Customs, Excise and Gold Tribunal - Delhi
Polycone Paper Ltd. vs Collector Of Customs on 3 May, 1993
Equivalent citations: 1993ECR432(TRI.-DELHI), 1994(70)ELT225(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. This appeal is directed against the impugned Order-in-Appeal passed by the Collector of Central Excise (Appeals), Bombay.
2. Brief facts of the case are that, the appellants are the manufacturer of Paper Cones, Paper Tubes, Paper Cores, Spools and Paper Bobbins. These are said to be produced from Kraft Paper and are invariably consumed in Textile Mills for winding yarn. They filed their Classification List No. 2/86-87 in respect of their said products claiming their classification under Heading 4818.19 of CET, 1985. They also claimed full exemption from duty under the New Budget Proposals dated 28-2-1986 for the year 1986-87. It was approved by the Assistant Collector. However, subsequently, they filed their fresh Classification List No. 4/86-87 dated 22-3-1986 classifying their product under sub-heading 4818.90, showing rate of duty at 12% Adv. This Classification List is said to be filed as per the direction given by the Range Superintendent. This subsequent Classification List was accordingly approved by the Assistant Collector on 9-4-1986. Against that Order of the Assistant Collector dated 9-4-1986, the appellants filed their appeal before the Collector of Central Excise (Appeals), Bombay. It was argued before him that their above said products are containers and are, therefore, covered by sub-heading 4818.19 and not under sub-heading 4818.90, as according to the appellants it covers articles of paper not covered by the earlier sub-headings of Heading 48.18. Reference was also made to the Telex message F. No. 61/11/86-CX. 2(Pt) dated 8-1-1987 said to have been issued by the Board. However, the Collector of Central Excise (Appeals), Bombay, modified the Order of the Assistant Collector dated 9-4-1986 impugned before him, as follows:-
"5. I have carefully gone through the case records, the appellants submissions ¦ in their appeal petition and those made at the time of personal hearing. As per the Ministry's Telex F. No. 61/11/86-CX. 2(Pt) dated 8-1-1987, it has been decided by the Board that the Paper Cones and Paper Tubes are to be assessed to duty under sub-heading to 4818.19. However, as mentioned in the said Telex, it was clarified in the Ministry's earlier Telex F. No. 114/18/86-CX. 3 dated 14-3-1986 that the Paper Cones and Paper Tubes were classifiable under sub-heading 4818.90. In the light of the above Board's decision, it is clear that the Paper Cones and Paper Tubes are classifiable and assessable to duty under sub-heading 4818.19 with effect from 8-1-1987 and for the period prior to 8-1-1987 the same were classifiable and assessable to duty under sub-heading 4818.90.
6. Subject to the modification as indicated above, the appeal is otherwise rejected."
2.1. Hence the present appeal.
3. Arguing on behalf of the appellants, Shri C.S. Lodha, learned counsel, contended that vide his impugned Order-in-Appeal, the Collector (Appeals), agreed with the appellants that their said products, namely, Paper Cones and Paper Tubes etc. are assessable to duty under sub-heading 4818.19 but after having agreed so, he erred in holding that the said products are classifiable under the said sub-heading 4818.19 only w.e.f. 8-1-1987 and not from 1-3-1986, that is to say, the date of filing of the Classification List in question. Elaborating on his submissions, it was contended by him that the dispute regarding the classification of the subject goods would fall under sub-heading 4818.19 or 4818.90 was settled by the Central Board of Excise and Customs by their Telex message dated 8-1-1987 wherein it was stated that the said product Paper Cones and Tubes would be classifiable under Chapter sub-heading 4818.19 and not under 4818.90. The Collector (Appeals), in fact, has admitted this position, but he erred in applying that Telex advice from its date, that is to say, 8-1-1987. In other words, his submission was that the Telex advice (decision of the Board) should have been given retrospective effect, that is to say, from the date of the Classification List (1-3-1986). In reply, it was contended by the learned SDR, Smt. Ananya Ray, that the said controversy regarding classification stands concluded by a decision of this Tribunal rendered in the case of M/s Andhra Pradesh Paper Mills Ltd. v. Collector of Central Excise, Guntur, Order No. 601/91-C dated 19-7-1991, wherein it was held that "reel core" is classifiable under Tariff Item 4818.90 and not under Item 4812.12 as the "reel core" cannot be held to be container. It was highlighted by her that while holding so, the Tribunal relied upon the judgment rendered by the Apex Court in the case of G. Claridge & Company Ltd. v. Collector of Central Excise, 1991 (52) E.L.T. 341, wherein while interpreting the scope of sub-heading 4818.19 and sub-heading 4818.90 (which are the subject matter in the present appeal) and the erstwhile Item 17(3) or 17(4) it was held that Egg trays, Egg filler flats, Egg cartons, tube light packing trays, apple trays and other similar products are not containers within the meaning of sub-heading 4818.19. These are articles of pulp falling under sub-heading 4818.90. Similarly, prior to 28-2-1986 they were not classifiable under Tariff Item 17(3) or 17(4) of the erstwhile Central Excise Tariff. As regards the said Telex tariff advice dated 8-1-1987 issued by the Central Board of Excise and Customs, she submitted that such advices are wholly irrelevant for the purpose of classification of the product under Central Excise Tariff as they cannot over-write the true meaning or construction underlying a statutory provision nor can operate as estoppel against correct interpretation of Tariff. Moreover, such Tariff advices are not binding on the Tribunal while deciding the question of classification. Besides, she also drew our attention to the Central Board of Excise and Custom's Telex F. No. 61/11/86-CX. 2/CX. 4 (PT) dated 11-2-1987 addressed to all Collectors of Central Excise wherein on being brought to the notice of the Board that Central Excise Authorities at certain places are interpreting that the Board's said Telex advice dated 8-1-1987 would take effect only from the date of issue, the Board invited the attention to its earlier letter F. No. 202/74/79-CX. 6 dated 24-10-1979 regarding scope and effect of Tariff advices for implemental action (see page 24 of the Paper Book), she also invited our attention to the said letter dated 24-10-1979 of the Board (which is referred to in the said letter) wherein in paragraph 5 it has been stated that the quasi-judicial authorities are free to differ with the Tariff advice. In a nutshell, her submission was that the subject goods are classifiable under heading 4818.90 and not under Item 4818.19, as claimed by the appellants.
4. In his rejoinder, it was vehemently contended by the learned counsel for the appellants, that the Collector (Appeals) has classified the goods under Heading 4818.19, as claimed by the appellants, and this finding has not been challenged by the Revenue by filing any appeal or cross-appeal or cross-objection, and therefore, the Revenue cannot be permitted at this stage to make out a new case and cited the following cases:-
(i) Kaloji Talusappa Ganga Vathi v. Khyanagouda and Ors., AIR 1970 SC 1420, wherein it was held that question requiring fresh pleading on questions of fact cannot be allowed to be raised for the first time before the Supreme Court.
(ii) Smt. Chander Kali Bail and Ors. v. Jagdish Singh Thakur, AIR 1977 SC 2262, wherein it was held that a new question of fact could not be entertained at any appellate stage.
(iii) The Commr. of Income Tax v. Sirpur Paper Mills Ltd., AIR 1978 SC 509, wherein it was held that since the question of applicability of Section 41(2) of the Income Tax Act, 1961 was not covered by the question and no question was referred to the High Court raising the issue as to chargeability of certain amount to tax under Section 41(2), the argument as to applicability of Section 41(2) was not open to the Revenue.
(iv) Mohinder Singh Gill v. The Chief Election Commissioner, AIR (6) 1978 SC 851, wherein it was held that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise.
(v) Collector of 24 Parganas v. Lalith Mohan Mullick, AIR 1988 SC 2121, wherein it was held that new grounds raised for the first time in Review Petition cannot be considered apart from fact that it would involve investigation of new facts.
(vi) Bush (India) Ltd. v. Union of India, 1980 E.L.T. 258, wherein the Bombay High Court held that it is not open to Central Excise authority to urge in its affidavit-in-reply a ground not taken in the order sought to be impugned and thereby seek to make out a new case in justification of the impugned order.
(vii) Dunlop Rubber Co. (India) Ltd. v. M.V. Raghwan Iyer and Ors., 1983 (14) E.L.T. 2289, wherein the Bombay High Court held that it is well settled law that the validity of an impugned Order must be judged by the reasons given in the order itself and cannot be complemented or supplemented by fresh reasons in the shape of an affidavit.
(viii) Bakul Cashew Company v. Union of India, 1984 (15) E.L.T. 379, wherein it was held by the Madras High Court that an order has to be supported only on the reasons stated therein and not by additional reasons in a writ of certiorari.
(ix) Shriram Jute Mills Ltd. v. Collector of Central Excise, Calcutta, 1986 (23) E.L.T. 446, wherein it was held by this Tribunal that it would be wrong to consider the alternative plea of the Department for classification under another Tariff Item, if it is found to create new liability for the appellants at the second appellate stage. Keeping in view the fact that, it was the appellants (in that case) who had come in appeal before the Tribunal and not the Department.
(x) Ashok Leyland Limited v. Union of India, 1986 (26) E.L.T. 676, wherein it was held that the respondent is not entitled to support the impugned Orders on grounds which do not figure in those Orders.
(xi) Atari Electronics (India) v. Collector of Customs, 1991 (52) E.L.T. 73, wherein it was held that additional grounds not figuring in orders under appeal and also inconsistent with the reasonings mentioned therein are not allowed to be raised for the first time before the Tribunal.
(xii) Collector of Central Excise v. Oswal Vanaspati & Allied Industries, 1989 (42) E.L.T. 3, wherein it was held that, where the Collector authorises the Assistant Collector to file appeal only on the ground of non-observance of the principles of natural justice, the appeal so filed before the Tribunal in pursuance of the said authorisation must confine to that ground only.
4.1 As regards the Final Order No. 601 /91-C, dated 19-7-1991 [reported in 1993 (65) E.L.T. 447 (Tribunal)] delivered by this Tribunal in the case of M/s Andhra Pradesh Paper Mills Ltd. v. Collector of Central Excise, Guntur, supra, he submitted that the present appellants were not a party to the said case and moreover reliance was wrongly placed on the case of G. Claridge & Company Ltd., supra.
5. We have considered the submissions.
6. To take contention of the Revenue that the subject products, namely, Paper Cones, Paper Tubes, Paper Cores, Spools and Paper Bobbins fall under Heading 4818.90 and not under Heading 4818.19, as held by the Collector (Appeals), it may be stated that the Assistant Collector approved the fresh Classification List filed by the appellants showing the subject products under sub-heading 4818.90 on 9-4-1986, but on appeal the Collector of Central Excise (Appeals), Bombay, without applying his mind and blindly following the Ministry's Telex message F. No. 61/11/86-CX. 2 (Pt) dated 8-1-1987 ordered for the classification of the subject products under sub-heading 4818.19 w.e.f. 8-1-1987 and further holding that for the period prior to 8-1-1987 the same were classifiable and assessable to duty under sub-heading 4818.90. It is in this background that the contention of the appellants as to whether the Collector (Appeals) erred in applying the said Telex advice from its date or should have been given retrospective effect, that is to say, from 1-3-1986 - the date of the Classification List is to be considered and for this purpose we have to consider, as to whether the Classification of the subject products done under heading 4818.19 w.e.f. 8-1-1987 is also to be considered. For, if it is ultimately held that the subject products fall under heading 4818.90 even prior to 8-1-1987 the said question as to whether the Collector (Appeals) erred in applying the said Tele message dated 8-1-1987 prospectively and not retrospectively would be of academic interest. The contention of the appellants that the Department, who is the respondent herein, cannot be allowed to raise the question of Classification since no appeal or cross-objections have been filed by the respondent, has no substance in the facts and circumstances of the present case. It is true that, the ratio of the case law cited by the learned counsel is that the Order under appeal is to sustain on its own and no new grounds in support of it could, invariably, be advanced by the respondent in an appeal against it. Whereas in the present case we are concerned with a quasi-judicial order made by the Collector (Appeals). The respondent is not supplementing the reasons which the Collector (Appeals) had furnished by filing affidavit or otherwise. In other words, what the respondent is pleading before us is that, since the Classification of the subject products done by the Assistant Collector under heading 4818.90 was correct and the Collector (Appeals) in relying upon the said Telex Message of the Ministry dated 8-1-1987, erred in classifying the subject products under heading 4818.19 w.e.f. 8-1-1987, the question, as to whether the said Telex Message dated 8-1-1987 should have been given retrospective effect would not arise. It has been the consistent view of this Tribunal that, if the appeal involved the question of correct classification of the goods on which a ruling would have to be given, it would not be in the interest of justice or conducive to a proper disposal if the appellants were prevented from raising the new ground. See the following cases -
(i) Cynamid India Ltd. v. Collector of Central Excise, Bombay, 1984 (15) E.L.T. 186,
(ii) Khadar Knitting Company v. Collector of Central Excise, Madras, 1984 (15) E.L.T. 176,
(iii) Collector of Central Excise, Kanpur, v. West Glass Works, Firozabad, 1984 (17) E.L.T. 368,
(iv) Hindustan Aeronautics Ltd., Bangalore, v. Collector of Customs, Madras, 1985 (20) E.L. T. 418,
(v) Collector of Customs, Bombay v. Goodyear India Limited, 1986 (25) E.L.T. 188,
(vi) Collector of Central Excise, Allahabad, v. Kanoria Chemicals & Industries Ltd., Renukoot, 1987 (29) E.L.T. 681,
(vii) Collector of Customs v. Photogravurs (India) Pvt. Ltd., 1987 (29) E.L.T. 647,
(viii) Collector of Central Excise, Calcutta v. Shalimar Paints Ltd., Howrah, 1987 (29) E.L.T. 1001,
(ix) Roots Auto Products (P.) Ltd. v. Collector of Customs, 1988 (38) E.L.T. 310,
(x) Griffon Laboratories Pvt. Ltd. v. Collector of Customs, 1989 (41) E.L.T. 613, and
(xi) J.K. Synthetics Ltd. v. Collector of Customs, 1992 (62) E.L.T. 41.
7. It is true that the Revenue, who is the respondent herein, has not filed any appeal or cross-objection against that part of the Order of the Collector (Appeals) wherein he has held that, the subject products were classifiable under sub-heading 4818.19 w.e.f. 8-1-1987 but this fact by itself should not prevent the respondents from raising the question of correct Classification. Disputes on classification matters are not in the nature of disputes between two individuals if affecting their respective rights in their particular action. A decision on a classification dispute rendered solely on the basis of the grounds urged before the lower authorities, shutting out any new ground(s) even if that ground(s) has (have) relevance to a proper and correct determination of the dispute, could, in our view, conceivably lead in some cases to a less than proper or correct or even a wrong determination. These decisions often have a significant and, recurrent implication for the revenue, or the assessee or both. Not only that, such decisions being decisions on matters of classification, are bound to be followed by the lower authorities. The need, therefore, not to shut out new grounds solely for the reason that they were not raised before the lower authorities or no cross-appeal or cross-objections are filed by the respondent when all the facts necessary are on the record. Even this principle is recognised under O. 41 R. 33, of the Code of Civil Procedure, 1908. In the case of Panna Lal v. State of Bombay, AIR 1963 SC 1516, it was held that the wide wording of O. 41 R. 33 was intended to empower the Appellate Court to make whatever Order it thinks fit, not only as between the appellant and the respondent, but also as between a respondent and a respondent, as filing of cross-objections by respondent is always not necessary. If a party who could have filed a cross-objection, under O. 41 R. 22 has not done so, it cannot be said that the Appellate Court can under no circumstances give him relief under the provisions of O. 41 R. 33. The Apex Court reiterated the same view in the case of Koksingh v. Smt. Deokabai, AIR 1976 SC 634, and observed that, under Order 41. Rule 33 the High Court is competent to pass a decree for the enforcement of a charge in favour of the respondent notwithstanding the fact that the respondent did not file any appeal from the decree of the Trial Court. Though, these are exceptional cases. Rule 10 of our Customs, Excise & Gold (Control), Appellate Tribunal (Procedure) Rules, 1982 also permits such a course. The said Rule runs thus -
"10. Grounds which may be taken in appeal. - The appellant shall not expect by leave of the Tribunal, urge or be heard in support of any grounds not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or those taken by leave of the Tribunal under these rules:
Provided that the Tribunal shall not rest its decision on any other grounds unless the party who may be affected thereby has had a sufficient opportunity of being heard on that grounds."
8. From a close reading of the said Rule, it is clear that, the Tribunal may rest its decision on any other ground (s) not taken by the party while deciding the appeal and the only rider is that the party who may be affected thereby should have a sufficient opportunity of being heard on that ground(s). In the case of Commissioner of Income Tax, Madras v. Mahalakshmi Textiles Mills Ltd., (1967) 3 SCR 957, the Apex Court held as follows:-
"By the first question the jurisdiction of the Tribunal to allow a plea inconsistent with the plea raised before the departmental authorities is convassed. Under sub-section (4) of Section 33 of the Indian Income-tax Act, 1992, the Appellate Tribunal is competent to pass such orders on the appeal "as it thinks fit". There is nothing in the Income-tax Act which restricts the Tribunal to the determination of questions raised before the departmental authorities. All questions whether of law or of fact which relate to the assessment of the assessee may be raised before the Tribunal. If for reasons recorded by the departmental authorities in rejecting a contention raised by the assessee, grant of relief to him on another ground is justified, it would be open to the departmental authorities and the Tribunal, and indeed they would be under a duty to grant that relief. The right of the assessee to relief is not restricted to the plea raised by him."
8.1 Section 35C of the Central Excises and Salt Act, 1944, like the above referred Section 33(4) of the Income-tax Act, provides that the Appellate Tribunal may pass such orders on the appeal "as it thinks fit". Therefore, applying the ratio of the said decision of the Apex Court rendered in the case of Commissioner of Income Tax, Madras v. Mahalakshmi Textile Mills Ltd., supra, this Tribunal is competent to consider the plea which relates to the assessment of the assessee and in fact this Tribunal is duty-bound to consider such plea as held by the Apex Court. It is true that, while in the case before the Apex Court, it was the right of the assessee to raise a new plea not put forth before the lower authorities which was upheld, in the case before us, it is the Department's right to raise the question of correct classification, but this makes no difference in applying the ratio of the said decision of the Apex Court. For, in the proceedings before us, the Revenue is as much a party as the assessee and there is no warrant to treat the Department differently from the assessee so far as the present question is concerned. In this view of the matter, we are supported by the majority decision of this Tribunal rendered in the case of Collector of Central Excise, Calcutta v. Shalimar Paints Ltd., Howrah, supra. Thus, we allow the said plea of the respondent and reject the contention of the appellants and proceed to decide the question of classification and the contention of the appellants that the Collector (Appeals) should have given the retrospective effect to the Ministry's Telex dated 8-1-1987. While doing so, we would like to take into consideration the interest of the appellants if our conclusion regarding classification of the subject products goes against him, keeping in view the fact that the respondent has not filed the cross-appeal or cross-objection against that part of the impugned Order wherein the Collector (Appeals) has partly agreed with the appellants on the point of classification.
9. To take up the contention of the appellants first that the Telex advice dated 8-1-1987 should have been given retrospective effect that is to say from the date of the classification list effective from 1-3-1986 filed by the appellants, it may be stated at the outset that besides the fact that the Board itself invited the attention of the authorities below to its earlier letter F. No. 202/74/79-CX. 6 dated 24-10-1979 regarding the scope and effect of Tariff advices for implemental action stating that the quasi-judicial authorities are free to differ with the Tariff advice, the trade notice/advices are essentially meant for administrative guidance and these are generally issued for the guidance of the officers of the Department. Such Tariff advices cannot be said to constitute an authority to bind and regulate any decision on the point of classification. Therefore, the same cannot operate retrospectively.
10. As regards the question of classification of the subject goods it may be stated that this Tribunal after considering the Heading 48.18 and its subheadings including 4812.12 and 4818.90 and the decision rendered by the Apex Court in the case of G. Claridge & Company Ltd. v. Collector of Central Excise, 1991 (52) E.L.T. 341 wherein it was held that egg trays, egg filler flats, egg cartons, tube light packing trays, apple trays and other similar products are not containers falling under sub-heading 4818.19 but are classifiable as articles of pulp under sub-heading 4818.90 of the Central Excise Tariff and further that similarly prior to 28-2-1986 they were not classifiable under Tariff Item 17(3) or 17(4) of the erstwhile Central Excise Tariff, concluded in the case of M/s Andhra Pradesh Paper Mills Ltd. v. Collector of Central Excise, Guntur [F.O. No. 601/91-C dated 19-7-1991 - 1993 (65) E.L.T. 449 (Tribunal)] that "Reel Core are classifiable under Tariff Item 4818.90 and not under Item No. 4812.12" as the "Reel Core" cannot be held to be containers. Applying the ratio of the said decision we hold that the Paper Cones, Paper Tubes, Paper Cores, Spools and Paper Bobbins are classifiable under Heading 4818.90 and not under Heading 4818.19 as these cannot be held to be containers even prior to 8-1-1987. The contention of the Learned Counsel for the appellants that the decision rendered by this Tribunal in the case of M/s Andhra Pradesh Paper Mills Ltd. v. Collector of Central Excise, Guntur, supra is not applicable as reliance was wrongly placed on the case of G. Claridge & Co. Ltd., supra, is not correct. Likewise the contention of the appellants that they were not party to the said case of M/s Andhra Pradesh Paper Mills Ltd. and, therefore, the ratio of the said case would not apply to them is to be stated only to be rejected as it is the ratio of the case which applies and not the party. However, since the deptt. has not filed any appeal or cross-objection against that part of the impugned order-in-appeal whereby the Collector (Appeals) has held that the subject goods are classifiable and assessable under sub-heading 4818.19 with effect from 8-1-1987 and this Tribunal has changed the classification of the subject goods, we are of the view that the benefit already availed of by the appellants till the date of this order be not withdrawn and this classification of the subject goods by this Tribunal under Heading 4818.90 would have a prospective effect.
11. The appeal stands disposed of accordingly.