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TMI Blog1987 (3) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... wspapers and printed periodicals . The Assistant Collector rejected the representation of R.M.D.C. by an order dated 5.7.1978. By this order, he observed that he was not in a position to conclude that R.M.D.C. s goods were identical to those manufactured by certain other parties in whose cases the appellate authority or the revision authority had found in the manufacturers favour. He further held that the cartons were essentially meant for packing and any printing done thereon was only to indicate the contents and the brand. Printing did not change the identity of the cartons. Without the printing, the manufacturers themselves would have accepted them as products of packing industry. On this reasoning, the Assistant Collector rejected the claim for duty exemption. In appeal, the Appellate Collector of Central Excise, Bombay, by his Order dated 25.9.1978, set aside the Assistant Collector s order and allowed the exemption basing his decision on the order-in-revision No. 2057 of 1977 dated 5.12.1977 passed by the Central Government in the case of M/s. Allibhoy Sharefally Company. 2. The Central Government, in exercise of its powers under Section 36(2) of the Act, perused the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n passed under Section 35 or Section 35A of the Act for the purpose of satisfying itself as to the correctness, legality or propriety of such decision or order and may pass such order thereon as it thinks fit. The second proviso to this sub-section provides that no proceedings shall be commenced under the sub-section in respect of any decision or order after the expiration of a period of one year from the date of such decision or order. 8. In the present case, the date of the Order-in-Appeal under Section 35 which is sought to be revised is 25.9.1978. The date of the show cause notice issued by the Central Government under Section 36(2) of the Act is 6.9.1979 i.e. within the 1 year time limit. Hence the notice is not barred by the second proviso. 9. But, it is the contention of R.M.D.C. that the notice is barred by the third proviso to Section 36(2) of the Act which reads thus:- Provided that where the Central Government is of opinion that any duty of excise has not been levied or has been short-levied or erroneously refunded, no order levying or enhancing the duty, or no order requiring payment of duty so refunded, shall be made under this Section unless the person affected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for R.M.D.C. submits that the Allahabad High Court judgment in the Triveni Sheet Glass Works case (supra) has no relevance to the facts of the instant case. The Triveni case was a writ petition for enforcing the refund of duty already ordered by the Appellate Collector, the department not having actually made the refund. The notice in that case was issued before the 3rd proviso to Section 36(2) of the Act came into force on 1.7.1978. The observations of the Court on the validity of the notice was by way of obiter; no final opinion was expressed by the Court since the Court was granting relief by issue of a writ mandamus. On the other hand, according to the learned Counsel, the Delhi High Court s judgment in the Associated Cement companies case (supra) is directly to the point. In that case no demands were involved, only a question of classification/exemption was in issue. 13. The Counsel for R.M.D.C. also referred to the decision of this Tribunal in the case of Collector of Central Excise v. Industrial Marketing Corporation, Bombay 1985 (22) E.L.T. 950 wherein it was held that the 3rd proviso to Section 36(2) applied to that case involving a question of classification b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice). 15. It must be noted in this context that the Appellate Collector had, after holding that there was no reason why the concession extended by the Government of India to M/s. Allibhoy Sharefally Co. (Order-in-Revision No. 2057 of 1977 - supra) should not be extended to R.M.D.C., allowed the appeal with consequential relief, if any. The relief would have been - (a) refund, if duty had been charged from, and paid by, R.M.D.C. (b) withdrawal of demands for duty, if duty had not been paid by R.M.D.C. whereas the Assistant Collector s Order had the effect of levying duty, that of the Appellate Collector had the effect of nullifying that levy or, in other words, directing no levy. In this background, the effect of adjudication of the Section 36(2) notice issued by the Government against R.M.D.C. would be to restore the levy, in other words, cancelling the order of non-levy. Though the review notice does not talk in terms of short-levy or non-levy the drift is quite clear. It is clearly not meant to pose and answer a question in the abstract: were printed cartons manufactured by R.M.D.C. liable to pay duty under Item 68 CET or were they eligible for exemption in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reading the said language with the orders passed under Section 35 or 35A which are sought to be reviewed by the orders proposed in the show cause notices. Once the notices are read with the orders passed under Section 35 or 35A, it would be clear whether the notices are issued under the third proviso. The language of the impugned show cause notices in the present case purports to be under the substantive part of Section 36(2). It cannot, however, attract the application of the limitation prescribed under the second proviso because if the notices are read as a whole and particularly if they are read with orders passed by the Appellate Collector, it becomes quite clear that the revision sought by these notices is of appellate orders of short-levy. It may be that along with short-levy the appellate order would also be incorrect or illegal in the opinion of the Central Government. This does not mean, however, that third proviso can be ignored and the notices can fall under the second proviso. 18. The result of reading the review notice issued by the Central Government in the light of the above observations of the High Court has been brought out in Para 15 of this Order. 19. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show cause notice had been issued in time, being governed by proviso 2 to Section 36(2) of the Central Excises and Salt Act as it then stood. Hence it has become necessary for me to record a separate order. 23. The facts leading to the issue of the show cause notice by the Government have been set out in great detail in the order of the learned Vice President as also the arguments advanced on both sides on the question of limitation. It is, therefore, unnecessary for me to repeat the same. 24. The order dated 5.7.78 of the Assistant Collector (Order No. Classification/78/RMDC/12499) was on the claim for exemption by the respondents for benefit under Notification No. 122/75-CE dated 5.5.1975 as amended, Item 13 of the Notification reading at the relevant time all products of the printing industry including newspapers and printed periodicals . The Assistant Collector had held that the printed cartons manufactured by the respondents were products of the packaging industry and not products of the printing industry and hence were not entitled to the exemption claimed. It is this order which had been set aside by the Appellate Collector. The contention for the Government is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants . In the appeal against the order on price-list No. 1/77 the Appellate Collector had passed the order on 14.10.1977 (i.e.) much earlier than the above-said two appellate orders. In that order he held in view of the above considerations the order of the Assistant Collector is set aside and the appeal is allowed. It was in respect of this last mentioned order of the Appellate Collector (dated 14th October, 1977) that the Government had issued a show cause notice under Section 36 and it was this show cause notice that was the subject matter of the writ proceeding before the Allahabad High Court. The learned Vice-President has pointed out that in the said Appellate Order dated 14.10.1977 there had been no direction for consequential relief following the order of the Appellate Collector but that in our present case the Appellate Collector has directed consequential relief and hence the decision of the Allahabad High Court would not apply to the facts of the present case. But it may be noted that there are various observations of the Allahabad High Court in dealing with the contentions raised before the said Court which would make it clear that even if consequential relief had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which and rate at which duty on those goods is payable itself does not result in assessment of duty. Thereafter, the provisions of Rules 173B, 173G, 173-l were taken into consideration and it was observed (at the end of Paragraph 26) that the duty payable is thus determined by the proper officer under Rule 173-l and at no stage prior to it. Thereafter the following observations occur in Paragraph 27: In this view of the matter we are of opinion that a simpliciter order passed under Rule 173C even though it provides a basis for eventually calculating and determining, the amount of duty payable by a manufacturer during a particular month neither results in assessment of duty nor to its being levied. Such an order by itself, therefore, cannot entail any question of short levy or erroneous refund of duty. 28. Thereafter the High Court took note of two other submissions of the assessee which, according to the assessee, made out that if the show cause notice issued by the Government was to be allowed it would result in a demand for duty short levied. The first of the said arguments is set out in Paragraph 30 which reads as follows:- Learned Counsel for the petitioner argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pass orders only regarding what should, for purposes of assessment of excise duty be considered to be the correct value of the article manufactured by the petitioner during the period in which price-list No. 1/77 remained in force. It would neither make any order regarding, nor deal with the question as to whether any assessment has been wrongly made resulting in short-levy or duty. If the order passed by the Central Government results in restoring the order made by the proper officer, appropriate proceedings in respect of excise duty that may, in the opinion of the relevant (sic) have been short-levied will have to be initiated under Section 11-A as inserted in the Central Excise Act by Act 25 of 1978 and it will be at that stage that the question whether or not there had been a short-levy and whether the petitioner can be made to pay the same will arise for consideration." 30. It is, therefore, clear that the Allahabad High Court held that when the order of the Assistant Collector, and the Order-in-Appeal by the Appellate Collector, related to a price-list only (or a classification list as in the present case) the said order would not by itself lead to determination of any que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w cause notice issued by the Central Government. The High Court held that so long as the order of the Appellate Collector was operative (and that would be till the Central Government disposed of the matter arising under the issue of the review notice) the appellants cannot be denied the benefit of refunds accruing due to them under the orders of the Appellate Collector and the Department was not justified in not making the refunds merely for the reason that a review notice has been issued. That relief had been granted in Paragraph 10. Under the subsequent Paragraphs the other relief of the quashing of the review notice by the Government had been taken up and it is in that connection that the various observations extracted earlier had been made. Thus these observations were relevant and necessary for a disposal of the relief prayed for from the High Court and they cannot, in the circumstances, be deemed to be merely obiter. 33. Shri Hidayatullah further wanted to distinguish the said case on the ground that the said case related to a price-list and not a classification list as in the present case. It does not appear to me that the said circumstance makes for any difference. 34. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in the present case are printed cartons. The Government of India in the case of Allibhoy Sharefally Co. (1978 E.L.T. J145) held that printed cartons can be manufactured only by recognized printers like the appellants and not by ordinary manufacturers who manufacture cartons for packaging goods. It took into note the fact that cost on account of printing would account for 70% to 90% of the cost of the printed cartons. The Appellate Collector in the present instance relied on this decision in granting relief to the respondents. But subsequently the Government of India set aside the ratio of the above decision in the case of Vijay Flexible Container Ltd. (1980 E.L.T. 646) where it held that printed cartons would be products of packaging industry. It held that only those products where printing virtually constitutes a culmination process of manufacture for obtaining the end product that could be called the product of printing industry. It was held that judged by the said criterion the printed cartons could not be held to be a product of the printing industry. Five major functions of a package were described in Paragraph 4.1 of that order and taking into consideration the said funct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular Entry ...... 41. Therefore, Shri Hidayatullah refers us to various technical books, most of which have been considered in the judgment of Karnataka High Court, and were also referred to in the judgment of the Andhra Pradesh High Court. The Printing Trades Directory published by the Printing Trade Journal in the U.K. Contains a Section which reads Print buyers guide to printers specialities - names of printers, with towns in which they are located, arranged under classified heading denoting classes of work undertaken." In this Section under the heading Print buyers guide to printers specialities the address of a large number of printers engaged in carton making is given. This would indicate that in the Trade the making of printed cartons is understood as a specialized work undertaken by printers. In the book The Printing Industry by Victor Strauss Section 1 of Chapter 11 deals with different kinds of printed products and their art and copy preparat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f each customer, since the printing would be for the purpose of the said customer only and would not serve any general purpose. As observed by the Government of India in 1978 E.L.T. J-145 the cost of printing accounts for more than 70% of the cost of a printed carton. It is not as if a person who requires printed cartons could purchase plain cartons and then have them printed. Any person who requires printed cartons for use in his business would necessarily be approaching a printer who would obtain the raw-material for the cartons, have the cardboard cut, printed, folded and pasted, all in his own establishment. In the circumstances this fact itself would establish that printed cartons would be products manufactured by a printer and not by a person engaged in manufacture of plain cartons and therefore printed cartons would be a product of printing industry rather than packaging industry. 44. It may also be noted that even in the decision of the Andhra Pradesh High Court the contention that printed cartons would be a product of printing industry has not been ruled out as without basis. The observations in that connection are as follows: The most that can be said in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present respondents are concerned they are members, of the Bombay Master Printers Association and have been registered as printers under the provisions of the Industries (Development and Regulation) Act, 1951. Manufacture of printed cartons, at the instance of the customers who require such cartons is said to be a substantial part of their business. In view of the discussion earlier I hold that printed cartons would be products of the printing industry. As earlier mentioned, the case of the printed cartons cannot be equated with the case of plain cartons or corrugated card board boxes. While the latter two may be products of packaging industry the former (printed cartons) would be products of printing industry. 47. I, therefore, hold that the order of the Appellate Collector granting the respondents the benefit of exemption under Notification No. 122/75 dated 5.5.75 was proper. In that view I hold that the appeal is to be dismissed and the review notice issued by the Government discharged. I, therefore, pass an order for dismissal of the appeal and discharge of the review notice dated 6th September, 1979. Sd/- (V.T. Raghavachari) 48. [Per: Shri K. Prakash Anand, Member (T)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that their, competitors also, who were manufacturing identical goods, were not paying duty. In the Order-in-Original it was held that the goods in question were not exempt under the Notifications cited and they were liable to duty. In the Order-in-Appeal, as just discussed, it was held that the impugned goods were eligible for the exemption claimed and not chargeable to duty. It is this order of the Appellate Collector which is sought by the Central Government to be reviewed under Section 36 of the Act. The show cause notice issued by the Central Government states that Government propose to set aside the impugned Order-in-Appeal and pass an Order that the printed cartons manufactured by the assessee cannot be held as products of the printing industry, eligible for exemption under the relevant notifications, but are products of packaging industry. In the words of the show cause notice itself Government has taken the tentative view that the Order of the Appellate Collector holding that the goods are exempt and not leviable to duty deserves reconsideration and the Government propose to set aside the appeal and pass an order that the goods cannot be held as eligible for exemption but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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