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PETITIONER: UNION OF INDIA AND ANR.

       Vs.

RESPONDENT: BABUBHAI NYLCHAND MEHTA

DATE OF JUDGMENT18/12/1990

BENCH: KASLIWAL, N.M. (J) BENCH: KASLIWAL, N.M. (J) AGRAWAL, S.C. (J)

CITATION:  1991 AIR  407            1990 SCR  Supl. (3) 559  1991 SCC  Supl.  (2) 348 JT 1990 (4)   790  1990 SCALE  (2)1269

ACT:     Central  Excises  &  Salt Act, 1944:  Section  2(f)  and Schedule  Item 17(2)--Processed Kraft Paper--  Assessability to duty.

HEADNOTE:     The  respondent  is the proprietor of  a  company  which carried on business of manufacturing Waterproof Kraft Paper. The 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.     The 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.      The  company filed a writ petition in the  High  Court. The 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.      Before  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, [1990] 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. Allowing the appeal, this Court,

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   HELD:  (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, [1990] Vol. 4 SCC 51, followed.     Standard Packaging Nailore v. Union of India, [1984] ECR 2639, referred to.     (2)  In 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]

JUDGMENT: