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TMI Blog1986 (7) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... y fact and have intimated the Department the nature of the activities including that of printing and lacquering. The invoices have been checked by the Department and the relevant returns have been filed. While so, a show cause notice was issued on 1-12-1978 alleging that aluminium containers were cleared by mis-describing them as collapsible tubes for further lacquering and printing which were carried on within the factory. The appellants were directed to show cause as to why duty amount of Rs. 3,18,512.93 (basic duty) and Rs. 9,852.37 (Special Excise Duty) should not be recovered from them for the period from 1-9-1977 to 30-9-1978. 3. Another show cause notice was received during April, 1979 to show cause as to why a sum of Rs. 2,44,730.11 should not be recovered as basic duty and Rs. 12,236.92 as special excise duty for the period from 1-10-1978 to 28-2-1979 in respect of similar products. 4. A third show cause notice dated 27-9-1979 was issued to show cause as to why a sum of Rs. 3,04,161.95 as basic duty and a sum of Rs. 15,208.10 as special excise duty should not be recovered for the period from 1-3-1979 to 31-9-1979. 5. The appellants sent their replies containing sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncidentally, we may point out that there was a common revision application to the Government of India. The same was transferred to the Tribunal. For completion of records, the appellants have also filed a supplementary appeal. Shri Soli J. Sorabjee, Senior Counsel appeared for the appellants. He urged that Entry 27(e) referred to Extruded shapes and sections including extruded pipes and tubes . 27(f) referred to Containers, made of aluminium . The entry at the relevant period also contained an explanation which is as follows :- Container means containers ordinarily intended for packaging of goods for sale, including casks, drums, cans, boxes, gas cylinders and pressure containers, whether in assembled or unassembled condition, and containers known commercially as flattened or folded containers . There was an amendment to these entries under the Finance Act of 1980 (effective from 18-6-1980). Shri Soli Sorabjee stated that collapsible tubes have also been included in the explanation to Finance Act of 1980. The printing and lacquering have also been mentioned in Tariff Entry No. 27(f). He argued that as the issue relates prior to the amendment of the Finance Act, the extende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the customers specifications and designs, the product ceased to be tubes and would attract duty as Containers . The appellants manufactured tubes under Tariff Item No. 27(e) but they do not stop with that activity; they also effect trimming and threading wherein nine stages of operation are involved. She referred to the reply to the show cause notice and the appellants have stated therein that the sequence of operation is feeding, threading, neak trimming, cutting, shaving, straightening, releasing mechanical air and after all these stages of operation, remained tubes marketed as collapsible tubes saleable in the market without further processing. She distinguished the judgment of the Gujarat High Court on the ground that the products were not the same and the question whether the product is container never came up for scrutiny. 10. Shri Sorabjee, in his reply, drew our attention to Lexicon Webster s Dictionary p. 1062 (Vol. 2) where Collapsible tube has also been described as tube . He contended that if there are two entries wherein one is beneficial to increase the incidence of taxation, then the former one should be preferred. He relied on the decision in A.I.R. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing activity was left to be performed before they could be converted from tubes to containers. This fact concludes that the products no longer remained as tubes but have become containers. 13. The process of manufacture indicated by the appellants in their reply to the show cause notice also prove that the subject goods are only containers. The raw material aluminium sheet is taken and made into slugs by using suitable dies. These slugs are annealed in furnace by 4 to 5 hours to make it soft. They are then charged into the tumbling barrel and mixed with zinc stearate powder and tumbled for about 10 minutes. This process makes it ready to feed into the extrusion press. These slugs are fed into the hopper whereby it is passed by a conveyor chute and automatically fed into the die. The punch hits the slug and a tube is formed in the punch and in the reverse operation it is being stripped off and made to fall on the conveyor which is carried into the trimming machine. At this stage the tube is formed without other operations. The appellants have specified that thereafter trimming and threading take place. It undergoes nine stages of operations before the collapsible tube i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 licence and that printing and lacquering was incidental to the process of manufacturing extruded shapes and sections or extruded tubes and pipes of aluminium. The petitioners therein purchased plain tubes and plain containers and were merely engaged in printing and lacquering them. It must be stated that the Department s main contention therein was that printing and lacquering of extruded collapsible tubes were covered by some item (e) of Entry 27. The Revenue did not place any reliance upon any other sub-item of Item 27. The Court was not called upon to decide on competing items. On the facts of the case, the Court held that printing and lacquering could not be said to be incidental or ancillary to the completion of the manufacture of the product, because they had no relation to the completion of manufacture of tubes. The printed and lacquered tubes were by themselves marketable commodities. The issue in this case is, whether the containers were manufactured by the appellants. There was no such plea by the Department in the earlier case. It must be said that printing and lacquering per se would not amount to manufacture. But the authorities below have considered the issue not on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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