ORDER
H.R. Syiem, Member (T)
1. This is an appeal dated 17th July, 1975 filed by Sirpur Paper Mills against Order-in-Appeal No. 618/75 (HNR) dated 1-4-75 passed by the Appellate Collector of Central Excise, Madras.
2. In his order the Appellate Collector agreed with the order of the Assistant Collector C.No. V/17/18/23/73-MPI dated 29 June, 1974. To understand the case we will trace briefly its history.
3. The Sirpur Paper Mills cleared 4542.2 kg. of paper described by them as white offset printing paper, weighing 88 gms. The assessment was made by the Assistant Collector under Central Excise Tariff Item No. 17(2) even though the mill claimed assessments under Tariff Item No. 17(3). A sample was sent for test and the Chemical Examiner declared that the paper weighed 89.5 gms. Since the classification 17(2) was made by the Assistant Collector contrary to the claim of the mill that the paper should be assessed under 17(3), they claimed refund of the differential duty. The mill says that the paper was supplied and used as printing and writing paper and that such varieties of paper were allowed to be cleared in the past under tariff sub-item 17(3) and, therefore, should not be upgraded into a higher Tariff Item without notice to the manufacturer. Because of the assessment by the Assistant Collector as cartridge paper under 17(2) they said they were entitled to a refund claim of Rs. 13,588.96. The refund claim of the mill appears to have been made in response to instructions from the Assistant Collector to file a refund claim if they were dissatisfied with the assessment of the paper as cartridge paper under 17(2). Meanwhile, another Assistant Collector took charge of the Division and he issued a letter to the mills to state whether they had anything further to say in the matter. Their reply was that they had been asked to send the refund application by the previous Assistant Collector who had already passed orders on their eligibility to the refund, and that the department therefore had to pass the claim. However, they were told that the action of calling a refund claim was not equivalent to a final order, and that they were at liberty to make further submissions if they desired.
4. The Assistant Collector then proceeded to adjudicate the matter and he began by saying that offset printing paper of 85 gms and above was indistinguishable from cartridge paper and, therefore, was correctly classifiable under sub-item 17(2). The approval given in the classification list makes this position clear and there was no scope for any protest or of permitting the assessee to clear under rule 9B provisionally. He said that their contention that he was not competent to classify the variety of paper under tariff sub-item 17(2), was not tenable because that variety of paper was indistinguishable from cartridge paper which was already listed under that sub-item. The party had also demanded a tolerance of 6% over the grammage in accordance with a trade notice issued by the Collector of Central Excise, Bangalore, but the Assistant Collector rejected this by saying that his collectorate had not issued any such trade notice. He also held that tolerance arises only when there is a dispute about the grammage, and not to bring down the declared grammage. He accordingly rejected the claim of the paper mill for assessment of the white offset printing paper under Tariff Item 17(3) as well as its consequential claim for refund of the differential duty.
5. At the hearing on 24-11-83 the counsel for the mill told the tribunal that similar goods i.e., white offset printing paper had been assessed under 17(3) in the past. He said that the goods were supplied to government and were used for printing and writing purposes by the government. He further argued that grammage was not a part of the statute but the Appellate Collector and the Assistant Collector took decision purely on the grammage, saying that a paper of this weight would have to be assessable under 17(2), the weight having been declared by the mill itself. He referred to the judgment of the Supreme Court Civil Appeal Nos. 1446 and 2746 of 1972 Dunlop India Limited v. Union of India (ECR C476 S.C.) in which it was held that in interpreting the words in a taxing statute, the accepted meaning of a particular word by the trade and its popular meaning should commend itself to the authorities. The mill had declared the goods as offset printing paper assessable under 17(3), but the Assistant Collector without notice to the factory unilaterly changed the assessments to 17(2) and assessed the paper at a higher rate of duty. They accordingly protested against the assessment. It was not correct for the Assistant Collector to say that there could have been no protest over the assessment since such goods were being assessed under 170) in the past and the Assistant Collector took a unilateral decision to assess the paper under 17(2) as cartridge paper because he said that they were indistinguishable from such (cartridge) paper.
6. The learned counsel for the department said that this was a case of refund. The duty claimed has been already recovered from the customer after the Assistant Collector modified the assessment to 17(2) in the classification list.
7. He also referred to a few authoritative books on the subject in “PAPER AND ITS USES” by Edward A. Dawe (1939). Cartridge paper is described as strong papers, the best qualities being tub-sized. The same book carries a paragraph about offset cartridges. Some of these papers have the character of a carefully made but fairly smooth cartridge paper, others are of moderate substance, but resemble machine finished lithographic papers. He then referred to Indian Standard 4661 : 1968 which describes cartridge as a variety of hard-sized and strong paper free from loading and free from fluffing characteristics. This same standard describes offset cartridge as a variety of hard-sized and strong paper generally free from loading and usually with a matt surface. In his book ‘Paper and Printing Manual’, Frederick T. Day describes cartridge paper as hard, tough, strong and studio papers made with a rough surface, the best being tub-sized. In Dictionary of Printing, Paper Making and Book Binding, by W.C. Kenneison and AJ.B. Spilman, cartridge paper is represented as a hard, tough class of paper made with a rough surface in a number of grades for a variety of purposes such as drawing, cartridge making and wrapping. This book has a description on offset cartridge paper and describes it as a paper on which it is possible to have high class colour work to be printed on rough papers. He said it can be seen from these authorities that offset printing paper was the same kind of paper as cartridge paper and was used as much the same thing as offset printing paper.
8. This case started as a refund claim but it would be seen that no refund could arise in this case under rule 11 because there was no question of error, inadvertence or misconstruction. There was no error, inadvertence or misconstruction because the party paid the duty when the classification was changed by the Assistant Collector and the duty was paid in consequence of that re-classification. This cannot be said to be an error, misconstruction or inadvertence but an action taken by the assessee in full knowledge of what he was doing. The proper course to be adopted was for the assessee to appeal against the reclassification and to get it changed by the competent authority; instead he filed a refund claim having cleared the goods under a gate pass marked with the words “under protest”. The party had already received the money it claims as refund, from the (government) customer.
9. In respect of the order of the Tribunal No. 200/83-C which the appellant had quoted in support of its case, the counsel for the department said that this was made possible because the party did not bring to the notice of the Tribunal the fact that offset paper was only a variety of cartridge paper and that the party declared as offset. In this order a quotation is made from the report of the Tariff Commission to the effect that offset and cartridge paper is a type of paper suitable for offset printing process and that it was normally made from bamboo or grass stock and may contain some amount of rag and wood pulp. For purposes of printing, it is normally below 85 gms while for drawing it is above 85 gms and may also be tub-sized and it includes ordinary litho paper. The learned counsel emphasised that the matter of classification was only secondary, the primary proceeding being a claim under rule 11 and this was not maintainable.
10. In reply the counsel for the appellant said that it was not correct to say that this originated only as a refund claim. It was a classification matter from the very beginning, their classification list having been amended arbitrarily by the Assistant Collector from 17(3) to 17(2). They followed the instructions of the Assistant Collector and hence they made a protest. It may be true that they did not follow the provisions of rule 9B. But the Assistant Collector did not give an appealable order for his sudden and arbitrary change. He emphasised that cartridge paper is different from the paper they manufactured and cleared.
11. We would like to point out at the beginning that there seems to be some confusion as to the gate pass in respect of which this dispute arose. The Assistant Collector says in his order that although a refund application dated 20-5-1974 was sent by the assessee claiming a refund of Rs. 13,588.96 on white offset paper cleared under gate-passes No. 249 of ’73 and 488 of 1973, the issue in the proceedings before him was limited to gate-pass No. 488 of ’73, but the Appellate Collector says that the differential duty claimed as refund arose on account of goods cleared under gate pass No. 249 of 1973. We shall proceed on the basis that the gate pass was No. 249 of ’73.
12. It has been claimed by the department that cartridge paper and offset printing paper were practically the same kind of paper and have the same kind of construction and characteristics. It will be useful, however, to reproduce in full the description of the two kinds of paper in the authorities quoted before us. Edward A. Dawe in “PAPER AND ITS USES” describes cartridge paper as “Strong papers, the best qualities are tub-sized, originally made for cartridge manufacture but now used for cover papers, as cheap drawings, and for variety of purposes”. This entry also asks the reader to see “offset papers”. This is at page 43 of the book in which they are described as having the character of a carefully made but fairly smooth cartridge paper. Other offset are moderate substances, but resemble machine finished lithographic paper. Offset paper is well sized and served for many varieties of work; executed by offset lithography.
13. In Paper and Printing Manual by Frederick Day, cartridge papers ‘ are defined as “hard, tough, drawing and studio papers made with a rough surface in a number of grades, the best being tub-sized”. These papers are also used for broad sheets and printing, advertising matter. The same book tells us that there are numerous papers which are used for offset work, the best of which have hard surface (“offset sized”) and rigidity. Surfaces are smooth and rough. The type of work will determine the choice of paper. Offset cartridge is a first class paper for offset work, it is stout and durable. Affinity for printing ink is essential, strength is not important.
14. The dictionary of Printing, Paper Making And Book Binding by Kenneison and Spilrnan describes cartridge paper as a hard, tough class of paper made with a rough surface in a number of grades for a variety of purposes, such as drawing, cartridge making and wrapping. This article on cartridge paper also calls attention to offset cartridge on which it says that the advantage of printing by offset is that it enables high class colour work to be printed upon rough papers. When this process was first introduced, rough cartridge paper was the medium used to demonstrate this fact. With the growth in popularity of offset printing, a wide range of papers became available, and rough surface was now no longer a desideration. Offset paper should be hard i.e., non-fluffing, free from waviness and cockles and made with the grain in the long direction of the sheet. The best of these papers are made on twin wire machines.
15. The Indian Standard 4661 : 1968 calls a cartridge paper a hard-sized and strong paper generally free from loading and usually with a rough surface, substantially free from fluffing characteristics. It also gives an article on offset cartridge which it says is a special variety of hard sized and strong paper generally free from loading and usually with a matt surface, with dimensional stability and suitable for offset printing.
16. It will be seen that in a very general way offset printing paper is very near cartridge paper in structure, finish, toughness and sizing, and at one time cartridge paper appears to have been literally the same thing as offset paper because we are told by one of these authorities that when offset printing was first invented, it was first tried on paper that was generally used for cartridge making, namely, cartridge paper (Kenneison And Spilman). However, with the advance in the technology of offset printing and its growing popularity, cartridge paper was discarded and a wide range of paper became available, when a rough surface was no longer required. None of these authorities describe offset printing or offset litho papers or offset cartridge papers as tub-sized, although it is hard sized. Affinity for printing ink is essential. On the other hand, cartridge papers are now generally used as cover papers, cheap drawing and the other purposes. An offset cartridge may be like a fairly smooth cartridge paper or it may be of moderate substance but it resembles machine finished lithographic papers. But all are agreed that an offset cartridge, offset litho and offset printing papers are for work executed by offset lithography. None of the authorities reports that ordinary cartridge paper is now used in connection with offset lithography work or offset printing.
17. The Assistant Collector did not say that he found the paper to be a cartridge paper, neither did the Appellate Collector and the Chemical Examiner; they all arrived at the decision simply because of the heavy weight of the paper. There is no determination possible by substance alone, although substance does serve as a guide in a limited sphere; but it cannot be the sole deciding test between one brand of paper and another. The paper was sold to the government in accordance with a procedure prescribed by the government and the Directorate of Disposal and Supplies and is said to have been used for printing. This is not an implausible claim because for one thing the central excise department has not refuted the claim that the paper was an offset printing paper, except by saying that such paper was indistinguishable from cartridge paper, and, for another, the fact that it had been supplied for printing to the government has not been rejected. Indeed, the Appellate Collector accepts that it was so used when he said that it may be true that the paper was actually used for printing purposes, although he went on to say that because of the higher grammage it is considered indistinguishable from cartridge paper which fell under item 17(2).
18. We are not satisfied with the finding of the lower authorities for many reasons. There is nothing in paper technology or in the law of central excise relating to paper taxation, that says that a higher grammage will make the difference between one kind of paper and another. The test result, for no reasons we are able to discover, confined itself to certifying the grammage but said nothing about the character, structure, strength etc. of the paper. We do not know if indeed the assessing authorities sought any information besides the substance of the paper. To argue as the central excise assessing officer did would be like saying that no offset printing paper can be assessed as a priming paper except when its grammage is low enough to satisfy them, a reasoning as unscientific as it is lacking in legal support. We wonder whether a cartridge paper of an appropriately low grammage would have been assessed as offset printing paper if the assessee argues that the two papers are indistinguishable from one another. It does not take too much imagination to see that the answer will be a resounding No.
19. A cartridge paper and an offset paper do have points of similarity but there are points of dissimilarity too. But this is true of many other kinds of paper and not just these two. Assessing Officers have to take adequate care to satisfy themselves, which we can see no sign of/in these proceedings. We have not heard of cartridge papers being used in printing in the manner the offset printing papers are used. As we have shown earlier such may have been the case once upon a time but has been no longer so for a long time. Offset printing paper is, of course, frequently referred to as offset cartridge paper but this does not make it a cartridge paper; it is an offset printing paper used in the execution of lithographic offset printing work. The reason for this is that cartridge papers were once used for lithograph work and the name has been associated with the paper used in the process ever since. But today it would be a mistake to speak of cartridge paper as being the same as offset litho printing paper or offset cartridge paper. We therefore hold that the assessment of the Assistant Collector under item 17(2) was wrong and the correct assessment was under 17(3) as originally claimed by the assessee.
The appeal is allowed.
20. The appeal which we are considering now speaks of the dispute as being in respect of gate-pass No. 249 dated 14-4-1973 to the Director of Printing and Stationery, Madras and the amount of claim that arises under this is said to be Rs. 11,088.00. This is the sum that may be refunded to the assessee.
21. An argument was advanced by the learned counsel for the department that the duty has been recovered from the customers by the factory, implying thereby that there was no need to refund the excess levied duty because such refund would only result in undeserved or unearned enrichment. This argument, generally speaking, is a good one. But in this case the factory was made to pay the higher duty by the Assistant Collector. If, therefore, he sold the paper at a price that includes the higher duty, we know where the blame lies, if blame there is. Having done this, we do not think the department can rightfully say that the, refund should not be given because of an action taken by itself at the time of clearance.
22. We would at the end like to clarify a point about the tolerance demanded by the assessee. The factory wants a tolerance of 6% to be given as this would bring their paper under the appropriate substance to qualify for assessment under 17(3). We consider this demand unacceptable because such tolerances can be given only when there is a dispute in respect of the grammage declared. In other words, when a grammage is declared as say 90 and on test it is found to be higher or lower than the declared grammage by a margin of 6% or less, the declaration is taken as correct. There is no case for giving a tolerance in order to change an assessment in the manner demanded by the assessee.