1981 (2) TMI 234 - CGOVT - Central Excise

Summary

Issues: Classification of goods under Central Excise Tariff, Interpretation of exemption under Notification No. 244/77, Review of appellate order

In the case, M/s. Kwik Metal Industries manufactured various goods out of Aluminium and cleared them without paying Central Excise duty. A show cause notice was issued to the manufacturer for the duty payable on the goods, claiming they were not covered by the exemption under Notification No. 244/77 and should be liable under Item 68 of the Central Excise Tariff. The Asstt. Collector confirmed the demand stating that the goods did not fall under the category of utensils for the exemption under the notification.

At the appeal stage, the Appellate Collector ruled that the term "utensil" in the notification should not be limited to kitchen utensils only. He considered the goods as articles useful or necessary in a household and thus classified them as utensils, allowing the appeal.

Upon reviewing the case, the Government disagreed with the appellate order, stating that school bags should not be considered household utensils. A show cause notice was issued under section 36(2) of the Central Excises & Salt Act, 1944, proposing a review of the appellate order. The manufacturer argued that school bags should be exempt under the notification based on the literary interpretation of "utensil" and cited practices in other Collectorates.

The Government determined that the popular understanding of "utensils" in trade was crucial for classification, not just the literary meaning. Since school bags were used for carrying books and not in households or kitchens, they were not considered utensils and thus not entitled to the exemption. The Government found no evidence supporting the manufacturer's claim about classification in other Collectorates. They also clarified that school bags did not fall under Item 27 of the Central Excise Tariff but were appropriately covered by Tariff Item 68.

Consequently, the Government confirmed their view in the show cause notice, setting aside the appellate order regarding Aluminium School Bags and reinstating the demand for duty on these goods.