COLLECTOR OF CENTRAL EXCISE, CALCUTTA-II versus EASTEND PAPER INDUSTRIES LTD. & ANR.

Citation: [1989] 3 S.C.R. 1017 · Decided: 29-08-1989 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Dismissed

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Judgment (excerpt)

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COLLECTOR OF CENTRAL EXCISE, CALCUTTA-II 
v. 
EASTEND PAPER INDUSTRIES LTD. & ANR. 
AUGUST 29, 1989 
[SABYASACHi MUKHARJI AND:B.C. RAY, JJ.] 
Central Excises and Salt Act, 1944/Central Excise Rules,· 1944: 
Section 2(f)/Rules 9(1), 56(a), 173-F and 173-G-Levy of Excise 
Duty-Wrapping paper-Captively consumed and utilised as com-
ponent part of other varieties of paper-Whether deemed to have been 
used in completwn or manufaciure of end product. 
The respondent, iri the first of tliese appeals, was manufacturing 
different varieties of pdritlrig paper including wrapping paper falling 
under Item No. 17 of th~ erstwhile Central Excise Tariff. The appellant 
issued a show. caiise notice tci the Respondent for the alleged violation of 
Rules 9(1), 173-F and 173-G of the Central Excise Rules, 1944 in respect 
of wrapping paper removed outside the Factory without payment of 
Central Excise duty, and for imposition of penalty. Showing cause, the 
Respondent contended that the wrapping paper was captively 
consumed and utilised as component ')ar'. of other varieties of paper 
arid as such no duty was pdyable. Reliance. was placed on section 2(1) of 
the Cen!ral Excises and Salt Act, 1944 and Notification No. 18A;83-CE 
dated 9th July, 1983. The Superintendent (Technical) having held 
otherwise, the respondent preferred an appeal to the Collector 
(Appeals). The Collector rejected the claim. On appeal, the Customs, 
Excise and Gold (Control) Appellate Tfibiiiial referred to its own deci' 
sion, which is the subject matter of the other appeals herein and sei 
aside the order of the Collector. 
The facts leading to the other appeais are similar, and the issue 
involved is the same. The Revenue has filed the appeals under section 
35-L of the Central Excises & Salt Act . 
On behalf of the Revenue, it was contended that wrapping paper 
cannot be deemed to be component part because ·it did not become an 
integral part of the packed paper. 
The assessee, however contended that wrapping paper was raw 
material or component part of the wrapped paper, and relied on S. 2(1) 
of the Act which includes any process incidental or ancillary to the 
1017 
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B 
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1018 
SUPREME COURT REPORTS 
[1989] 3 S.C.R. 
completion of a manufactured product. It was also urged that Revenue 
had itself considered the stage of wrapped or packed paper as the stage 
at which goods should be entered in the statutory production register. 
Dismissing the appeals, 
B 
HELD: J. 'Manufacture' in the sense it is used in the excise law, 
was not complete until and unless wrapping was done. It is the 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 
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market as such. 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. 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 he some-
D thing 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. There-
fore, 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 
E must be deemed to have been used in completion or manufacture of the 
end product. [J02JG-H; J022A-D] 
Bhor Industries Ltd., Bombay v. Collector of Central Excise, 
Bombay, [1989] l SCC 602; South Bihar Sugar Mills Ltd., etc. v. Union 
of India & Ors., [1968] 3 SCR 21; Union of India v. Delhi Cloth & 
~· 
F 
General Mills Ltd., [1963] Suppl. l SCR 586; Union Carbide India Ltd. 
v. Union of India and Ors., [1986] 24 ELT 169; Collector of Central 
Excise, Baroda v. Mis Ambalal Sarabhai Enterprises, [1989] 3 SCR 784 
relied on. 
2. Processes incidental or ancillary to wrapping are to be 
G 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 co

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