1991 (3) TMI 394 - HC - Central Excise

Summary

Issues Involved:
1. Authority of the Board to issue directions to a quasi-judicial authority.
2. Classification of the "outer shell" of cigarette packets under Tariff Item No. 17(4).
3. Violation of natural justice due to the Board's directive.
4. Definition and interpretation of "box" or "container" in the context of the outer shell.

Issue-Wise Detailed Analysis:

1. Authority of the Board to Issue Directions to a Quasi-Judicial Authority:
The petitioner challenged the impugned order on the ground that the Board has no authority under the law to give directions to a quasi-judicial authority like the Assistant Collector. The Board's directive dated 7th April 1982 classified the "outer shell" as a box under Tariff Item No. 17(4). The court noted that the adjudicating authority did not apply its own mind and adhered to the Board's directions. The Board cannot usurp the function of classification, which is a quasi-judicial function, as established in the Supreme Court case of Orient Paper Mills v. Union of India. The court emphasized that the adjudicating authority must act independently and impartially without being influenced by administrative directions.

2. Classification of the "Outer Shell" of Cigarette Packets Under Tariff Item No. 17(4):
The petitioner argued that the outer shell, being open on both sides, cannot function as a box or container. The court examined the product and agreed that the outer shell, without the slide, cannot hold cigarettes and thus does not fit the definition of a box or container. The court referred to the Supreme Court's interpretation in G. Claridge and Co. Ltd. v. Collector of Central Excise Pune, which defined "container" in various senses, none of which applied to the outer shell in its incomplete form. The court concluded that the outer shell, without the slide, is neither a box nor a container.

3. Violation of Natural Justice Due to the Board's Directive:
The court found that the Board's directive was issued behind the petitioner's back, depriving them of a reasonable opportunity to present their case. This violated the principle of natural justice. The court highlighted that the Assistant Collector, being subordinate to the Board, was prejudiced and did not independently assess the classification. The court emphasized that natural justice requires that no one can be condemned unheard, and the impugned order, based on the Board's directive, was thus vitiated.

4. Definition and Interpretation of "Box" or "Container" in the Context of the Outer Shell:
The court examined the definitions and trade meanings of "box" and "container." It noted that in the cigarette trade, the outer shell and slide together form a packet, but the outer shell alone cannot be considered a box. The court referred to dictionary definitions and trade practices, concluding that a box must be a receptacle capable of holding contents by itself. The outer shell, being open on both sides, does not meet this criterion and cannot be classified as a box under Tariff Item No. 17(4).

Conclusion:
The court held that the "outer shells" of cigarette packets manufactured by the petitioner are not excisable under Entry 17(4) of the First Schedule as introduced by the Finance Act, 1982. The impugned orders dated 7th April 1982 and 30th April 1982 were quashed and set aside. The writ petition was allowed with costs, and the rule was made absolute.