Customs, Excise and Gold Tribunal - Ahmedabad
Vadilal Industries Ltd. vs Cce on 28 March, 2007
Equivalent citations: 2007(117)ECC368, 2007ECR368(TRI.-AHMEDABAD), 2007(213)ELT157(TRI-AHMD)
ORDER M. Veeraiyan, Member (T)
1. This is an appeal against the order of the Commissioner (Appeals) No. COMMR(A)478/AHD-II/2002 dt. 20.6.2002.
2. Heard both sides.
3. The relevant facts, in brief, are as follows:
a) The appellant manufactures branded as well as unbranded paper cups falling under Chapter heading 4823.90 of the Central Excise Tariff Act, 1985. This product is meant for holding/packing the ice-cream. The appellant claimed the benefit of concessional rate of duty under Sr.No. 6 of Notification 20/94 dated 1.3.94 as amended by Notification No. 144/94, dt. 22.12.94 and under Notification No. 18/95, dt.16.3.95. The period involved in the dispute is from April, 94 to June, 97.
b) The adjudicating authority has taken a view that the product in question is not eligible for the exemption in view of the exclusion clause in the notification. This view has been upheld by the Commissioner (Appeals).
c) Hence, the present appeal.
4. Learned advocate for the appellant made the following submissions:
a) The exclusion is only for laminated sheets which is evident from the amending notification No. 144/94. Exclusion Clause (a) in the amending notification deals with the process by which the product comes into existence and exclusion Clause (b) deals with the commercial nomenclature. He submits that the word "or" in between Clause (a) and (b) should be interpreted not as disjunctive but as expository. He submits that there are "no sheets" used in the manufacture of cups and what is used is only "sheet". There is no compression undertaken by the appellant in manufacturing the product. There is no reference of compression in the show cause notice and no finding of the compression in the order in original and therefore, the finding by the Commissioner (Appeals) about the product being compressed is not correct. He relied on the following judgments for his above proposition:
(i) Amit Polymers and Composite Ltd. v. CCE .
(ii) Viral Laminate Pvt. Ltd. v. CCE, Ahd.
(iii) Copper Rollers Pvt. Ltd. v. CCE, Bombay
(iv) Gaekwar Mills Ltd. v. CCE, Baroda
5. The learned DR submits that the product manufactured by them consists of sheets of paper i.e. two sheets are involved: To enable the ice-cream to be kept, there is a plastic coating on the sheets of paper used. The product comes out of heat compression on wall portion and the sheets have been squeezed together.
6. We have carefully considered the rival submissions. The relevant tariff description under Sr.No. 6 of notification No. 20/94 dated 1.3.94 before amendment and after amendment by notification No. 144/94 are reproduced as under:
Before amendment:
All goods, other than products consisting 20% ad
of sheets of paper of paperboard impregnated, valorem
coated or covered with plastics, compressed
together in one or more operations.
After amendment;
All goods, other than the following, namely:
(a) products consisting of sheets of paper or
paper board impregnated, coated or covered
with plastics (including thermoset resins
or mixtures thereof or chemical formulations
containing melamine, phenol, urea or
formaldehyde with or without curing agents
or catalysts), compressed together in one
or more operations; or
(b) products known commercially as "decorative
laminates".
7. Regarding the process of manufacture, the claim that no compression is involved in making the paper cup for holding ice-cream is not tenable. Their claim that "no sheets are used" is also not correct as the wall portion and bottom portion are different sheets. This has been brought together. The learned advocate submits that there is no compression, it is merely sticking together due to pressure. He drew our attention to dictionary meaning of compression. He also submits that the conditions in Clause (b) and Clause (a) should be together satisfied so that the product is excluded for the purpose of exemption under notification 20 of 1994 as amended by the notification 144 of 1994. He canvases the view in the light of the decisions in the case of Gaekwar Mills Ltd. v. Collector and Copper Rollers Pvt. Ltd. v. Collector . The Commissioner (Appeals) has held as under:
The principal enshrined in the two decision is that the word 'or' is an alternative word but is not always disjunctive but is sometimes interpretive or expository of the former word and that whether it is expository or disjunctive is to be seen in the context it is used.
In the context in which the notification has been worded there is no warrant for such interference.
8. The findings of the Commissioner (Appeals) in this regard are as follows:
The very use of the word 'products' in the beginning of Clause 'a' of exclusion clause indicates that the exclusion covers more than one product which is clear from the use of the words "products". If the intention was "all goods" in the Notification other than there was need for Clause 'a' after the word "all goods" in the Notification other than the following. Namely the words used could have been simply "products known commercially as decorative laminates" as used in Clause (b) of the exclusion clause rather than have the generic description as given presents in Clause (a) Further more, if the intention was merely to give the exclusion to decorative laminates then in Clause 'a' after the word 'compressed together in one or more operations' or instead of 'or' it would have been written after the word "operations" known commercially as decorative laminates'. It has not been so written and the exclusion Clause (a) describes the excluded product by the generic description given in the said clause and Clause (b) of the exclusion clause covers the specific exclusion of decorative laminates. I am unable therefore to agree with the pleading taken in appeal that the exclusion is only confirmed to products known commercially as decorative laminates. On the merits of the case, the manufacturing process is as follows:
The Appellant manufactures ice cream cups, which are formed by a process by the printed sheet coated with Raisin, which are cut in Strips to from the outer wall of the ice-cream cup. The two ends of the cut strips are pressed together to from the order wall. The bottom portion is cut out of another roll of sheet in the machine and is then joined to the bottom of the outer wall formed as above by pressing the same which results in the bottom portion sticking to the bottom of the walls of the cup with the use of pressure and adhesives. The top portion is cut out separately and placed separately in the "cup but not joined together". The product is classifiable under Chapter Heading S.H. No. 1823.90.
The process as such is that all 3 conditions in the exclusion clause are satisfied. The product is made out of paper or paper board is impregnated with plastic, the two ends of the cut impregnated paper/paper board are pressed together to from the outer wall of the cup, and the bottom portion is cut out of another roll of sheet and then joined to the outer walls of the cup by inserting it in the inner portion of the outer walls of the cup where it sticks to the bottom with the use of pressure and adhesives. By this an identifiable cup to held ice-cream comes into existence with the top portion being cut out separately and placed separately in the cup. Clearly the goods so formed fall within the exclusion Clause (a) of the Notification. In the event, I see no infirmity in the impugned order, which is upheld, and the appeal is dismissed as devoid of merit.
9. No valid grounds have been put forth to upset the findings of the Commissioner (Appeals). Therefore, the appeal is devoid of merits.
10. However, the learned advocate submits the following alternative pleas that the price realized by them, should have been treated as cum-duty price and no penalty should have been imposed as this is a case of difference in interpretation. There is no issue of limitation involved as the show cause notices were issued within the normal period of limitation.
11. There are merits in these alternative pleas of the ld. Advocate, We hold that on merits the appeal is to be rejected. However, there is no warrant for imposition of penalty and accordingly penalty is set aside. Further, the price charged by them should be treated as cum-duty-price. Accordingly, the matter is remanded for the limited purpose of quantifying the duty taking the price charged by them as cum-duty price.
12. The appeal is disposed off in the above terms.
(Pronounced in Court on 28/3/07)