1994 (7) TMI 86 - SC - Central Excise

Whether printed cartons manufactured by the appellant-company are products of the Printing Industry and as such, are exempt from payment of duty of excise under Exemption Notification No. 55/75, dated March 1, 1975 as amended from time to time? Held that - We agree with the reasoning and the conclusions reached by the Divison Bench of the High Court. What is exempt under the Notification is the Product of the Printing Industry . The product in this case is the carton. The Printing Industry by itself cannot bring the carton into existence. Any amount of fancy printing on a card-board would not make it a carton. In the process of manufacturing the printed cartons, the card-board has to be cut, printed, creased and given the shape of a carton by using paste or gum. Simply because there are expensive prints on the carton such a printed carton would not become the product of the Printing Industry. It shall remain the product of the Packaging Industry. Appeal dismissed.

Summary

Issues:
1. Interpretation of Exemption Notification No. 55/75 regarding duty of excise on printed cartons.
2. Classification of printed cartons as products of the Printing Industry or Packaging Industry.
3. Legal validity of the claim for exemption under the Notification.

Analysis:
1. The appeal before the Supreme Court revolved around whether printed cartons manufactured by the appellant were exempt from excise duty under Exemption Notification No. 55/75. The appellant claimed that printed cartons fell under the category of "products of the Printing Industry" as specified in the Notification, while the Union of India contended that they were products of the Packaging Industry and not eligible for the exemption.

2. The appellant argued that printed cartons were recognized in the trade as products of the Printing Industry due to the printing being the dominant activity in their manufacture. They emphasized the role of printed cartons in advertising and enhancing the sale value of goods. However, the Division Bench of the High Court rejected this argument, stating that a carton, whether plain or printed, remains a carton in common parlance and use. The court highlighted that the end-use of a carton is packing products for sale, and printing does not change its essential nature as a packaging material.

3. The Supreme Court concurred with the Division Bench's reasoning and dismissed the appeal. The court emphasized that the exemption under the Notification applied to the "product" of the Printing Industry, which in this case was the carton itself. The court clarified that the mere presence of printing on a carton does not transform it into a product of the Printing Industry. The process of manufacturing printed cartons involves various steps beyond printing, such as cutting and shaping the carton, making it a product of the Packaging Industry. Therefore, the court upheld the decision that printed cartons were not entitled to the exemption under the Notification.

In conclusion, the Supreme Court upheld the judgment of the Division Bench of the High Court, ruling that printed cartons were products of the Packaging Industry and not eligible for exemption from excise duty under Exemption Notification No. 55/75.