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TMI Blog1989 (10) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... te prevailing rate under Item 68. After the budgetary changes from 28-2-1982/1-3-1982, the respondents filed a revised classification list effective from 1-3-1982 for the aforesaid five products claiming classification under Tariff Item 17(4) as "articles of paper packing containers" and claiming full exemption from Central Excise duty under Notification No. 66/82-C.E., dated 28-2-1982. This classification list was approved by the Assistant Collector of Central Excise, Pune Division on 11-3-1982. Subsequently, the Range Superintendent of Central Excise directed the respondents to file supplementary classification list for "pulp" manufactured by them in their factory, but they did not comply with the direction on the ground that they did not manufacture "pulp". Range Superintendent re-examined the classification of those five products and he fE.L.T. that those did not merit classification under Item 17(4), but under Item 68 of the Tariff. He asked the respondents to furnish information regarding production and sales value of the "pulp" and other five products for the period from 1-3-1982 to 31-12-1983, but they did not furnish "he data. Then the Range Superintendent issued a show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lp and it is not dutiable under Item 68 of the Tariff. He has also held that the five final products of the respondents are packing containers and are classifiable under Item 17(4) of Central Excise Tariff as articles of paper and paper board and are fully exempted under Notification No. 66/82-C.E., dated 28-2-1982. The order-in-appeal of the Collector (Appeals) has" been challenged by the Revenue by filing the present appeals before this Tribunal. 3. In appeal No. E/1468/88-C, the facts are that the respondents filed classification list No. 61/86 effective from 3-7-1986 in respect of their products "(i) egg containers, sizes IS1/^ and 17, (ii) retail egg containers, (iii) tube light packing containers, (iv) duck egg containers and (v) apple containers" at "nil" rate of duty under Tariff Heading 4818.19 consequent on the changes effected by the Central Excise Tariff Act, 1985. The above Classification List was approved by the proper officer provisionally on 9-10-1986. After going through the process of manufacture of the products, a show cause notice was issued to the respondents on 16-10-1986 proposing to classify the goods under Heading 4818.90 at the rate of 12% ad valorem. Aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se cases are fully covered in favour of Revenue by this Tribunal's decision in Mohan Paper Moulding Ltd. v. Collector of Central Excise, Chandigarh, reported in 1988 (36) E.L.T. 161 (Tribunal). It was held by the Tribunal in that case that egg tray fell under Item 68 of the old Central Excise Tariff and Heading 4818.90 under the new Tariff as against the assessee's claim for classification under Tariff Item 17(4) and 4818.19 respectively. He has also stated that in the first two cases, the plea of limitation was raised before Collector (Appeals), but he did not give any findings on limitation. If these appeals are decided in favour of Revenue, then these should be remanded to the lower authorities to decide the question of limitation. 6. For the respondents, the gusts of the arguments of Shri Lodha are as follows :- (i) The decision of the Tribunal in Mohan Paper Mouldings case is applicable if the egg containers, apple containers etc. are made directly from pulp. In the present case these are manufactured from waste paper. The above decision is not applicable as the articles would be articles of paper. During the process of manufacture of the products of the respondents pulp as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal) in the case of Ambalal Sarabhai Enterprises (P) Ltd. v. Collector of Central Excise, Baroda. In 1986 (24) E.L.T. 169 (S.C.) the Hon'ble Supreme Court held that in order to attract excise duty, the manufactured product must be capable of sale to a customer. To become "goods", an article must be something which can ordinarily come to the market to be brought and sold. In 1987 (31) E.L.T. 865 (S.C.) the Hon'ble Supreme Court has held that the goods not capable of being bought and sold are not liable to duty. In the case reported in 1988 (33) E.L.T. 117, this Tribunal held that "starch hydrolysate" produced as an intermediate product by complete hydrolysis of starch was not an excisable commodity in the sense of goods known in the market. The respondents' intermed ate product slurry is, therefore, not excisable as this is not marketable. (iii) As the goods manufactured by the respondents are articles of paper and they are containers, they are specifically covered by Item 17(4) of the old Central Excise Tariff operative prior to 1-3-1986 and the products cannot be classified under the residuary Item 68 in terms of the ratio laid down in the Supreme Court judgment reported in 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use notice merely asked the assessee to show cause against calculations or determination of the amount of short-levy and not against the alteration in the classification list on the basis of which short levy was alleged for the period from 15-8-1983 to 6-2-1984. The Hon'ble Supreme Court held in that case that the notice could not be regarded as a show cause notice against the modification of the classification list in respect of the aforesaid period, and the show cause notice was bad in law and of no effect. The respondents' case is squarely covered by this judgment of the Supreme Court. (vi) In exceptional circumstances like change in the manufacturing process, change of law etc., modification of classification is permissible after issuing necessary notice to the assessee and after considering his viewpoint. No such circumstances arose for changing the approved classification list effective from 1-3-1982. No show cause notice was also issued before revising the said classification. Onus of correct classification lies on the Department. Reliance is placed on the following judgments :- (a) 1979 (4) E.L.T. (J 543) (Bom.) Sanghvi Non-Ferrous Metal Industries v. Union of India & Oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise, reported in 1988 (38) E.L.T. 571 (S.C.) and on Calcutta High Court's judgment reported in 1988 (34) E.L.T. 473 (Cal.) in the case of Indian Tobacco Co. He has also relied on the Tribunal's decision reported in 1988 (36) E.L.T. 346 (Tribunal) in the case of Sudhakar Litho Press. On the point of limitation, Shri Sunder Rajan has stated that the Tribunal should not go into the point of limitation and remand the question of limitation to the lower authority. He has stated that the show cause notice dated 4-5-1984 was for change of classification and demand for duty. This argument has been challenged by Shri Lodha stating that a show cause notice for change of classification was issued on 24-11-1984; so, the show cause notice dated 4-5-1984 was not for re-classification. Shri Sunder Rajan has, however, conceded that the demand for duty on slurry is not sustainable. 8. We have considered the records of the case and the arguments of Shri Lodha and Shri Sunder Rajan. Shri Lodha has argued on a few propositions. The respondents' final products, whose classification is under dispute, are "egg filler flats, egg cartons, tube light packing trays, duck egg trays, apple trays, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of power - (1) Uncoated and coated printing and writing paper (other than poster paper) (2) Paper board and all other kinds of paper (including paper or paper boards which have been subjected to various treatments such as coating, impregnating, corrugation, creping and design printing), not elsewhere specified. (a) All sorts of paper commonly known as Kraft paper, including paper and paper board of the type known as Kraft liner or corrugating medium, of a substance equal to or exceeding 65 gram per square metre in each case. (b) Others. (3) Carbon and other copying papers (including duplicator stencils) and transfer papers, whether or not cut to size and whether or not put up in boxes. (4) Boxes, cartons, bags and other packing containers (including flattened or folded cartons, whether or not printed and whether in assembled or unassembled conditions." "ITEM No. 17 - PAPER AND PAPER BOARD AS IT WAS IN FORCE DURING THE YEARS 1983-84,1984-85, and 1985-86 Paper and Paper Board, all sorts (including paste-board, mill board, straw-board, cardboard and corrugated board), and articles thereof specified below, in or in relation to the manufacture of which any process is ordinarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Tariff Item 17 prior to 1-3-1986. In support of his argument that these products are containers, he has relied on the definition of "container" given in IS : 4261-1967, Glossary of Packing Terms, Webster's New Collegiate Dictionary, 1975 and Chambers' 20th Century Dictionary. He has also relied on the circular No. A-3/2740/85, dated 15-7-1985 issued by the Office of the Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad and this Tribunal's decision reported in 1988 (37) E.L.T. 426 in the case of Ajay Electrical Industries Ltd. v. Collector of Central Excise. Ii Indian Standard, Glossary of Terms, IS: 4261-1967 "container" is defined as "any receptacle which holds, restrains or encloses any article or commodity or articles or commodities to be stored or transported". In Webster's New Collegiate Dictionary, 1975, "container" is described as "one that contains; a receptacle or flexible covering for shipment of goods". In the said dictionary 'receptacle' has been defined as "one that receives or contains something". In Chambers' 20th Century Dictionary the meaning of "container" has been given as "that which contains: that in which goods are enclosed for Transport". The me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly it was only a paper drum with both ends open. The Tribunal held that those drums were not cartons falling within the mischief of Item 17(3) of the CET. This decision of the Tribunal does not, therefore, support the contention that the respondents' products are containers. Shri Lodha has contended that the respondents' final products are known as containers in the trade parlance and according to the ratio of the Supreme Court judgment reported in 1983 (13) E.L.T. 1566 (S.C.) = (Dunlop India Ltd. and Madras Rubber Factory Ltd. v. Union of India and Others), following the trade parlance their products should be classified under Item 17(4) of the erstwhile Central Excise Tariff prior to 1-3-1986 and under Tariff sub-heading 4818.19 w.e.f. 1-3-1986. In the said judgment the Hon'ble Supreme Court held that the articles should be classified on the basis of popular sense and not in scientific and technical sense. In support of his argument on trade parlance, Shri Lodha has relied on the affidavits of Shri Dadasaheb, Director of Hand Made Paper Institute, Pune-5 (copy at pages 87 to 89 of the paper-book relating to Appeals No. E/1883/85-C and No. E/2031/85-C), Shri Vasant, Partner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 48.18 reads as "Other articles of paper pulp, paper, paperboard, cellulose wadding or webs of cellulose fibres". This heading is divided into three broad sub-headings, viz., the following :- Cartons, boxes, containers and cases (including flattened or folded boxes and flattened or folded cartons), whether in assembled or unassembled condition; 4818.20 - Toilet tissues, handkerchiefs and cleansing tissues of paper 4818.90 - Other" The first sub-heading is sub-divided into the following sub-classifications :- " 4818.11 - Intended for packing of match sticks 4818.12 - Printed cartons, boxes, containers and cases, made wholly out of paper or paperboard of heading No. or sub-heading No. 48.04, 4805.11, 4805.19, 4807.91, 4807.92, 48.08 or 4811.10, as the case may be 4818.13 - Other printed cartons, boxes and cases 4818.19 - Other." It, therefore, follows that for the purpose of classification under sub-classification "4818.19 - Other" a product must fall within the category of cartons, boxes, containers or cases. It is nobody's case that the impugned egg trays, apple trays, etc. are cartons, boxes or cases. The contention of the respondents is that these are "containe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned DR has conceded that the demand for duty on slurry is not sustainable. In the circumstances, respectfully following the judgment of the Hon'ble Supreme Court, we hold that the respondent's intermediate product "slurry" is not liable to central excise duty. The demand for duty on the slurry is, therefore, set aside. 15. Other issues raised by Shri Lodha are that :- (a) the respondents' classification list effective from 28-2-1982 under Tariff Item 17(4) read with Notification No. 66/82-C.E., which was approved by Assistant Collector on 11-3-1982, became final in the absence of any appeal filed by the Revenue under Section 35E of the Central Excises and Salt Act, 1944; (b) Assistant Collector modified the said classification list without issuing any show cause notice; (c) there was no exceptional circumstances like change in law, change in the manufacturing process etc. warranting the change of the classification; (d) there is no provision of law empowering the Assistant Collector to review his own order or the order of his predecessor; and (e) Assistant Collector's action was not permissible in view of the various judgments cited in sub-paragraphs (iv), (v) and (vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several judgments as listed in paragraph 6(iv) supra. In the judgments reported in AIR 1966 S.C. 641 and AIR 1970 S.C. 1273, the Hon'ble Supreme Court held that the power of review must be conferred bylaw either specifically or by implication and it is not an inherent power. In its judgments reported in 1981 (8) E.L.T. 565 (Mad.) and 1983 (12) E.L.T. 34 (Mad.), Hon'ble Madras High Court has held that Central Excise Act and the Rules do not confer any power on the Central Excise Officers to review their own orders, because it is settled law that there is no inherent power of review in an authority while acting judicially or quasi-judicially unless the power of review is conferred expressly or by necessary implication by the provisions of a statute. In the judgment reported in 1986 (23) E.L.T. 318 (Del.), Hon'ble Delhi High Court has held that a classification list once approved, cannot be reviewed by the same or another Assistant Collector. Shri Sunder Rajan has argued that the judgments cited by the learned advocate stand superseded in view of paragraph 8 of the latest judgment of Supreme Court in the case of Elson Machines Pvt. Ltd. v. Collector of Central Excise (decided on 15-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that rule so that an assessment has to be re-opened." (Emphasis supplied by us). In Sudhakar Litho Printers' case, this Tribunal considered two judgments of Delhi High Court, reported in 1981 (8) E.L.T. 328 (Delhi) and 1986 (23) E.L.T. 318 (Delhi), but preferred to follow the judgment of Karnataka High Court for the reasons stated in paragraphs 10 and 14 of the Tribunal decision. The judgment of Karnataka High Court was followed by this Tribunal in a number of cases including the case of Mis. Malwa Vanaspati and Chemical Co. Ltd. v. Collector of Central Excise, Indore, reported in 1988 (35) E.L.T. 693 (Tribunal). 17. The scope of Sections 11A and 11B vis-a-vis Sections 35A, 35E and 35EE of the Central Excises and Salt Act was discussed in great details by Calcutta High Court in paragraph 29 of its judgment [1988 (34) E.L.T. 473] in the case of.T.C. Limited (supra). For facility of ready reference, we reproduce the said paragraph below :- "With regards to the next contention of Mr. Nariman about the scope and ambit to provision of Section 11A of the Central Excises and Salt Act, 1944 it appears to me that Section 11A of the said Act provides provision for recovery of duties no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the observation of Lord Esher M.R. in the case of R. v. City of London Court Judge reported in 1842 (9 M & W) 378 at 398 may be quoted, wherein it was observed that "if the words of an act are clear, you must follow them, even though they lead to manifest absurdity. The Court has nothing to do with the question whether the legislature has committed an absurdity. In my opinion, the rule has always been this if the words of an act admit of two interpretations, then they are not clear; and if one interpretation leads to an absurdity and the other does not, the Court will conclude that the legislature did not intend to lead to an absurdity, and will adopt to other interpretation." In my view, the interpretation sought to be given by Mr. Nariman in Section 11A is given that would produce a wholly unreasonable result and it is duty of the Court to construe a statute according to literal and grammatical meaning which it had expressed and that the words of enactment must prevail. Under the scheme of the said Act, Section 11A of the said Act was provided as a substantive provision and a complete code for realisation of excise duty in case of short levy or short payment and Section 11B o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment than by opening it to destructive analysis. The Tribunal's view, in my opinion would lead to destructive analysis. The provisions of Section 35A and Section 35EE neither override the provisions of Section 11A nor it could be said that Section 11A is a mere machinery provision which could not be invoked independently and/or the same could only be invoked in aid of the powers conferred in Section 35A and/or Section 35EE of the said Act. The later Sections adopted by reference, only the period of limitation and nothing else. When the language of Section 11A is clear and the powers conferred in other provisions could be invoked only within the period of limitation mentioned in Section 11A of the said Act, makes it clear that the provision of Section 11A is an independent code and/or provision for the purpose of recovery of the excise duty short paid and short levied. In my view, if the interpretation as sought to be given by Mr. Nariman is to be given in Section 11A of the said Act, it would produce a wholly unreasonable result and would also defeat obvious intention of the legislature and further the Court has to do some violence to the words which, in my view, is not permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner was admittedly enjoying a concession and/or exemption and the provision of notification giving concession and/or exemption should not be construed liberally in favour of the taxpayer defeating the purpose of the legislation. While interpreting the provision of law, the Court will try to ascertain the mischief which the statute intended to remedy from the whole of the enactment and the existing statute of law. The object of Section 11A was for recovery of duty short paid or short levied and in my view, the provision of Section 11A could not be interpreted in a manner which would defeat the very purpose and/or object for which the same is enacted. Accordingly, in my view, this contention of Mr. Nariman must be overruled. In my view, that within the scope and ambit of Section 11A of the said Act, the impugned show cause notice was issued rightly." Calcutta High Court did not accept this Tribunal's earlier view that unless the price list was set aside on appeal, the question of refund would not arise and accordingly held that the Tribunal did not decide the law on the subject correctly in its decision reported in 1987 (29) E.L.T. 933. The Hon'ble High Court also held that it co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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