1981 (9) TMI 123 - CGOVT - Central Excise

Review - Revisional Order - Binding effect of - Printed cartons - Products of packaging industry

Issues Involved:

1. Classification of printed cartons under the Central Excise Tariff.
2. Applicability of Notification No. 55 of 1975 for exemption.
3. Jurisdiction and authority of the Government to review its previous decisions.
4. Timeliness of the show cause notice under Section 36(2) of the Central Excises & Salt Act, 1944.
5. Adequacy and jurisdictional validity of the show cause notice.

Detailed Analysis:

1. Classification of Printed Cartons:

The primary issue was whether printed cartons should be classified as products of the printing industry or the packaging industry. The Government of India examined the classification and concluded that printed cartons are primarily products of the packaging industry. This conclusion was based on the function and use of the cartons, the machinery involved in their production, and industry practices. The Government emphasized that the exemption under Notification No. 55 of 1975 should be strictly construed and only apply to products exclusively of the printing industry. The printed cartons were deemed to be products of the packaging industry as the printing was not the culminating process of their manufacture.

2. Applicability of Notification No. 55 of 1975:

The assessee argued that printed cartons should be exempt under Notification No. 55 of 1975, as they are products of the printing industry. However, the Government held that the exemption notification must be construed strictly. The printed cartons, being primarily products of the packaging industry, did not qualify for the exemption. The Government noted that the notification explicitly included items like newspapers and periodicals, indicating a limited scope for the term "products of printing industry."

3. Jurisdiction and Authority to Review Previous Decisions:

The assessee contended that the earlier decision in the case of M/s. Allibhoy Sharafully & Co. was binding on the Department. However, the Government cited the Delhi High Court's judgment in J.K. Synthetics Ltd. v. Union of India, which held that earlier decisions are not conclusive and can be departed from for good and cogent reasons. The Government asserted that the principle of res judicata and estoppel does not apply in tax matters, allowing for reappraisal of previous decisions.

4. Timeliness of the Show Cause Notice:

The assessee argued that the show cause notice was time-barred under proviso 3 to Section 36(2) of the Central Excises & Salt Act, 1944. The Government distinguished the present case from the Delhi High Court judgment in ACC Ltd. v. Union of India, stating that the issue in the current case was primarily one of classification (rate of duty) rather than assessment. Therefore, the six-month limitation period did not apply.

5. Adequacy and Jurisdictional Validity of the Show Cause Notice:

The assessee claimed that the show cause notice lacked material particulars and was issued without jurisdiction. The Government countered that the notice provided sufficient information for the assessee to understand the grounds for the proposed action. The Government also noted that the assessee's advocate was already in possession of relevant documents, such as the decision in the case of M/s. Vijay Flexibles Ltd. The Government concluded that the show cause notice was valid and within its jurisdiction.

Conclusion:

The Government of India held that printed cartons are products of the packaging industry and not entitled to the exemption under Notification No. 55 of 1975. The impugned order-in-appeal was set aside, and the original order of the Assistant Collector was restored. The Government emphasized that the principles of res judicata and estoppel do not apply in tax matters, allowing for reappraisal of previous decisions for good and cogent reasons. The show cause notice was deemed timely, adequate, and within the jurisdiction of the Government.

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