1991 (10) TMI 51 - HC - Central Excise

Paper and paper board and articles thereof - Cigarette packets - Writ jurisdiction - Printed shells

Issues Involved:

1. Whether the cigarette packets are covered under Item No. 17 of the First Schedule liable for duty and whether the same is exempted from duty in view of Notification No. 66 of 1982, dated 28-2-1982?
2. Whether the present writ petitions are not maintainable for the reasons stated in the counter affidavit?
3. Whether the petitioner is entitled to the relief prayed for in the writ petitions?

Issue-wise Detailed Analysis:

1. Whether the cigarette packets are covered under Item No. 17 of the First Schedule liable for duty and whether the same is exempted from duty in view of Notification No. 66 of 1982, dated 28-2-1982?

The court analyzed the applicability of Section 3 of the Central Excises and Salt Act, 1944, which mandates excise duties on excisable goods as listed in the First Schedule. The exemption from duty is governed by Rule 8 of the Central Excise Rules, under which Notification No. 66 of 1982 was issued, exempting articles of paper or paper board under Item No. 17(4) from excise duty, except for printed boxes and cartons.

A clarification from the Central Board of Excise and Customs (dated 7-4-1982) stated that printed cigarette packet shells are considered printed boxes and thus not exempt under Notification No. 66/82. However, the petitioner argued that in trade parlance, cigarette containers are known as "packets" and not "boxes" or "cartons," as supported by dictionary definitions and the respondents' own affidavit.

The court supported the petitioner's view, emphasizing that the description of goods for excise classification should align with common trade parlance. The court cited several precedents, including *Collector of Customs v. K. Mohan & Co. Exports* and *Indian Aluminium Cables Ltd. v. Union of India*, reinforcing that the commercial understanding of terms should guide classification.

The court concluded that cigarette packets should be considered containers exempt from duty under Notification No. 66/82, as they do not fall under the exceptions for printed boxes and cartons. The court also noted that the outer shells and inner slides were previously classified under Tariff Item 68 and exempted from duty, and the process of packing cigarettes involves the creation of a packet only after the cigarettes are inserted, thus not warranting double taxation.

2. Whether the present writ petitions are not maintainable for the reasons stated in the counter affidavit?

The respondents contended that the impugned letter from the Superintendent of Central Excise was merely informational and not a directive, and that the petitioner should have followed the statutory appeals process after filing classification lists. However, the court noted that the letter was based on a directive from the Central Board of Excise and Customs, which is the highest authority, making the letter effectively a directive.

Given the Board's clear stance that printed shells are classified under Item 17(4) and not eligible for exemption, the petitioner had no alternative remedy but to approach the court. The court found merit in the petitioner's argument that the writ petitions were maintainable, as the issue involved a fundamental question of law regarding the interpretation of the exemption notification.

3. Whether the petitioner is entitled to the relief prayed for in the writ petitions?

Based on the findings on the first two points, the court concluded that the petitioner was entitled to the relief sought. The writ petitions were allowed, and the court quashed the impugned letters and directives requiring the petitioner to obtain a license for manufacturing the outer shells and inner slides. The court ruled that these items were exempt from excise duty under Notification No. 66/82, and no costs were awarded.

Conclusion:

The court allowed the writ petitions, ruling that cigarette packets are exempt from excise duty under Notification No. 66/82 and that the writ petitions were maintainable. The directives requiring the petitioner to obtain a manufacturing license were quashed.

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