notifica tion and it is well settled law in view of several judgments of High Court and orders of the Tribunal that wrapping of paper was a process incidental or ancillary to the comple tion of manufacture of paper as the printing and writing paper could not be sold in the market without being packed and wrapped by wrapping paper
The Collector Appeals however rejected the claim to exemption in respect of such wrapping paper in terms of the proviso to Rule 91
There was an appeal to the Tribunal
The Tribunal referred to its own decision in the case of Collector of Central Excise Bhubneshwar vs Orient Paper Mills Brajraj Nagar 135 which is the subject matter of the other appeal involved herein and set aside the order of Collector
Similar is the case in Civil Appeal Nos
3760 62 of 1988
In that case Ms Orient Paper Mills Brajraj Nagar respondents were manufacturers of various types of paper and paper board
They were also the manufacturers of wrap ping paper for packing or wrapping of 1021 other varieties of paper
Under the relevant notification the Central Government had exempted duty in respect of goods if these were consumed or utilised in a place where such goods were produced or manufactured under relevant rule either as raw materials or component parts for the manufac ture
Therefore in order to get the benefit of non levy of excise duty on wrapping paper it had to be established in both these appeals that the wrapping papers were consumed or utilised by the respondent assessees as component parts or raw materials for the finished products
The Collector Appeals in his order observed that when wrapping paper was used for making paper reamsreals it lost its original identity as wrapping paper and became a part and parcel of the paper reamreal and as such available for the benefit of amended Rules
Revenue disputed this finding
It was contended that the wrapping paper was not utilised or consumed in the manufacture of other paper
On behalf of the revenue it was contended before us in these appeals that in order to be non dutiable the wrapping paper must be either component part or raw material and must be consumed or utilised in the manufacture of the finished products
Wrapping paper cannot it was contended be deemed to be component part because it did not become an integral part of the packed paper
In this connection on behalf of the revenue learned Attorney General drew our attention to the fact that reliance had been placed on the decision of the Kerala High Court in Paul Lazar vs State of Kerala 1977 40 STC 437
On behalf of the respondent however Shri Bajoria placed reliance on section 2f of the Act which includes any process incidental or ancillary to the completion of a manufactured product
Therefore it was urged that all processes leading upto the stage of goods when the goods become completed for marketing would be within the process of marketing
In that view of the situa tion it was urged that wrapping paper was raw material or component part of the wrapped paper
It was further urged that revenue had itself considered the stage of wrapped or packed paper as the RGI stage ie the stage at which goods should be entered in the statutory production regis ter Manufacture  in the sense it is used in the excise law was not complete until and unless wrapping was done
It is law now that excise is a duty on manufacture
Manufacture is the process or activity which brings into existence new identifiable and distinct goods
Goods have been understood to be articles known as identifiable articles known in the market as goods and marketed or marketable in the market as such
See in this connection the observations of this Court in Bhor Industries Ltd Bombay vs Collector of Central Excise Bombay 602 South Bihar Sugar Mills Ltd etc
vs Union of India  Ors
   Union of India vs Delhi Cloth  General Mills Ltd 1963 Supp 1 SCR 586 and Union Carbide India Ltd vs Union of India and Ors See also the decision of this Court in Civil Appeal No 2215NA of 1988 Collector of Central Excise Baroda vs Ms Ambalal Sarabhai Enterprises judgment delivered on 10th August 1989
The finished goods were cut to size and packed paper which according to the Indian Standard and trade practice consisted of the wrapping paper and the wrapped paper
In South Bihar Sugar Mills Ltd s case supra it was held by this Court that the duty is levied on goods
As the Act does not define goods the legislature must be taken to have used that word in its ordinary dictionary meaning
The dictionary meaning of the expression is that to become goods  it must be something which can ordinarily come to the market to be bought and sold and is known to the market as such
The Tribunal found and there was material for the Tribunal to do so that the market in which articles in question were sold were paper packed and wrapped in paper
Therefore anything that enters into and forms part of that process must be deemed to be raw material or component part of the end product and must be deemed to have been used in completion or manufacture of the end product
This Court in the case of Empire Industries Ltd  Ors
vs Union of India  Ors
  has explained the concept of process  in Excise Law
In view of the principle laid down therein and other relevant decisions processes incidental or ancillary to wrapping are to be included in the process of manufacture manufacture in the sense of bringing the goods into existence as these are known in the market is not complete until these are wrapped in wrapping paper
In JK Cotton Spinning and Weaving Mills Co Ltd vs Sales Tax Officer 1965 16 STC 563 SC this Court while construing the expression in the manufacture or processing of goods for sale  in the context of Sales Tax Law though the concept is different under the Excise Law has held that manufacture of goods should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods
Where any particular process this Court further emphasised is so integrally connected with the ultimate production of goods that but for that process manufacture or processing of goods would be commercially inexpedient articles required in that process would fall within the expression in the manufacture of goods 
The Tribunal on the appraisement of all the relevant facts in the light of the principles indicated before upheld its own decision in the case of Orient Paper Mills
and in both the appeals accepted 1023 the manufacturer s contentions and dismissed the appeal
The revenue contends that the Tribunal has erred
Shri Bajoria for the respondent drew our attention to the decision of this Court in Collector of Central Excise vs Jay Engineering Works Ltd There the respondent was the manufacturer of electric fans and brought into its factory nameplates under Tariff Item 68 of the erstwhile Central Excise Tariff
The nameplates were affixed to the fans before marketing them
The respondent claimed the benefit of proforma credit in terms of notifica tion No 20179 dated 4th June 1979 which was for the purpose of relief on the duty of excise paid on goods fall ing under Tariff Item 68 when these goods were used in the manufacture of other excisable goods
The said notification stated that in supersession of the Notification No 17877 of the Central Excise dated 18th June 1977 all excisable goods on which duty of excise was leviable and in the manu facture of which any goods falling under Item No 68 have been used were exempt from so much of the duty of excise leviable thereon as was equivalent to the duty of excise already paid on the inputs
In that case the question before the Tribunal was whether the nameplates could be considered as component part of the electric fan so as to be eligible for proforma credit under the exemption notifi cation
It was found by the Tribunal that no electric fan could be removed from the factory for being marketed without the nameplate
The Tribunal also noted in that case that even though it could be said that electric fans could func tion without the nameplates for actual marketing of the fans the affixation of the nameplate was considered an essential requirement
To be able to be marketed or to be marketable it ap pears to us in the light of facts in the appeals that it was an essential requirement to be goods to be wrapped in paper
Anything required to make the goods marketable must form part of the manufacture and any raw material or any materials used for the same would be component part for the end product
In our opinion the Tribunal was right in the view it took
There is no ground to interfere in these appeals
Before we conclude we must further observe that Shri Bajoria drew our attention to the judgment and order of the Tribunal in Appeal No EDSBA No 2734 83C Collector of Central Excise vs Orient Paper Mills where the appeal has been preferred and in the  petition in appeal to this court by the revenue under section 35Lb of the Act where the question involved was whether the proforma credit under rule 56A of the Central Excise Rules 1944 in respect of said 1024 packing and wrapping paper used for packing admissible or not is punishable or not the revenue has pleaded that the unit of paper for sale was ream  duly packed in wrapping paper and the real is cured and such real is also wrapped in the wrapping paper
Therefore from that statement it further appears that such ream or real are wholesale pack ages and are stored in packed condition
If that is the stand of the then it cannot be contended that wrapping paper is not integral part of the manufacture
If that is so any material utilised must be component part of the raw material used or consumed in the finished products
Apart from that under rule 56A of the Rules the assessee would be entitled to the benefit of deduction of the duty to be charged on all wrapping papers if any
Nothing contrary to the aforesaid was indicated to us by the revenue though asked to do so
In the aforesaid view of the matter this question involved in these appeals is really of academic interest
These appeals however have no merit for the reasons indicated above and are accordingly dismissed without any order as to costs
GN Appeals dismissed


Summary:
The appellant company carried on the business of manu facture and sale of paper
It claimed exemption from payment of excise on paper core which accordingly to the appellant was used in the manufacture of paper
The case of the appel lant was that the paper cores used in the manufacture of paper constituted component parts within the meaning of Notification No 20179 dated June 4 1979 as amended
The case of the respondent on the other hand was that the paper cores were really used by the appellant as packing material after the paper had already been manufactured for taking it to the market and did not constitute component parts of paper
The Assistant Collector Central Excise rejected the claim of the appellant but its claim on appeal as regards exemption from duty on paper cores was allowed by the Appel late Collector
The Customs Excise and Gold Control Appellate Tribunal however allowed the appeal of the Reve nue
Partly allowing the appeal this Court HELD 1
Even though the term component parts has not been defined either by the Act or by the Notification the term manufacture has been defined in section 2f of the 
This definition contem plates that manufacture includes any process incidental or ancillary to the completion of a manufactured product
895D 2
In the absence of any definition of the term compo nent partS it is permissible to refer to the dictionary meaning of the word component
Accordingly to the diction ary meaning the word component inter alia means a con stituent part
895F 3
If the use of paper core is necessary in any process incidental 893 or ancillary to the completion of paper as marketable goods and it would consequently be commercially inexpedient to sell paper without the use of paper core it would certainly be a constituent part of paper and would thus fall within the purview of the term component parts used in the Noti fication
896F Ms JK Cotton Spinning  Weaving Mills vs Sales Tax Officer Nagpur and another 1965 1 SCR Page 900 and Bhor Industries Ltd Bombay vs Collector of Central Excise Bombay   referred to
Paper is made 1 in the form of rolls and 2 in the form of sheets and the paper which is sold in the form of sheets is cut in desired sizes
Even though rewinding has to be done both for manufacturing roll paper as well as sheet paper use of paper core in rewinding is necessary only with regard to manufacture of roll paper inasmuch as it is the paper as rolled on paper core which is delivered to the customer in the form of rolls and unless in the process of rewinding paper core is used paper cannot come out of the machine in rolls so as to be sold as a marketable commodity known as roll paper
The use of paper core however is not necessary for the manufacture of paper sheets
897E 899G 900A 5
Use of paper core would come within the purview of the expression any process incidental or ancillary to the completion of manufactured products used in the definition of the term manufacture in section 2f of the Act and for the same reason paper core would also be constituent part of paper and would thus fail within the term component parts used in the Notification in so far as manufacture of paper in rolls is concerned
Paper core however cannot be said to be used in the manufacture of paper in sheets as compo nent parts
900E F