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Reference No. Chapter Or heading No. or Sub-Heading No. Description of goods Rate Conditions 73.6 73.10 and 73.26 Mathematical boxes, geometry boxes and colour boxes Nil   Subsequently show-cause-notice dated 22.2.2001 was issued alleging that there was evasion of central excise duty of about Rs. 67 lakhs in respect of boxes cleared as geometry boxes during the period April 1996 to December 2000. Under Order-in-Original No. 2/2003 dated 31.1.2003, Commissioner of Central Excise, Delhi-1 confirmed the same duty demand. The Commissioner also demanded interest in respect of the duty amounts not paid under Section 11AB of the Central Excise Act, 1944 and imposed a penalty equivalent to the duty amount on the appellant. The ground for denying the exemption was that the boxes, which are cleared without filling mathematical instruments in them, could not be called mathematical or geometrical instrument: it is the presence of these instruments that makes them geometry boxes. The order also has noted boxes of certain dimensions like 2.25" x 7.5" x 1" cannot accommodate geometrical instruments. The Commissioner held that "The complete identity of the metal container or any boxes would depend on the things being placed inside the boxes." He also held that "the. intention was to give exemption on mathematical/geometrical boxes which are cleared with the mathematical/geometrical instruments only and not as empty boxes."

2. The present appeal contends that the findings of the Commissioner are entirely erroneous. At the outset, the appellants point out that just as cash box manufacturers do not supply those boxes with cash or jewellery box manufacturers do not supply those boxes with jewellery or sweet box manufacturers do not sell the boxes with sweets, the geometry boxes or mathematical boxes manufacturers do not sell geometrical or mathematical boxes with geometry or mathematical instruments, though in some cases the mathematical/geometrical boxes may be sold alongwith the instruments also. The learned Counsel for the appellants points out that the Central Excise Tariff classifications specifically recognizes this inasmuch as HSN Notes under Chapter Heading 90.17 for drawing instruments specifically states that "Drawing compasses, dividers, reduction compasses, spring bows, mathematical drawing pens, dotting wheels, etc., whether in a case (e.g. drawing sets) or separately. It is also the contention of the appellant that geometry/mathematical box makers and geometry/mathematical instrument makers are different industries and both the products are traded separate. It is also submitted that these boxes are clearly known in commerce and industry as Geometry/mathematical boxes. The appellant has pointed out that it supplied the boxes under dispute as geometrical boxes to major sellers of these goods, namely, Archis and Camlin. The appellant has further pointed out that the price-list of Camlin describes these goods specifically as "cases for geometry sets". Further, these boxes are ordered under specific code numbers which are for cases for geometry sets. These are also marketed under attractive names like "Trendy cars", "Terminator cases", etc. so as to attract children. It is the contention of the appellant that central excise classification of goods has to be in accord with the trade understanding.

3. A contention of the appellant is that no evidence has been produced by the Revenue to show that the boxes in question were not known in the trade as geometrical /mathematical boxes or that they were being bought and sold under any other category. The learned Counsel has pointed out that the appellant/assessee filed evidence in support of the contention that these boxes are specifically manufactured and traded as geometry sets. He referred in this connection to affidavit dated 20th day of August 2002 of Shri Rajesh Chavan, Manager (Legal) of Camlin Ltd., Bombay. The learned Counsel pointed out that Shri Chavan had specifically stated that Camlin were engaged in the trading of geometry sets, that these cases were procured from several venders and that "these cases are sold in the market by us as empty cases which the students purchase and thereafter the students purchase the instruments which were put into these boxes." Shri Chavan has also stated that the boxes of dimensions 3.75" x 7.25" x.1" are suitable for filling the instruments. With regard to boxes with the dimensions 2.25" x 7.5" x 1" he has stated that these are also used as geometry boxes and that M/s. Ashoka Trading Corporation, Delhi manufactures mathematical instruments of such small size.

6. The learned SDR has contended that since the exemption is specific to "mathematical/geometrical boxes", granting exemption to empty boxes would not be correct inasmuch as these boxes become geometrical/mathematical boxes only upon the filling of geometrical/mathematical instruments inside them and not in their empty condition. He also submitted that the granting of exemption to general category of metal boxes would lead to abuse of the exemption.

7. The issue arising for consideration is whether the metal boxes in question are geometry boxes/mathematical boxes. It is clear from the evidence on record that these boxes were being sold by the appellant's buyers, namely, Archis and Camlin as geometry/mathematical boxes. Their price-list describe them so. They place orders on the appellant with specific code number and name for mathematical/geometry boxes. Shri Chavan of Camlin has also testified that trade deals with geometry boxes and geometrical instruments separately and students purchase the boxes and instruments separately. Thus, the evidence on record supports the appellant's claim that the boxes cleared by it under the exemption are actually known as geometrical/mathematical boxes. It is well settled that commercial parlance understanding should govern tariff classification and levy of duty. In the present case, since commercial understanding of the goods supports the assessee's claim, there is no justification to hold that "the boxes in question are not mathematical/geometry boxes". The test laid down in the impugned order that the complete identity of a metal container or any boxes would depend on the things actually placed inside the boxes" cannot be sustained, because that shifts the test to a stage subsequent to the removal of excisable goods and not when they are manufactured and cleared from the factory What is relevant for the purpose of excise classifications is not the actual use of the goods but the Commercial/trade understanding of the use of the goods. Someone or other may put an item to a use quite different from the one for which it was intended or commonly used. That would not make the goods different from the goods which were put to their normal use. It is also significant that the demand in the present ease is in respect of only boxes, which were cleared, empty. The same boxes when they were cleared with instruments, were accepted as geometry/mathematical boxes by Revenue Authorities. From this itself, it is clear that the boxes are manufactured for, intended and are used as mathematical/geometry boxes. The only difference being that some boxes are cleared after filling with instruments as geometrical sets and some others are cleared empty for further sale and use as such boxes. The impugned order proceeds to determine the classification depending upon the actual use, which as already stated, is not the correct test.