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PETITIONER: M/S. METAGRAPHS PVT. LTD.

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE, BOMBAY

DATE OF JUDGMENT:       20/11/1996

BENCH: S.P. BHARUCHA, K. VENKATASWAMI

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T Venkataswami, J.      The only  question that arises for our consideration in all these  Appeals is  whether  ‘Printed  Aluminium  Labels’ (hereinafter referred  to as  "labels") manufactured  by the appellant are ‘products of the printing industry" within the meaning of Notification 55/75-CE dated 1.3.1975 (hereinafter called "the  Notification") issued  under Rule  8(1) of  the Central Excise Rules, 1944.      It is  not in  dispute that but for the exemption under the Notification,  the labels  in question, would fall under Item No.  68 of the First Schedule to the Central Excise and Salt Act,  1944 (hereinafter called the "Act"). The relevant portion of the said Notification is extracted below:-           "In  exercise   of  the  power      conferred  by   Rule  8(1)  of  the      Central  Excise  Rules.  1994,  the      Central Government  hereby  exempts      goods of  the description specified      in the Schedule annexed hereto, and      falling under  Item No.  68 of  the      First  Schedule   to  the   Central      Excise and  Salt Act,  1944, (I  of      1944) from the whole of the duty of      excise leviable thereon.            ******************      13.  All products  of the  printing      industry including  newspapers  and      printed periodicals."      It appears  that the  appellants claimed  and  got  the labels in  question exempted  from the  levy of  duty on the ground that they come within the category of products of the printing industry,  under the  orders of Assistant Collector dated 24.12.1979.  Later on the Collector of Central Excise, Bombay, invoking  his powers  under Section  35A of  the Act issued a notice for revising the said order of the Assistant Collector dated  24.12.1979 and for bringing the goods under Item 68  for the  purpose of  levy  of  excise  duty.  After hearing the  objections of  the  appellants,  the  Collector revoked the exemption granted by the Assistant Collector and

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directed assessment of the goods under Item 68.      Aggrieved by  the order of the Collector, the appellant preferred four  appeals to  the  Customs.  Excise  and  Gold (Control)  Appellate   Tribunal.  New  Delhi  for  different assessment periods.  The Tribunal,  New Delhi  for different 13.6.1986 held  that the  printing on  the  aluminium  label being incidental to its use as a label or a wrapper and that being inherently  not a  piece of  reading matter,  will not fall under  the above-said  exemption Notification.  On that view, the  Tribunal dismissed the appeals. Hence the present appeals by special leave.      Mr. V. Laxmikumaran, learned counsel for the appellants has submitted  that the  Tribunal went  wrong in coming to a conclusion that  the printing  on the  aluminium  label  was incidental to its use. According to the learned counsel, the printing was  the primary  purpose and without it, the metal on which  the matter  was printed,  is  of  no  use  to  the appellant’s customer.  It is  the contention  of the learned counsel that  it is  the printing  that gives  the aluminium labels their  use without  which they  would not  be  called labels and  would serve  no purpose.  In  other  words,  the printed words  on the product inform the customer that he is buying the  product of  his choice  or his  brand.  He  also submitted that  in the  trade as well as in common parlance, these aluminium  labels are  treated as products of printing industry.  According   to  the  learned  counsel,  this  was specifically pleaded  before the  Tribunal, but the Tribunal unfortunately not  accepting this  test has stated that this will not  be a  correct test. He also distinguished on facts the judgment  of this  Court in  Rollatainers Ltd. & Another vs. Union  of India  & Others, reported in 1994 (Supp) 3 SCC 293. According to the learned counsel, the test laid down in that judgment,  if applied  to the  facts of this case, even then the appellant is entitled to succeed.      Mr. R. Mohan, learned Senior. Counsel appearing for the Revenue, contending  contrary submitted  that the  labels in question are not products of printing industry and the ratio laid down in the judgment referred to by the learned Counsel for the  appellant wold  directly apply to the facts of this case and  the distinction  sought to  be made  on facts  was without substance.  It is  his contention  that the Tribunal has considered  elaborately the  facts placed  before it and the reasoning  and ultimate  conclusion of the Tribunal that the printing  is only  incidental to  the use  of the labels and, therefore,  they  cannot  be  treated  as  products  of printing industry are unassailable.      We have considered the rival submissions. The labels in question are  printed on  flatbed off-set printing press and the printing  is done  on a  deep offset  printing  machine. These labels are meant to be fixed to refrigerators, radios, air-conditioners, telephone  sets etc.  It is  seen from the order of  the Tribunal  that a  certificate of  an award was printed on  aluminium sheet  of an association. The Tribunal in the course of its order has observed as follows:-      According to  the  appellants,  all      these aluminium sheets are meant to      serve a  purpose connected any with      the printing  on them.  This can be      very   briefly   described   as   a      communication to  the  reader  that      the  commodity,   product,  device,      machine  etc.  etc.  to  which  the      printed aluminium plate is attached      is such and such product made by so      and so.  It is not an advertisement

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    plate or  a  decorative  plate  but      serves a  communication  need  that      the reader  or a potential customer      feels the  need of when he looks at      a product be it a refrigerator or a      clock, or  an air-conditioners or a      motor car  or a  fan. It  tells him      what he want to know in precise and      certain word  and  to  chose  from,      perhaps, a variety of brands of the      same kind  of product  or  machine.      .... In  other words,  the  printed      word on  the  product  informs  the      customer  that  he  is  buying  the      product of  his choice  or  of  his      brand.  These   aluminium   printed      plates serve the purpose of written      word that conveys to the buyer what      he needs  to know about the product      he is contemplating to purchase and      to pay money for."      Having said  so, the  Tribunal at  the end  comes to  a conclusion  that   the  printing  on  the  labels  was  only incidental to  its use and therefore, they cannot be treated as products  of  printing  industry.  The  Tribunal  in  its earlier part  of the  order observed  that the answer to the question depends upon the conclusion whether the printing on the metal plates manufactured by the assessee was or was not incidental to the primary use of the goods.      In Rollatainers  Ltd.  case  (supra),  this  Court  was considering whether  printed  cartons  manufactured  by  the appellants in  that  case  were  products  of  the  printing industry. This Court held as follows:-      "We are  of  the  view  that  to  a      common man  in  the  trade  and  in      common parlance  a carton remains a      carton whether  it is a plan carton      or a  printed carton.  The  extreme      contention  that  all  products  on      which some  printing is  done,  are      the product  of printing  industry,      cannot be accepted."      This Court accepted the reasoning of the Division Bench of the Karnataka High Court to hold that the printed cartons are not the products of the printing industry. The following reasoning of the Division Bench reads as follows:-      "The classification of manufactured      goods cannot  be  dependent  merely      upon their place of production. The      product wherever  produced must  be      classified having regard to what it      means and  how it  is understood in      common parlance. The guiding factor      is not  where it  is produced,  but      what is  produced (See Collector of      Central Excise  vs. Calcutta  Steel      Industry 1989  Suppl (1)  SCC 139).      There appears to be no principle on      which a  distinction can  be  drawn      between an  ordinary carton  and  a      printed carton, and to hold that an      ordinary carton  is a  product of a      packaging industry, while a printed      carton is a product of the printing      industry,  if  it  emerges  in  its

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    final shape  from a printing press.      At best  it can  be said  that with      technological advancement.  It  has      become possible  to have  composite      industries  which   can  provide  a      variety    of     services,     not      necessarily confined  to  a  single      industry     as      conventionally      understood, and which may produce a      variety of  manufactured items.  In      such cases  the products have to be      classified having  regard to  their      purpose and  as they are understood      in ordinary  parlance. So viewed, a      paper carton,  whether  printed  or      not must be classified as a product      or the  packaging industry, and not      a product  of the paper industry or      printing industry. A carton is used      for packing  goods  whether  it  is      made or  printed paper  or not, and      therefore, the  printing of cartons      does  not   add  to  its  essential      function  as   a  container.   Mere      printing does not make a carton. An      ordinary an in the trade has no use      for a  printed paper, unless it can      be given  shape as  a container  in      which he  can  pack  his  products.      What  makes  it  a  carton  is  its      capacity to  contain which  is  its      essential  characteristic  and  not      the printing  work on  it, which is      merely incidental. In our view, the      fact that  sometimes more money may      be spent  on  printing  than  other      things, will make no difference."           (Emphasis supplied)      It was  argued that the trade also understood likewise. But this  argument was repelled by the tribunal by observing that classification  of goods can never be based on what the industry regards  the  goods  to  be.  This  approach  seems contrary to the view expressed by this court in Rollatainers case.  There   this  Court   approved  the   test  based  on understanding  of   trade  parlance/common   parlance  of  a particular product.  In  the  case  on  hand,  but  for  the printing, the  aluminium label world serve no purpose and as seen above, it is the printing on the aluminium sheet, which communicates the  message to  the buyer that makes the sheet as a  label, unlike  a carton  printed or plain which always remained a carton.      The label announces to the customer that the product is or is  not of  his choice  and his purchase of the commodity would be  decided by  the printed  matter on  the label. The printing of  the label  is not  incidental to  its  use  but primary in  the sense  that it  communicates to the customer about the  product and  this serves a definite purpose. This Court in  Rollatainers case  held that  what is exempt under the notification  is the  product’ of the printing industry. The ‘product’  in this  case is  the  carton.  The  printing industry by  itself cannot bring the carton into existence". Let us  apply this  above formula to the facts of this case. The product’  in this  case is  the aluminium printed label. The printing  industry has brought the label into existence. That being the position and further the test of trade having

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understood this  label as  the product of printing industry, there is  no  difficulty  in  holding  that  the  labels  in question are  not products  of printing industry. It si true that all  products on  which some  printing is done, are not the products  of printing  industry.  It  depends  upon  the nature of  products and  other circumstances.  Therefore the issue has  to be  decided with  reference to  facts of  each case. A  general test  is neither advisable not practicable. We are,  therefore, of the opinion that the Tribunal was not right in  concluding that  the printed  aluminium labels  in question are not ’products of printing industry’.      Accordingly, the  appeals are  allowed and the impugned orders of  the Collector,  Central Excise  are set aside and the appellants are entitled to claim exemption on the labels in question  under the  above-mentioned Notification.  There will be no order as to costs.