ivil Appeal No4534 of 1984
From the Order No C 496 dated 237
1984 of the Cus toms Excise and Gold Control Appellate Tribunal New Delhi in Appeal No1117 of 1980 C
Harish N Salve Ravinder Narain PK Ram and DN Mishra for the Appellant
Govind Das Mrs Sushma Suri and RP Srivastava for the Respondents
The Judgment of the Court was delivered by RANGANATH MISRA J
This appeal under Section 35 L of the 1070 Central Excise and Salt Act 1944 hereafter referred to as the Act  is directed against the Appellate order of the Customs Excise and Gold Control Appellate Tribunal
The appellant buys white paper from the market on which duty has already been paid and manufactures flock paper out of it
According to the appellant it is registered as a Small Scale Industry with the Directorate of Industry Government of Maharashtra and employs nine workers in all
The process of conversion of paper into flock paper is said to be as fol low Solution of PVA Emulsion thickened with cmc
and coloured with dyes is applied on one side of paper manually with the help of hand made screen then flock is sprinkled by hand with the help of man made sheeves
There after paper is put on dryers for drying and finally when the paper is dried extra flock is removed manually by tapping with fingers and the paper becomes ready
 The appellant had made it clear to the Assistant Collec tor that it had no coating or laminating machine and the process was essentially manual
It claimed the benefit of Notification No 6876 CE issued by the Central Government
The Assistant Collector issued a show cause notice and rejected the claim of the appellant after cause was shown and by order dated 27th of July 1979 held that the appel lant should take out the requisite excise licence and start paying central excise duty on flock paper under Tariff Item No 172 of the Central Excise Tariff
He also directed the appellant to pay the duty for a period of five years preced ing the date of issue of the show cause notice
A small penalty was also imposed
The appellant carried an appeal to the Appellate Collector against the aforesaid order who by his order dated 4th of October
1979 held At the time of hearing they appellants produced a piece of flock paper manufactured by them and submitted that if this flock paper was put into the glass of water the flocking material would disappear and thereaf ter it would be seen that the paper which has been used for this purpose is only printed with the colour on one side
The experiment was performed in my office and it was seen that the paper was printed with colour on one side and the other side remained as it is after the flock material has been fixed to it
The appellants submitted that their appeal may be decided without a personal hearing as any delay in personal hearing would cause them a great hardship and that they 1071 being a small scale manufacturer their activi ties have come to virtual halt because of this order of the Assistant Collector
I have gone through the appeal petition and I find that the Assistant Collector has agreed that one side of the paper is coloured by printing with colour but since the flocking material had been stuck to this paper the Assistant Collector has held it to be flock paper and demanded the duty on it
The wording of the Notification No 6876 as amended under Sr No 3Aii clearly show that as long as the one side of the paper has been printed with the colour whatever other process is undertaken of further polishing or glazing etc
is immaterial
In this case the first operation is that of printing one side of the paper with colour which has been established beyond doubt by the appellants
What further process is done on this paper is immaterial as glazing and embossing etc
have been allowed under this notification to be done to the coloured side of the paper
In view of this the order of the Assistant Collector is set aside so far as the classification of this material is concerned    On 591980 a show cause notice purport ing to be under Section 362 of the Act was issued by the Central Government to the appel lant which inter alia stated On examination of the records of the case the Central Government are tentatively of the view that the order of the Appellate Collector is not proper legal and correct
The process of manufacture of flocked proper cannot prima facie be considered to be equivalent to print ing of colour inasmuch as use of ink appears to be inevitably linked up with a printing process as understood and no ink was used in the particular process
Hence it would appear that the flocked paper manufactured by the assessee would be perhaps not eligible for the benefit of notification No 6876 The Central Government therefore in exer cise of the powers vested in them under sec tion 362 of the Central Excise and Salt Act 1944 propose to set aside the order of the Appellate Collector of Central Excise Bombay or to pass such order as is deemed fit after consideration of the submissions of the asses see    1072 The appellant showed cause and with the change in the scheme of the Act the matter came before the Tribunal for disposal
Before the Tribunal on behalf of the appellant two contentions were raised firstly the Collector was right in holding that the benefit of the Central Government Notification was available to the appellant and secondly the proceeding was barred by limitation
The Tribunal found with reference to the opinion indicated in the show cause notice as follows The Government of India was wrong to speak of ink as inevitably linked up with a printing process
This is only the character printing or word printing
But printing is not only word printing it extends to numerous other processes whereby a surface is coated or coloured or is given an imprint to represent reproduce cover decorate etc
and it is not just ink that is used for printing
 It further found that the Appellate Collector was wrong in holding that the appellant was entitled to the benefit of the notification in question and concluded that there was no colour printing it did not deal with the question of limi tation and set aside the Appellate order
Both the aspects raised before the Tribunal are reiter ated before us in this appeal namely 1 The Appellate Collector was right and the Tribunal is wrong in holding that the appellant was not entitled to the benefit of the notification and 2 The show cause notice was issued after the expiry of the period of limitation and therefore the Tribunal had no jurisdiction to reverse the order of the Collector
The Notification No 6876 dated 163
1976 as far as relevant
reads thus Table Sl
No Description Rate of Duty Condition 1 2 3 4 1
     2
     3
     1073 4
Following varieties of paper namely i     ii Converted types of Nil If it is proved to the paper commonly known satisfaction of proper as imitation flint officer that the app paper or leatherette ropriate duty of paper or plastic coated excise or additional paper or by any other duty leviable under name obtained by one section 2A of the side of paper being subjec Indian Tariff Act ted to printing of colour 1934 32 of 1934 as with or without design the case may be has irrespective of the fact already been paid in whether or not such paper respect of the paper is subsequently varnished used in their manu or glazed by chemicals or facture
embossed and falling under sub item 2 of the aforesaid Item No 17
iii     underlining by us The appellant has throughout claimed that it buys duty paid paper from the market and subjects one side thereof to colour printing without design and while so printing adhe sive material is added to hold the spread of flocking done by hand
The extra flocking material is removed manually and the paper is ready
The notification is in wide terms paper by any name is intended to be covered by it
After the process referred to is undertaken irrespective of the fact whether or not such paper is subsequently treated in the manner indicated therein the benefit appears to have been intended to be made available
The purpose of the notifica tion is that the paper which would have otherwise fallen under Item 172 of Excise Tariff would if covered by the notification becomes exempt from duty
In an affidavit filed in this Court the respondent department has stated It is further submitted that the product does not merit classification as a paper obtained by one side of paper subjected to printing of colour  under notification No 6876 CE
It is also submitted that in the manufacture 1074 of flocked paper the process of application of adhesive coloured or otherwise to the surface of the base paper through a silk screen is printing of adhesive only and not one of imparting colour
The paper obtained immedi ately after printing with adhesive coloured or otherwise is not a finished product itself as in the case of papers envisaged in the notifi cation The learned counsel for the appellant produced a sheet of flocked paper in court during hearing of the appeal
We carried the experiment as indicated in the order of the Appellate Collector and found that the adhesive and flocking material got washed out and what remained was the base paper coloured on one side and white on the other
This is exactly what the Appellate Collector had found
The Tribunal rightly indicated that printing did not require ink and many other processes would also be covered by the term printing
The appellant has been pleading from the very beginning that the process carried on by it con sists of a colour printing on one side of the paper
The Tribunal has recorded a finding that the appellant s process is to paste one side of the paper with adhesive material
Whether adhesive material is mixed to colour or colour is mixed with adhesive does not make any difference so long as a process of screen printing is carried on to colour the paper on one side
The counter affidavit of the respondents in this Court accepts the position that there is screen printing and that has been the case of the appellant
The words used in the notification make it clear that irrespective of the fact whether or not such paper is subse quently varnished or glazed by chemicals or embossed would be entitled to the benefit of the notification
The word subsequently  makes it clear that the process need not be simultaneous
The Tribunal failed to notice this aspect
We are of the view that the process carried on by the appellant is covered by the notification and it is there fore not liable to pay any duty
We set aside the finding of the Tribunal and restore that of the Appellate Collector
The appeal is allowed
There would be no order for costs
PSS Appeal al lowed


Summary:
The Notification No 6876 dated March 16 1976 issued by the Central Government exempted converted types of papers commonly known as imitation flint papers obtained by one side of paper being subjected to printing of colour irre spective of the fact whether or not such paper is subse quently varnished or glazed by chemicals or embossed and failing under item 172 of Excise Tarrif if it was proved that the appropriate duty of excise has already been paid in respect of the paper used in their manufacture
The appellant registered as small scale industry which buys white paper on which duty had already been paid and manufactures flock paper out of it by a manual process sought exemption from payment of duty under the aforesaid notification
His claim was rejected by the Assistant Col lector
That order was set aside by the Appellate Collector who took the view that the wording of the notification showed that as long as the one side of the paper has been printed with the colour whatever other process is undertaken of further polishing or glazing etc
is immaterial and that in this case the first operation of printing of one side of the paper with colour has been established
Thereafter the matter went before the Customs Excise and Gold Control Appellate Tribunal under section 362 of the Salt Act 1944 which found that printing is not only word printing it extends to numerous other processes whereby a surface is coated or coloured or is given an imprint to represent reproduce cover decorate etc
and it is not just ink that is used for printing
Since in its opinion in the instant case there was no colour printing it set aside the Appel late order
Allowing the appeal under section 35 L of the Central Excise and Salt Act 1942 the Court 1069 HELD The process carried on by the appellant is covered by the Notification No 6876 dated March 16 1976 and it is therefore not liable to pay any duty
1074G The purpose of the notification is that the paper which would have otherwise fallen under Item 172 of Excise Tariff would if covered by the notification become exempt from duty
The words used therein make it clear that irre spective of the fact whether or not such paper is subse quently varnished or glazed by chemicals or embossed it would be entitled to the benefit of the notification
The word subsequently  makes it clear that the process need not be simultaneous
The Tribunal failed to notice this aspect
1073FG 1074F The Tribunal rightly indicated that printing did not require ink and many other processes would also be covered by the term printing
The appellant has been pleading from the very beginning that the process carried on by it con sists of a colour printing on one side of the paper
The Tribunal has further recorded a finding that the appellant s process is to paste one side of the paper with adhesive material
Whether adhesive material is mixed to colour or colour is mixed with adhesive does not make any difference so long as a process of screen printing is carried on to colour the paper on one side
The fact of screen printing is accepted by respondents and that has been the case of the appellant
The Appellate Collector was therefore right in holding that the appellant was entitled to the benefit of the notification
1074DE 1071D