Customs, Excise and Gold Tribunal - Delhi
Collector Of C. Ex. vs I.T.C. Ltd. on 22 September, 1987
Equivalent citations: 1987(14)ECC398, 1987(13)ECR1033(TRI.-DELHI), 1988(38)ELT76(TRI-DEL)
ORDER
G. Sankaran, Sr. Vice-President
1. The facts of the case relating to appeal No. 858/83-D, briefly stated, are that Indian Tobacco Co. Ltd., Madras (hereinafter called the assessee), are engaged in the manufacture inter alia of printed cartons out of duty paid paper boards procured by them. The assessee had been paying duty on printed cartons under Item No. 68 of the First Schedule (hereinafter referred to as 'CET') to the Central Excises and Salt Act, 1944, ever since this item was inserted in the Tariff in 1975. On 11-3-1978, the assessee wrote to the Assistant Collector of Central Excise, Madras, requesting exemption from payment of duty on printed cartons on the plea that they were "products of printing industry" within the meaning of Central Excise Exemption Notification No. 55/75-C.E., dated 1-3-1975, as amended by Notification No. 122/75, dated 5-5-1975. In support of their plea, they relied on Order-in-Revision No. 2057/77 passed by the Central Government acting as Revision Authority under the Central Excises and Salt Act (hereinafter called the 'Act'), in the case of . Allibhoy Sharafally & Co., Bombay, holding printed cartons manufactured by that party to be products of printing industry eligible for duty exemption under the aforesaid notification. The Assistant Collector, however, held that the goods were not eligible for the exemption claimed. In his order dated 20.3.78, he observed that when printed paper boards move to the slitting and gumming stage, they do not remain any longer products of the printing industry but passed on to the stage of products of the packaging industry. He also observed that printing in relation to cartons was only an incidental process in their manufacture and even without the printing operation, the cartons retained their identity and use as cartons. In appeal, the Appellate Collector of Central Excise, Madras, by his order dated 5.12.78, set aside the Assistant Collector's order on the basis that printed cartons were mainly meant for product display to push up sales and not packaging. The dominant activity in the manufacture of printed cartons was printing which consumed about 70% of the total cost. Slitting and gumming were only incidental processes.
2. The Central Government, on perusal of the records, formed a tentative opinion that the Appellate Collector's order ought to be set aside and an order should be passed to the effect that printed cartons manufactured by the assessee could not be held to be products of printing industry eligible for duty exemption under the aforesaid notifications. The assessee was accordingly called upon to make its representation against the proposed course of action.
3. The reasons which formed the basis for the Central Government's tentative view were set out in paras 5 and 6 of the notice dated 27.3.79. These read as follows:
"5. On perusal of the case records, the Central Government are, however, tentatively of the view that irrespective as to whether or not the facts of the party's case are distinguishable from the facts of the case in respect of the party to whose favour Order-in-Revision in 057/77 was passed by the Central Government, the issue relating to the applicability of the exemption provided by Notification No. 55/75, dated 1.3.75 amended by Notification No. 122/75 cannot be decided solely with reference to cost creiteria as has been done by the Appellate Collector. That correctly printing in relation to manufacture of printed cartons is only an incidental process, and even without printing the cartons retain their basic identity and are used as cartons only. That even though the raw-materials i.e. the printed boards used for manufacture of printed cartons may be products of printing industry, it cannot be said that the end product i.e. the cartons made out of such raw materials are also products of printing industry. That it cannot be said that the printed car-tons in question are mainly meant for product display since these are also used for packing (as outer covers) of the goods.
6. Secondly, Government are also tentatively of the view that whether a particular product is the product of printing industry or not is dependent on various facts and circumstances obtaining in each case. In deciding a particular case, there appears to be no bar for the Government taking note of questions of facts and law which may have been overlooked in deciding an earlier case."
By a detailed reply dated 22.5.79, the assessee contested the notice.
4. The proceedings initiated by the above notice remained unconcluded and were, therefore, transferred to this Tribunal under Section 35.P of the Act for disposal as if it were an appeal filed before the Tribunal.
5. Appeal No. 1350/81-D pertains to rejection by the lower authorities of the assessee's claims for refund of duty paid on printed cartons under Item in 8 CET, the basic issue involved being same as in Appeal in 58/83-D.
6. Since the two appeals presented a common issue, they were heard together. Shri Ravindra Narain, Advocate, represented the assessee and Shri Vineet Kumar, Sr.D.R., the Collector.
7. The learned counsel for the assessee referred to, and relied upon, this Tribunal's Order in 73/1987-D dated 4.3.87 in the case of CCE, Bombay v. Mis. R.M.D.C. Press (P) Ltd., Bombay [1987 (29)ELT 957 (Trib.)], wherein the view was expressed that printed cartons were products of printing industry within the meaning of Notification in 5/75 and were, therefore, eligible for duty exemption under that notification. When, however, it was pointed out to the counsel that the majority opinion in that order had not gone into this question at all and had no occasion, therefore, to endorse this view expressed by the Member (Judicial), the counsel submitted that the majority had not dissented from that view. At any rate, he said, the said view had considerable persuasive value and was entitled to the highest consideration. In the order written by Member (Judicial), the decision of the Government of India in the case of Allibhoy Sharafally & Co. -1978 ELT (J) 145, the contrary decision of the Central Govt. in case of Vijay Flexible Containers Ltd. 1980 ELT 646 and the two conflicting judgments of the Andhra Pradesh High Court in case of Mis. Golden Press - 1985 ECR 1001 and Karnataka High Court in the case of Rollatainers Ltd., 1984 ELT Vol.18 217 had been considered. The Karnataka High Court had considered the Andhra Pradesh High Court judgment but differed from it and Shri Ravindra Narain submitted that, for the reasons set out in the Member (Judicial)'s order, the Karnataka High Court judgment should be preferred and, consequently, printed cartons should be held to be products of printing industry. Referring to the Andhra Pradesh High Court judgment, the learned counsel stated that it was not as though the High Court did not find merit in the petitioner's contention. In fact the court said :
"The most that can be said in favour of the petitioner is, may be two views are possible."
Since two views were possible, the Court did not choose to exercise its extraordinary writ jurisdiction to decide the issue in favour of the petitioner. For this reason also, more than the Andhra Pradesh High Court judgment, the Karnataka High Court judgment which gave a ruling on the specific issue should be preferred. Further, if the Andhra Pradesh High Court felt that two views were possible, surely, the more beneficial view in the assessee's favour should be adopted.
8. Shri Ravindra Narain further submitted that the raw material supplied to the as-sessee was not printed board but plain ones. The manufacturing process as set out on page 32 of the assessee's paper book would show that the pre-dominant activity in the manufacture of printed cartons was printing and that slitting and gumming were only incidental, accounting for about 30% of the cost of manufacture Further, printed cartons were normally manufactured by the printing industry In this connection, the counsel pointed out that, even according to the show cause notice issued by the Government, it was admitted that upto the stage of printing, the goods may be a product of the printing industry. It is only at the later stages of slitting and gumming that the show cause notice seeks to put them as a product of the packaging industry If, even according to the Goverm-ment, upto the stage of printing the goods are to be considered as products of printing industry, the counsel urged, the process of slitting and gumming would not take them out of that category. The counsel further- submitted in response to a query from the Bench that even if printed cartons were to be manufactured by a packager, they would nevertheless be products of the printing industry if they were not normally known as products of the packaging industry, but as products of the printing industry
9. On the merits of the dispute, the learned Sr. D.R. submitted in response to the contentions put forth by Shri Ravindra Narain that the agreement between the assessee and its clients were for the sale and purchase of printed cartons and not boards. The as-sessee was not merely printing on plain boards according to the specifications of the customers but also undertaking the activity of slitting and gumming which would make the product printed cartons. The fact that there was elaborate printing would not mean that the cartons ceased to be just that - containers. Containers were often required to bear on them statutorily required data, as for example, date of manufacture, date of expiry, ingredients, batch number etc. in the case of drugs. In respect of other products, the printed matter may be wholly or essentially of an advertisement or display nature. The nature of the legends printed on the cartons was not so material as the fact that the cartons were printed. In this connection, Shri Vineet Kumar drew our attention to the Andhra Pradesh High Court's judgment which had considered the analogy of metal containers which continued to be metal containers even if they had been printed on. Besides, the High Court had given a definite finding that printed cartons were a product of the packaging industry though the court might not have deemed it fit to interfere with the impugned order in exercise of its extraordinary writ jurisdiction. According to Shri Vineet Kumar, the ordinary common sense connotation of the expression product of printing industry" would be articles such as newspapers, periodicals, books etc. It would not take within its sweep printed cartons. The D.R. also drew our attention to the Tribunal's judgment in the case of Muthuvel Industries, reported in 1985 (22) ELT 875 in which, after considering the Kar-nataka and the Andhra Pradesh High Court judgments, the Tribunal held that flat files for use in office were products of the printing industry.
10. In a short rejoinder, Shri Ravindra Narain reiterated his submission that the Andhra Pradesh High Court had held that two views were possible and, therefore, did not choose to interfere. He also referred to the Tribunal's order in the case of Jayant Pack-aging Private Ltd. Order No. 180/85 dated 17 5.1985. in Appeal in 03/81-D and order in 83/85-D dated 29.8.1985 in appeal in 52'78-D in the case of India Coated Carbons (P) Ltd.,holding, after the Karnataka High Court judgment in the Rollatainers case (supra), that printed cartons were products of the printing industry Referring to the Tribunal's decision in the case of Muthuvel Industries (supra), it was stated that the technical authority cited in that decision showed that printed cartons were included in the products of printing industry. He also submitted that it would not be correct to say that a carton remained a carton even after printing, because it was not the carton that was subjected to printing but the plain board and it was the printed board that was made into a carton.
11. We have carefully considered the submissions before us. Our task has been rendered considerably lighter by the detailed and lucid examination of the merits of the dispute in the opinion recorded by the learned Member (Judicial) in the case of R.M.D.C. Press (P) Ltd. Bombay (supra). Briefly recapitulated, the position that emerges is as fol-lows:-
(i) As observed by both the Andhra Pradesh and Karnataka High Courts, the meaning of the expression "products of printing industry" will have to be found with reference to the trade understanding of the same in the absence of any statutory definition of the term.
(ii) The conclusion as to trade understanding, as gathered from several publications such as -
(a) "The Printing Trade Directory" published by the Printing Trade Journal of the U.K. listing the addresses of a large number of printers engaged in carton making in the Section "Print buyers guide to printers specialities";
(b) "The Printing Industry" by Victor Strauss dealing inter alia with "package printing" in the Section dealing with different kinds of printed products;
(c) "Printing Office Procedure" published by the British Printing Industries Federation shows a large number of firms engaged in book and magazine production, jobbing printing and binding, carton and stationery manufacture; it also states that there is a trend among printers towards specialisation, some firms concentrating on books, some or periodicals, yet others on printed cartons and stationery :-
is that in the trade, making of printed cartons is understood as a specialised work undertaken by printers.
(iii) The above publications have been relied upon in the Karnataka High Court judgment in concluding that manufacture of printed cartons is accepted in the trade as an activity of printing industry and hence printed cartons would be products of the printing industry;
(iv) If printed cartons are considered as products of the printing industry, the fact that plain cartons which would normally be less sophisticated and expensive than printed cartons would not be eligible for the benefit of duty exemption (- an anomaly -) would not be a reason to deny the benefit of duty exemption to printed cartons;
(v) The contention of the Revenue that cartons remain cartons after being printed lacks force since the position is not as if a person who requires printed car-tons would purchase plain cartons and have them printed on. Such a person would necessarily approach a printer who would have the card board cut, printed, folded and pasted, all in his own establishment.
12. In addition to the above, the assessee has placed on record, with our approval, additional evidence in the shape of extracts from certain other publications:
(a) The Encyclopaedia of "How It's Made" -
Edited by Donald Clarke -
Marshall Convendish, London & New York says in the chapter entitled "Printing" - "Apart from the obvious books, magazines and newspapers, the products of the printing industry are many and diverse. They include posters, bank notes, telephone directories, postage stamps, record sleeves, wall papers, cartons, plastic containers and many other forms of packaging".
(b) "Package Printing" by Robert P. Long -
Graphic Magazine Inc., Garden City, New York, has the following passage under the hearing "First Carton Printing" - 'The folding carton, now a major product of letter press printing, was launched by Quatar Oats, some time prior to 1886...".
13. All these authorities establish the fact that printed cartons are products manufactured by printers and not by persons engaged in manufacture of plain cartons. Hence, printed cartons would be a product of printing industry rather than packaging industry.
14. As the learned counsel for the assessee has pointed out, the Andhra Pradesh High Court in its decision on the case of Golden Press (supra) has not ruled out the contention that printed cartons are products of printing industry as without basis. As pointed out by Member (Judicial) in his order in the R.M.D.C. Press case (supra), the High Court has held that the view that printed cartons are products of printing industry is as much plausible as the view that they are products of packaging industry. It is also to be noted that it was in view of its observation that "The most that can be said in favour of the petitioner is, may be two views are possible", that the High Court perhaps did not deem it proper to interfere in the matter in exercise of its writ jurisdiction.
15. It is also significant to note that even according to the Central Government, as apparent from the show cause notice dated 27.3.1979 issued by it to the assessee, printed boards used for the manufacture of printed cartons may be products of the printing industry. If this be so, it does not stand to reason why the cartons made of such printed boards in the printer's factory cannot be also said to be products of the printing industry especially when, as already noted, the Trade considers printed cartons as products of the printing industry.
16. We do not think that the relative cost of printing vis-a-vis the other activities connected with the preparation of printed cartons can form a satisfactory basis for resolving the dispute. The cost of printing would depend on the specification of customers and could vary widely. And in any case, where to draw the dividing line?
17. The learned Sr.D.R. for the Revenue contends that a metal container continues to be a metal container even after being printed on. On the same analogy, it is urged, cartons should be considered to continue to be cartons even after being printed on. We may note that it is not the metal container or the paper board carton that is printed on. The printing is done on sheet metal or, as the case may be, plain paper board. They are then fabricated into metal containers or printed cartons. To pose the point that metal containers/paper board cartons continue to remain as such even after printing is, therefore, to confuse the issue. This apart, the Central Excise Tariff Schedule has a specific entry for metal containers - Item in 6 - unlike in the case of printed paper board cartons (as the CET stood at the material time). The analogy of printed metal containers is, therefore, clearly inapt and inapplicable.
18. In the light of the foregoing discussion, we hold that printed cartons manufactured by the assessee were products of the printing industry and, therefore, eligible for duty exemption in terms of Central Excise Notification No. 55/75.
19. In the above view of the matter, we discharge the show cause notice dated 27.3.1979 issued by the Central Government to the assessee and dismiss appeal No. 858/83-D.
20. We now turn to Appeal No. 1350/81 -D. As already noted at the outset, the basic issue herein is the same as in the other appeal which we have disposed of as above. What remains to be seen is whether the assessee is entitled to refund of whole or part of the duties paid by it on printed cartons under Item in 8 CET. Since we have already held that the subject goods are eligible for duty exemption in terms of Notification in 5/75, it only remains for us to see the other relevant facts and circumstances concerning this appeal.
21. Following the Order-in-appeal in 006/78 dated 5.12.1978 passed by the Appeltate Collector (the order impugned in Appeal in 58/83), the assessee preferred a claim for refund of Rs. 11,20,558.17 being the excise duty paid by it on printed cartons manufactured and cleared by it during the period from March 1975 to September 1978. The Assistant Collector passed order dated 2.4.1979 in which he noted that Notification No. 122/75 which added the entry relating to products of the printing industry in Notification in 5/75 had been issued only on 5.5.1975 and that, therefore, the said notification could take only prospective effect. Hence the refund claim for the period upto 4.5.1975 could not be entertained. We shall straightaway deal with this part of the Assistant Collector's order which has been upheld by the Appellate Collector by his order dated 12.11.1980. Shri Ravindra Narain accepted before us that Notification No. 122/75 having been issued only on 5.5.1975, could not have any retrospective effect and therefore, he would not press the claim for the period March 1975 to 4.5.1975. For the reason that the said notification issued on 5.5.1975 had only prospective effect, we uphold the rejection of the assessee's claim for refund for the period March 1975 to 4.5.1975.
22. That leaves for consideration the claim for the period 5.5.1975 to September 1978. This part of the claim was held by the Assistant Collector as barred by limitation in view of the fact that the claim for refund had been preferred on 1.3.1979 when the assessee's accounting year was April to March and the refund claim, if any, had to be filed within 6 months from the closing of the accounting year. The Assistant Collector, thereafter proceeded to pass an order which, according to us, is curious to say the least. Referring to the period from 20.1.1978 to March 78, the Assistant Collector said that the claim did not appear to be time barred. However, he stated :
"However, as it is under the consideration of the Government of India, whether review proceedings under Section 36(2) of the Central Excises and Salt Act, 1944 should be initiated against the order of the Appellate Collector, the refund claim for this period could be entertained only after the expiry of the statutory time limit for initiating review proceedings/after receipt of the order in review as the case may be."
23. We must record at this stage itself that the Assistant Collector's action in not passing the claim for refund which, according to him, was not barred by limitation, was not correct. His leaving it to the assessee to agitate the matter again after the period for initiation of the order-in-appeal was over or after receipt of the order-in-review, was, in the absence of a stay of operation of the order-in-appeal by a competent authority, without, and in excess of his, jurisdiction and what is noteworthy is that it was only on 18.4.1981 that the Government of India by an order stayed the operation of Order-in-appeal in 006/78 dated 5.12.1978 passed by the Appellate Collector, pending decision on the review proceedings.
24. In appeal, the Appellate Collector passed an order on 12.11.1980, which, in effect, upheld the order passed by the Assistant Collector. However, he directed the Assistant Collector that as soon as review proceedings were over, he must take action to ex-peditiously finalise the refund claim in respect of the period for which the claim had been held by the Assistant Collector to be not barred by limitation.
25. Before us, the learned counsel for the assessee contends that the show cause notice issued by the Government seeking to set aside the order-in-appeal in 006/78 dated 5.12.1978, not having raised the question of limitation, the Tribunal should not go into that question now. His contention is that the aspect of limitation was not gone into by the lower authorities and, therefore, not raised in the show cause notice.
26. We do not agree with the above contention. Firstly, the order-in-appeal in 006/78 dated 5.12.1978 concerned itself with the question of eligibility of printed car-tons to the benefit of Notification in 5/75. It did not deal with the question of refund of excise duty, though, no doubt, the Appellate Collector had stated in his order that he was allowing the appeal with consequential relief to the appellants. For determining what was the "consequential relief' flowing from the said order, we must look at the Assistant Collector's order dated 20.3.1978 which was set aside by the Appellate Collector. Now, by order dated 20.3.1978, the Assistant Collector had only ordered that the printed car-tons manufactured by the assessee were not eligible for exemption under Notification in 5/75 as amended by Notification No. 122/75 and that it should continue to pay duty on printed cartons. This order does not deal with, or dispose of any claim for refund of duty. It is natural, therefore, the show cause notice issued by the Government had no occasion to consider the refund claims or the aspect of limitation with reference to the claims. The order of the Assistant Collector and of the Appellate Collector which have culminated in the present appeal dealt with the claim for refund of duty and held that the claims were partly barred by limitation. We do not, therefore, see any reason why this Tribunal ought not to go into the question of limitation. We reject Shri Ravindra Narain's contention in this behalf.
27. The period of the claim covered by the assessee's claim letter dated 1.3.1979 to the Assistant Collector is March'75 to September'78. As we have already stated, refund for the period March 75 to 5.5.1975 is, In any event, not admissible. Shri Ravindra Narain took us through the correspondence between the assessee and the Assistant Collector.
By a letter dated 20.1.1978, the assessee sought refund of duty paid by them under Item in 8 on printed cartons manufactured by them. This was in the light of the Central Government's order-ln-revision in the case of Allibhoy Sharaffally & Co. (supra). No particulars of the refund claim were furnished along with this letter but a detailed statement was to follow.
By another letter dated 8.2.1978, the assessee quantified the refund claim as Rs. 5,68,185.96 and furnished month-wise details of the payment of duty under Item in 8. The period of claim was March 75 to January 78. The letter also stated that the assessee was paying duty on printed cartons under protest on and from 20.1.1978. The next event is a letter dated 1.3.1979 from the assessee as a sequel to the order-in-appeal dated 5.12.1978 passed by the Appellate Collector ruling that printed cartons were eligible for the benefit of Notification in 5/75 and directing consequential relief - (we had occasion to advert to the implication of the expression "consequential relief' in one of the preceding paragraphs). By this letter, the assessee sought refund of Rs. 11,20,558.77, the period covered being March75 to September 78. This claim included the period covered by the claim letter dated 8.2.1978 also.
28. Shri Ravindra Narain submitted before us that payment of duty on printed car-tons under Item in 8 CET was under a mistake of law as it transpired from the Central Government's decision in the case of Allibhoy Sharaffally & Co. (supra). Therefore, the limitation contained in Rule 11 of the Central Excise Rules would not apply but that under the General Law of Limitation. He also submitted that the consolidated refund claim dated 1.3.79 was one under Rule 11 (3) and that limitation under Rule 11 would not apply. Shri Vineet Kumar's reply to these submissions was that the claim for refund of excise duty was certainly subject to the limitation imposed under Rule 11.
29. We have carefully considered the submissions of both sides. Since the claim that printed cartons were eligible for benefit of duty exemption as products of printing industry in terms of Notification in 5/75 has been upheld by us, the assessee would be entitled to refund of the duties paid subject of course to the necessary applications having been made within time-limit prescribed under Rule 11. Since it has now been well settled that claims for refund of duty preferred before quasi-judicial authorities functioning under statute are governed by the limitations imposed under the statute (see Supreme Court's judgment in the case of Miles India Ltd. v. Assistant Collector of Customs, 1985 ECR 289, upholding a decision of this Tribunal to the said effect in respect of a claim under Section 27 of the Customs Act, the ratio, in our opinion, applies to claims for refund of excise duty also), we reject Shri Ravindra Narain's contention that the claims in the present matter are governed by the limitation under the General Law of Limitation.
30. As earlier noted, the assessee had. filed a claim for refund of duty but without the necessary details on 20.1.78. Without the particulars which are necessary for scrutinising the claim and on the basis of which alone the assessee could also have quantified the claim, a bare claim for eligibility for refund would not serve the purpose of a claim for refund under Rule 11. This letter must, therefore, be excluded from consideration. However, on 8.2.78 the assessee claimed refund of duty paid during the period March 75 to January 1978 with the necessary data. As far as we can see from the record, this claim does not seem to have been adjudicated upon.
On 1.3.79, the assessee again filed a claim seeking refund of Rs. 11,20,558.77 covering the period from March 75 to September 78, which included the period covered by the earlier claim. This claim has, In the very nature of things, to be considered as a continuation of the earlier claim though it has been filed ostensibly in pursuance of the order-in-appeal dated 5.12.78 of the Appellate Collector. Taking all these circumstances into account, we are of the view that the assessee would be entitled to refund of duty paid on printed cartons under Item No. 68 CET during the period of six months preceding 8.2.78 in accordance with the limitation under Rule 11 as it stood at the material time. The asses-see would also be entitled to refund of duty paid during the period from 9.2.77 to 6.8.77 in accordance with the limitation in Rule 11 at the material time. This is in accordance with the ratio of the judgment of the Bombay High Court in the case of Universal Drinks Pvt. Ltd. v. Union of India 1984 (18) ELT 207, followed by this Tribunal in the case of Nagar-juna Steels Ltd. v. Collector of Central Excise, Hyderabad 1985 (21) ELT 854. The payments of duty on and after 20.1.78 having been made under protest, would naturally not be barred by limitation. The claim for refund for the period on and after 20.1.78 covered by the refund claim dated 1.3.79 would, therefore, not be barred by limitation.
31. Appeal in 350/81-D is thus partly allowed as discussed above and, for the rest, dismissed.