COMMNR. OF CENTRAL EXCISE, MEERUT-II versus M/S. SUNDSTRAND FORMS P. LTD.

Citation: [2011] 10 S.C.R. 764 · Decided: 30-08-2011 · Supreme Court of India · Bench: MUKUNDAKAM SHARMA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
8 
[2011) 10 S.C.R. 764 
COMMNR. OF CENTRAL EXCISE, MEERUT-11 
V. 
MIS. SUNDSTRAND FORMS P. LTD. 
(Civil Appeal No. 4077 of 2003) 
AUGUST 30, 2011 
[DR. MUKUNDAKAM SHARMA AND ANIL R. DAVE, JJ.] 
Central Excise Tariff Act, 1985: 
c 
Schedule -
Heading 48. 16 read with sub-heading 
4816.00; and Heading 48.20 - Carbonless stationery -
Classification of - Assessee manufacturing computer 
stationery by processing carbonless paper -Excise duty 
demanded on carbonless paper - Held: Carbonless paper or 
D self-copying paper emerges at the intermediate stage, it is an 
intermediary product and is a well known marketable 
commodity - It is being bought and sold and there is a 
demand of such articles in the market - The Commissioner 
has rightly recorded the findings that the intermediary products 
in the instant case would fall and are classifiable under 
E Heading 48. 16 and duty payable for the said intermediary 
products is prescribed as 20% - Rules of Interpretation of the 
Schedule - r. 2(a) and 3 - Central Excise Rules, 1944 - r. 
9(2) - Central Excise Act, 1944 - s. 11-A - Interpretation of 
Statutes - Principle of ejusdem generis. 
F 
The 
respondent-assessee 
engaged 
in 
the 
manufacture of computer stationery, business forms etc. 
(carbonless or with carbon) claimed that the said goods 
produced by it fell under Sub-Heading Nos. 4901.90 and 
G 4820.00 of the Schedule to the Central Excise Tariff Act, 
1985 and, therefore, chargeable to nil rate of duty. A team 
of Central Excise Officers visited the factory premises of 
the assessee and examined the manufacturing process 
of the carbonless stationery. It was found that the 
H 
764 
COMMNR. OF CENTRAL EXCISE, MEERUT-11 v. SUNDSTRAND 
765 
FORMS P. LTD. 
assessee was purchasing carbonless paper in roll form, 
A 
coated with chemical on backside or front side or on both 
sides, from the market and such carbonless paper was 
subjected to the process of only printing and perforation 
etc. for the manufacture of the stationery. Show cause 
notices were issued to the assessee raising demand of B 
duty in terms of Rule 9(2) of the Central Excise Rules, 
1944 read with s. 11A of the Central Excise Act, 1944, 
stating that the assessee was engaged in evasion of duty 
on carbonless paper which emerged at the intermediate 
stage during the course of manufacture of carbonless c 
stationery from the plain paper. The Department 
classified the product as "the coated paper" at the 
intermediate stage under Heading 48.16. Simultaneously, 
proceedings were initiated against the MD and the Deputy 
MD of the assessee for imposing the penalty. The 
0 
Commissioner confirmed the demand and imposed a 
penalty of Rs. 50 lakhs on the assessee. The appeal of 
the assessee having been allowed by the Customs, 
Excise and Gold (Control) Appellate Tribunal, the revenue 
filed the appeal. 
Allowing the appeal, the Court 
HELD: 1.1 There is no dispute with regard to the fact 
that the carbonless paper or self-copying paper emerges 
E 
at the intermediate stage and has its own life but the 
F 
same could be further used in the manufacture of 
stationery in continuous process. There is also no 
dispute with regard to the fact that the carbonless paper 
is a well known marketable commodity as is evident from 
the process of manufacturing. The carbonless paper or G 
other paper cannot be treated as the computer stationery 
unless it is subjected to the second stage of processing, 
i.e., the process of perforation, punching and fan-folding 
etc. Therefore, in common trade parlance the computer 
stationery is processed through various modes of H 
processing. [Para 6) [770-E-G] 
766 
SUPREME COURT REPORTS 
[2011] 10 S.C.R. 
A 
1.2 The opinion of the Institute of Paper Technology, 
Saharanpur, U.P clearly indicates that computer 
stationery is different from carbonless paper and self-
copyi ng paper. It was also indicated therein that 
carbonless papers or self-copying papers are fully coated 
B throughout and are available in reel/sheet form. [Para 20-
21] (775-A-C] 
1.3 Para 2(a) of the Interpretative Rules for -
interpreting headings of the Schedule to the Central 
Excise Tariff Act provides that any reference in a heading 
· C to the goods shall be taken to include a reference to 
those goods incomplete or unfinished, provided that, the 
incomplete or unfinished goods have the essential 
character of the complete or finished goods. Para 3 
thereof provides that when goods are classifiable under 
D

Excerpt shown. Read the full judgment & AI analysis in Lexace.