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Issues involved: The classification of aluminium canisters for excise duty under Tariff Item No. 27(f) and whether they are ordinarily intended for packaging of goods for sale.
Summary: The petitioners, a registered firm manufacturing aluminium canisters for sensitive drugs, challenged a demand notice for excise duty issued by the Collector of Central Excise. The Collector initially opined that the canisters were non-excisable, but later reversed this decision, leading to the demand notice. The petitioners argued that the canisters were not intended for packaging goods for sale, supported by letters from the drug manufacturers. The Assistant Collector and the Appellate Collector upheld the demand notice, citing that the canisters were used for packaging drugs ultimately sold in the market. However, the High Court found that the canisters were primarily for conveyance and storage, not packaging for sale, as evidenced by the letters from the drug manufacturers. The Court held that the demand notice was erroneous, as the department failed to substantiate its claim, and ruled in favor of the petitioners. In conclusion, the High Court made the rule absolute in favor of the petitioners, quashing the demand notice. No costs were awarded in this case.
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