9911796707
TMI Blog1984 (3) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... without payment of duty, some quantity of jute pack sheets and stitching twine for the packing of jute manufactures for export as well as for the packing of jute manufactures cleared for home consumption. The Department issued a show cause notice on 17-8-1979 demanding from them total duty of ₹ 36,952.02 on the pack sheets and twine so used. On adjudication, the Asstt. Collector confirmed the demand. The Appellate Collector, by his order dated 9-12-1980, sustained the demand for ₹ 126.63 which related to the duty on the twine used for home consumption goods but set aside the remaining demand holding that since the goods were exported under Bond/under Rule 13 of the Central Excise Rules, 1944 without payment of duty, no duty could be realised on the packing material also. The Central Government tentatively held the view that the order of the Appellate Collector was not legal, correct and proper because the packing materials were not covered by the Bond under Rule 13 and as such duty should have been paid thereon. Accordingly, the Central Government issued the subject show cause notice on 18-11-1981 under the then Section 36(2) of the Central Excises and Salt Act, 1944. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and drilling machines fitted with electric motors had been exported. It was held that electric motors fitted to other appliances and which were merely component parts were not eligible for rebate of central excise duty under Rule 12 or the notification issued thereunder. The Department s representative argued that in the case before us pack sheets and twine had been consumed within India prior to export. They were neither exported under Bond nor under claim for rebate of duty. They could not be deemed to have been exported themselves. Relying on the Supreme Court judgment in the case of Burmah Shell Oil Storage Distributing Company v. Commercial Tax Officer (1961-(1) SCR-902), he stated that only those goods could be considered as exported for which some one was waiting abroad to receive them. He elaborated by saying that only the contents were sold and purchased and not the packing material (reliance on 1980 46 STC 126 (M.P.)-in the case of Commercial Tax Officer v. Dharamse Morarjee Chemicals). He further relied on the Supreme Court judgment reported at 1961 (1)-SCR.-709 (Anwar Khan Mehboob Khan v. The State of Bombay) to say that for utilisation of one substance for the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and Salt Act, 1944 and as per the said definition packing amounted to manufacture only in the case of specified products. Jute manufactures were not such a specified product. Explanation 2(ii) under Rule 13, which the respondents relied on, was also not applicable for the same reason. He referred to the order of this Tribunal reported at 1983-ECR-1512D (CEGAT) = 1983 E.L.T. 1813 (Tribunal) - M/s. Orient Paper Mills v. Collector of Central Excise, Calcutta, and stated that the point whether packing amounted to manufacture did not fall for decision in that case. 6. The Department s representative then brought in a new point on his own. He stated that the order of the Appellate Collector, though passed on 9-12-1980, was despatched on 23-2-1981. The show cause notice of the Central Government was issued on 18-11-1981, i.e. after the expiry of six months from the date of despatch of the Appellate Collector s order. According to the view taken by this Tribunal in their order dated 24-1-1984 in Modella Mills case, the show cause notice was time-barred. The Tribunal had relied on the Delhi High Court judgment in the Associated Cement Company s case. But he added that he did not agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of November, 1979 should be considered to apply only prospectively. The Appellate Collector virtually followed the Board s orders in passing favourable orders not only in the case of the present respondents but six or seven other jute Mills also. In the circumstances, the respondents as well as the Bench, were entitled to know as to whether the Department had filed appeals against the other favourable orders passed by the Board and the Appellate Collector or not. The Department s representative, however, had no information on the point and the respondents were consequently left with the feeling that they had been singled out for a discriminatory treatment. These three considerations put together would have been adequate justification for us to decline to interfere with the impugned Order-in-Appeal. But since the Department wanted us to undertake an in-depth examination of the legality of the demand for duty, we have done so. 9. In everyday life, it is the experience of all of us that the normal, minimum packing necessary to deliver the goods, whether in retail or wholesale, is taken for granted as a part of the goods themselves and is not considered to have a separate identity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he normal, minimum packing are not used up in the process, it would not be correct to say that they have not been used in an incidental or ancillary process to complete the manufactured product-by turning it into marketable goods. The observation of the Hon ble Supreme Court relied on by the Department s representative (Anwar Khan Mehboob Khan v. State of Bombay) supports our view. The Department s representative is not correct in saying that section 2(f) recognizes packing as a process of manufacture for a few specified goods only. On referring to the section, we notice that it treats labelling, re-labelling and re-packing in relation to manufactured tobacco (cigarettes, bidis etc.), medicines, cosmetics and toilet preparations as processes of manufacture. The word used in the section is re-packing which means making retail packs out of bulk packs. The section does not specifically say anything about the normal, minimum packing of manufactured products in general except laying down the rule that manufacture includes any process incidental or ancillary to the completion of a manufactured product. Further, the specific provisions relating to labelling, re-labelling and re-pack ..... X X X X Extracts X X X X X X X X Extracts X X X X
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