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PETITIONER: COLLECTOR OF CENTRAL EXCISE, CHANDIGARH

       Vs.

RESPONDENT: PUNJAB ANAND LAMP INDUSTRIES MOHALI (PUNJAB)

DATE OF JUDGMENT14/09/1989

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RAY, B.C. (J)

CITATION:  1989 SCR  Supl. (1) 123  1989 SCC  Supl.  (2) 490  JT 1989  Supl.    251    1989 SCALE  (2)657

ACT:     Central Excises and Salt Act, 1944: Section 2(f),  First Schedule  Tariff Item No. 17(3), 17(4) and Notification  No. 66/82 dated 28th February’82, Notification No. 151/83  dated 13th May’83--Applicability of.     Bulb  sleeves and tube light sleeves for the purpose  of packing  electric  bulbs and electric  tube  lights--Whether ’printed boxes and cartons’--Levy of excise duty.

HEADNOTE:     The  respondent was manufacturing printed  bulb  cartons and printed tube cartons for the purpose of packing electric bulbs  and electric tube light. The Additional Collector  of Central  Excise  held that the cartons manufactured  by  the respondent  were classifiable under item No. 17 of the  Cen- tral  Excise Tariff Act and thus chargeable to excise  duty. Accordingly an order was passed for demand of excise duty.     The  respondent  filed  an appeal  before  the  Customs, Excise  &  Gold (Control) Appellate Tribunal.  The  Tribunal allowed the appeal by holding that (i) The product drums  or sleeves  manufactured by the respondent could not be  called ’box’ or ’carton’; (ii) They were exempted from excise  duty under the relevant notification. Hence this appeal by the Revenue. Dismissing the appeal, this Court,     HELD: 1. To consider the question whether the  exemption notification was applicable or not in view of its terms,  it is  necessary  to find out whether these  sleeves  bulbs  or sleeves  or tube light sleeves manufactured for the  purpose of packing the electric bulbs and tubes are printed box  and cartons. [127E]     2. The Tribunal approached the question from the literal meaning  as  well as the functional use of  the  expressions employed. As these 124 sleeves and tube sleeves manufactured by the respondent  had no  independent market as such, and as these  were  utilised for captive consumption for the end product manufactured  by the respondent, in the absence of any positive and  reliable evidence  that  there was either a market  for  these  goods manufactured  by  the respondent, and in that  market  these bulb  sleeves and tube sleeves are known and  marketable  as

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corrugated boxes and cartons, a fact of which in the record, there  is  no  positive evidence either  way,  the  Tribunal proceeded  on  a correct basis.  Therefore,  the  conclusion reached  by the Tribunal cannot be assailed in this  appeal. [127F-H; 128B]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 3097  of 1989.     From  the  Judgment  and Order dated  15.3.1989  of  the Central  Excise and Gold (Control) Appellate  Tribunal,  New Delhi in Order No. 100/89-C in Appeal No. E/55/87-C. K. Swami and P. Parmeswaran for the Appellant. The Judgment of the Court was delivered by     SABYASACHI MUKHARJI, J. This is an appeal under  section 35L(b) of the Central Excises & Salt Act, 1944  (hereinafter referred  to  as  ’the Act’) against the  order  dated  15th March,  1989 of the Customs, Excise & Gold (Control)  Appel- late  Tribunal, New Delhi (hereinafter referred to  as  ’the Tribunal’).     The question for consideration in this appeal is, wheth- er  the bulb sleeves and tube light sleeves manufactured  by the respondent for the purpose of packing the electric bulbs and electric tube lights are ’printed boxes and cartons’ and are  subject  to excise duty or whether  the  respondent  is entitled  to  exemption under notification No.  66/82  dated 28th February, 1982, as amended by notification No. 15  1/83 dated 13th May, 1983. The said amended notification reads as follows:               "GSR No.--In exercise of the powers  conferred               by subrule (1) of rule 8 of the Central Excise               Rules,  1944,  the Central  Government  hereby               exempts  articles  of  paper  or  paper  board               falling  under sub-item (3) of Item No. 17  of               the First Schedule to the Central Excises  and               Salt Act, 1944 (1 of 1944), from the whole  of               the duty of excise leviable thereon:               125                        Provided that no such exemption shall               apply  to  printed boxes and  printed  cartons               (including  flattened or folded printed  boxes               and  flattened  or  folded  printed   cartons)               whether    in   assembled    or    unassembled               condition."     The respondent was manufacturing printed bulb carton and printed tube carton falling under erstwhile Tariff Item  No. 17(3)  of  the  Central Excise Tariff. The  revenue,  it  is alleged,  ascertained that the sleeve rolls had a  width  of 17.5  cms. consisting of corrugated kraft paper on one  side and plain paper on the other side having printed thereon the name  monograms and so on pertaining to the lamps  from  the corrugated  paper manufacturers. The rolls are mounted on  a packing  machine and are cut to adequate length  to  circum- scribe  the lamps and the joint is automatically covered  by gum  tapes.  The  sleeves are conveyed  automatically  to  a conveyer  on which the lamps are inserted manually.  Further the  ends  of the above sleeve are folded to  prevent  lamps from falling out. The entire machine is operated by means of electric motor. It is stated that it was further ascertained that for the florescent tubes the sleeves already cut to the proper  length are supplied to the factory by outside  manu- facturers.  The tube lamp is manually put in and the  sleeve edges  folded  over manually and gum tape  is  also  applied

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manually. The tube lamp is inserted in the tube and then put in  the  outside  card box packing. It is the  case  of  the revenue that the respondent manufactured printed cartons for bulbs by way of printing on papers (printed and writing) and pasting  the printed paper on the corrugated board and  thus converting  the said corrugated board to  printing  cartons. According  to the revenue, this process of manufacture  ren- ders  the  carton having printing and paper pasting  on  the surface  to make these manufacture in terms of section  2(f) of  the  Act  and classifiable under Tariff  Item  17(3)  as aforesaid. According to the revenue, the exemption contained in  the  notification No. 66/82 was not  applicable  as  the notification  exempted  articles of paper  and  paper  board falling  under Tariff Item No. 17(3) except  printing  boxes and  cartons  from the duty. According to the  revenue,  the respondent  manufactured and cleared bulb cartons  (printed) and tube cartons during the period June, 1985 to 30th April, 1986  of  the  value of  Rs.10,24,461.25  involving  central excise  duty to the tune of Rs.1,59,817.67 without  applying for  and  obtaining a central excise licence  for  erstwhile Tariff  Item  No. 17 and without maintaining  any  statutory record  thus wilfully suppressing and mis-stating the  facts with the intention to evade central excise duty and  thereby contravening provisions of the Act and the rules. 126     A Show Cause notice was issued followed by a corrigendum and  demand was made of Rs. 1,59,817.57 under rule  9(2)  of the  Central Excise Rules, 1944 (hereinafter referred to  as ’the said rules’) as to why penalty should not be imposed on them  under  rule  173Q of the said rules  for  the  various alleged  contraventions under the provisions of the Act  and the rules. Written submissions were made. By an Order  dated 24th  November,  1986, Additional Collector of  Central  Ex- cise,  Chandigarh  held  that cartons bulb  and  light  were manufactured by the respondents and were classifiable  under item  17(3) of the erstwhile Central Excise Tariff  Act  and thus  chargeable to excise duty. But the duty was liable  to be reduced in view of the exemption notification No.  217/86 dated 2nd April, 1986 for the period 2.4.86 to 30.4.86.  The Additional  Collector therefore passed an order  dated  24th November,  1986 for demand of duty of Rs.  1,44,158.12  from the  respondent under rule ’9(2) of the said rules  and  im- posed  a penalty of Rs.25,000 under rule 173Q. There was  an appeal to the Tribunal. The Tribunal referred to Tariff Item 17  pertaining to paper and paperboard. Sub-item (4) of  the said item reads as follows:               "4.  Boxes,  cartons, bags and  other  packing               containers  (including  flattened  or   folded               boxes) and flattened or folded cartons, wheth-               er or not printed and whether in assembled  or               unassembled condition."     Tariff  Item  17(4) makes a distinction  between  boxes, cartons,  bags and other packing container. There can be  no doubt,  according to the Tribunal, that boxes,  cartons  and bags  would also be packing containers. Out of  the  various types  of packing containers of paper and paper  board,  ac- cording  to  the Tribunal, only printed  boxes  and  printed cartons  are dutiable if we read notification 66/82  as  al- ready  set  out hereinbefore. The Tribunal was of  the  view that  the boxes and cartons have a  definite  understanding. Reference was made to Shorter Oxford English Dictionary Vol. I  where ’box’ has been defined as "a case of  a  receptacle usually having a lid". In that view of the matter, according to  the Tribunal, the product drums or sleeves  manufactured by  the  respondent could not be called ’box’  or  ’carton’.

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Therefore, the Tribunal held that these will be exempt  from excise  duty under the aforesaid notification even  assuming that the product is a container. In that view of the matter, the  Tribunal  did not go into the  question  of  limitation which  had  been raised before it.  The  Tribunal,  however, mentioned in the order that before the adjudicating authori- ty, no mention had been made by the respondent regarding the fact  that  they were undertaking manufacture of  drums  and sleeves out of paper and 127 paper  board sheets purchased by them from the market  inas- much  as,they had not filed any classification list to  that effect  which they were under an obligation to do under  the law.  It was contended on behalf of the respondent that  the manufacturing  of  the drums and sleeves was  undertaken  in manufacturing  bale  and, therefore, the  revenue  knew  its manufacturing. But this factor, the Tribunal held, is of  no consequence because in the system of Self Removal Procedure, the  respondent  is not absolved of  the  responsibility  of bringing  the product manufactured by them to the notice  of the  authorities  even if they are using  that  product  for their captive consumption. The respondent had their  respon- sibility.  In  the light of the Tribunal’s findings  on  the question of classification, the appeal of the respondent was allowed  with consequential relief. Revenue  challenges  the same in this appeal.     We have perused the order of the Tribunal. It is evident that  one of the meanings, according to the  Shorter  Oxford English Dictionary, Vol. I, which the Tribunal had referred, is that box is ’a case of a receptacle usually having a lid’ and  in  view of the purpose for which this is used  in  the transaction, the Tribunal found that drums or sleeves  manu- factured by the respondent could not be called a ’box’ or  a ’carton’ because the box must have a lid. The Tribunal noted that  sleeves by themselves could not contain  anything  be- cause these are open ended from both sides.     In order to consider the question whether the  exemption notification  was applicable or not in view of the terms  of the notification, it is necessary to find out whether  these sleeves bulbs or sleeves or tube light sleeves  manufactured for the purpose of packing the electric bulbs and tubes  are printed  box and cartons. In our opinion, the  Tribunal  ap- proached  the question from the literal meaning as  well  as the  functional  use of the expressions employed.  As  these sleeves and tube sleeves manufactured by the respondent  had no  independent market as such, and as these  were  utilised for captive consumption for the end product manufactured  by the respondent, in our opinion, in the absence of any  posi- tive  and reliable evidence that there was either  a  market for  these goods manufactured by the respondent and in  that market  these  bulb sleeves and tube.sleeves are  known  and marketable as corrugated boxes and cartons, a fact of  which in the record, there is no positive evidence either way,  in our  opinion, the Tribunal proceeded on a correct basis.  We have  considered the submissions advanced on behalf  of  the revenue. But we have not been able to persuade ourselves  to accept  the  contention that Tribunal  committed  any  error either  on  the  principle of law to be  applicable  or  the appreci- 128 ation of the facts in this case.     In  the  aforesaid view of the  matter,  the  conclusion reached  by the Tribunal cannot be assailed in this  appeal. The appeal, therefore, fails and is, accordingly, dismissed. There will, however, be no order as to costs.

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T.N.A.                                         Appeal   dis- missed. 129