Customs, Excise and Gold Tribunal - Delhi
Ras Extrusions Ltd. vs Collector Of Customs on 6 December, 1990
Equivalent citations: 1991(53)ELT450(TRI-DEL)
ORDER V. Rajamanickam, Member (T)
1. The appellants have imported an "Aseptic Packaging Machine" with complete set of standard accessories and have claimed assessment under Heading 8422.40, C.T.A. read with Notification No. 125/86-Cus., dated 17-02-1986 and under OGL Appendix-1, Part-B, Sl. No.17, Part-I of AM 1988-91. The Principal Collector has held the machines to be falling under Heading 8479.89 and denied them the exemption under Notification No. 125/86-Cus. and also confiscated the machine for contravention of the Import and Export (Control) Act, 1947, and permitted redemption on payment of a fine of Rs. 20,00,000/- and differential duty of Rs. 93,56,362.30.
2. The appellants have putforth the following grounds of appeal. That they were not permitted the cross-examination of the experts, whose reports formed the basis for issue of the Show Cause Notice and, therefore, there was a denial of the principles of natural justice.
The examination report of Shri P.V. Narayanan, Additional Director of Indian Institute of Packaging though specifically asked for was not given in order to rebut the report of Shri M.R. Subramanian, Director of the Indian Institute of Packaging.
The Principal Collector based his conclusions on grounds not indicated in the Show Cause Notice, where he has stated that the appellants are not engaged in the processing/packaging of food articles as per the Notification No. 125/86-Cus., dated 17-02-1986 and drew attention to the Public Notice issued by the Bombay Custom House No. 164/89 dated 04-12-1989. Their aseptic packaging machinery is predominantly used in packaging of food articles and it was not necessary for the appellants to be engaged in the processing/packaging of food articles.
The Principal Collector has gone by the dictionary meaning of the terms packaging and in the decision of the Supreme Court in Collector of Customs v. Krishna Carbon Paper Co., reported in 1988 (37) ELT 480 (SC) where it has been held that Dictionary meaning is not always safe and the trade meaning is to be preferred.
The Principal Collector has held that the machine is not capable of performing any of the functions enumerated in Sl. No. 23 of the Notification No. 125/86-Cus., dated 17-02-1986. Whereas the machine imported apart from manufacturing aseptic packaging for use in the food industry would simultaneously gives Code No. at pre-determined places on the packaging showing the Batch No., Date of Manufacture, Date of Expiry, Code No. of the manufactured product of the manufacturer.
That the machine would even otherwise fall under Appendix-1, Part-B, Sl. No.1, sub-serial No. 18 as Laminating and Coating machine for the A.M. Policy 1988-91 and would be covered by OGL which was not accepted by the Principal Collector.
The Aseptic packaging machinery's starting point is the manufacture of aseptic packaging material and in the trade parlance, the aseptic packaging is a system involving a number of machines and the Principal Collector has erred in holding that the manufacture of aseptic packaging machine is an activity of several stages earlier to sterilised packing.
That the machine imported is for producing aseptic packing materials which are mainly/predominantly used in packing food articles though not for processing of food articles and the machine imported would produce 5-7 layered packaging material aseptically, which mainly/predominantly can be used only in the packaging of food articles.
3. Shri B.N. Rangwani, the Ld. Consultant, during his oral submissions laid emphasis to the above ground of appeal and referred to the book "The Wiley Encyclopaedia of Packaging Technology" and cited the relevant portion as Aseptic Packaging:
"Unlike conventional canning, aseptic processing, literally defined, is the continuous sterilization of the food independent from the container, the sterilization of the container and lid, and the filling and sealing in an absolutely sterile atmosphere. Unlike all other means of food packaging, when aseptic processing techniques are used, the processing of the food and the packaging are mutually dependent. A loss in sterility in any area of processing, packaging, filling, closing, or sealing adversely affects the sterility of the product."
and also the catalogue from the suppliers which treats the machine as Aseptic Packaging Machinery. The terms should be viewed in its broad perspective to cover not merely filling the package, but also covers the materials which are to be used for Aseptic Packaging and in trade parlance this is called Aseptic Packaging Machinery. Taken in this light the entire system should be taken as covering the manufacture of the material and the packaging of food. His plea was to allow the machinery imported under OGL and also claimed the benefit of the Notification No. 125/86-Cus., dated 17-02-86 and cited the Public Notice No. 164/89 dated 04-12-1989 which gives the guidelines for implementation of certain industry based Notifications which do not contain end use conditions.
4. In his rejoinder, Shri M.K. Sohal, Ld. J.D.R. stated that the notification was for use in processing/packaging of food articles and the machine imported as per the examination report and expert opinion was for manufacturing aseptic material and will not be covered by the Entry No. 17 sub-serial-1 of Appendix-I, Part-B as Aseptic packing machine, and the appellants' claim for entry under Sl. No.1, sub-serial No. (18) Appendix-I, Part B of 1988-91 AM Policy claiming it as Laminating Coating machine, it is not permissible as that entry is for Jute Industry. The Heading 8422.40 was not applicable and the correct Heading was under Heading 8479.89 which was agreed to by the appellants. The plea for classification under 8422.40 was inadmissible as the heading covers other packing and wrapping machinery.
5. The submissions made are considered. The appellants have imported an "Aseptic Packaging Machinery" as per the invoice, which on examination was found to be Aseptic Packaging material making machine. The machinery expert has noted the function as :
"The machine model KTBL-1200 IS BASICALLY a machine manufacturing material suitable for aseptic packaging of food products.
Normally, a paper Board web of 1 mtr. width is fed into the line by an unwinder. Primary coating and coating in the form of sheet of molten LDPE or other laminates are given to the web. To improve the adhesion of web and other coatings given a surface treatment called corona treatment is imparted.
The web may be slitted in different sizes by using slitters according to the requirement of the customers. The slitted or unslitted web is rewound on to cores.
In brief, the subject machine takes and coates the web, produces webs slitted or unslitted wounded on cores. It does not make any packaging but performs certain activities in preparation/manufacture of Material suitable for Aseptic packing of food products.
The cores wound with slitted or unslitted or unslitted webs are sold to customers who actually do the forming of pouches or cartons filling or wrapping of food products and sealing."
There is no dispute about the fact that it is a machinery for manufacturing aseptic packing material. The appellants have not controverted this fact and the contract also mentions that the equipment will produce satisfactorily Aseptic Packaging Materials. The Notification No. 125/86-Cus., dated 17-02-1986 is applicable for goods for use in processing/packaging of food articles and Sl. No. 23 reads as "Aseptic Packaging machinery which may also perform one or more of the following processes in addition to packaging:- Presterilising, pasteurising, comprising, forming, filling, sealing, coding, marking." The appellant has, therefore, to satisfy that this machine is for process ing/packaging of food articles. The appellants rely on the guidelines issued by the Bombay Custom House Public Notice No. 164/89 dated 04-12-1989 that importer can produce evidence that the industrial facility is available with them for making articles of that industry for claiming the benefit and that aseptic packaging material is for packaging of food and he has to be given the benefit.
It is the contention of the appellant that the Principal Collector took into consideration a number of other facts not mentioned in the Show Cause Notice, one among them being the view that the notification entitles the concessional rate for machines meant for use in processing of food articles. The Show Cause Notice has been scrutinised. It does not expressly spell out the industrial application for which it is meant but it has been held that "machine does not fall in listed category as it is not capable of performing the function of packaging". Since the appellants have held that no opportunity to submit satisfactory evidence to this effect was given to them, the order of the Principal Collector lacks the element of providing natural justice.
The appellants have putforth the point of cross-examination that was not complied with. It is seen from the Show Cause Notice, copies of the inspection reports of all the experts were endorsed and the opinions were that the machine was not capable of packaging. The Principal Collr. while referring to these expert opinions has observed that the machine is not "Aseptic Packing Machine", and has also cited the several authorities on packaging for arriving at the conclusion that the machine does not conform to the description in S. No. 23 of the Notification No. 125/86-Cus. However, in his order he has not mentioned about the cross-examination of the experts although specifically asked for by them in their reply to the Show Cause Notice and also has not mentioned the reasons for not permitting the request. On this point they place reliance on the following decisions :-
(i) B.M. Auto India v. Collector of Central Excise and reported in 1989 (41) ELT 69 (Tri.), wherein this Hon'ble Tribunal followed the decision of the Hon'ble Supreme Court of India in the case of Kalra Glue and Factory v. Sales Tax Tribunal and Ors and reported in 1967 ITR 498;
(ii) Eros Metal Works (P) Ltd. v. Collector of Central Excise and reported in 1989 (43) ELT 361 (Tri.);
(iii) Pradeep Kumar Sengupta v. Collector of Central Excise, reported in 1989 (41) ELT 412 (Tri.).
6. In order, therefore, to afford an opportunity to the appellants to establish their case before the adjudicating authority by providing cross-examination of the experts and also to provide evidence that the machine is meant for use in the packaging of food industry, we feel that it will be reasonable and in the interest of justice to remand the case back to the adjudicating authority having jurisdiction to take into consideration all these aspects, after fulfilling the principles of natural justice. We do not express any views on the merits of the case. The appeal is accordingly allowed by remand.