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TMI Blog1990 (11) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... Mandamus directing the appellants to refund the excise duty collected from the respondent on the printed cartons for the period during which the exemption was in force on such manufactured article. 2. The question involved in the instant writ appeal is whether the printed cartons manufactured by the respondent-Company are products of printing industry and as such exempted from the payment of excise duty under Notification No. 55/75, dated 1-3-1975 as amended from time to time. There is no dispute that if the product of the respondent-Company is found to be a product of the printing industry, it is entitled to the benefit of the exemption from payment of excise duty till 28th of February 1983. 3. The relevant facts may be briefly stated thus: The respondent-Company manufactures printed cartons at its factory at Makali, Nelamangala, Bangalore District. It manufactures such cartons for important and reputed organisations as per their specifications and requirements. The respondent-Company has specialised in the branch of the printing industry connected with the manufacture of printed cartons. According to the respondent-Company, printed cartons are known and understood in the trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplementary. In the course of time, the printed carton has become a medium of advertising the products. The printed carton enables the manufacturer to enhance the sale value or market appeal of their goods. The art work is chosen so that the brand name and trade mark of the manufacturer is highlighted. The appearance and .the usual impact of the printing on the printed carton are of supreme importance to both the manufacturer of the product to be sold in the printed carton and to the printer, and the same therefore occupies the major time of the printer in the manufacture of the printed carton. It has therefore been contended by the respondent-Company that printed cartons are known and understood in the trade as products of the printing industry. Since that is how printed cartons are understood in common parlance, they earned the benefit of exemption under the notification in question. 4. It is not in dispute that by Notification No. 55/75, dated 1st March, 1975 certain specified goods falling under Item 68 of the 1st Schedule to the Act were exempted from payment of the whole of the duty of excise leviable thereon under Item No. 68. The notification was amended by Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent-Company has been paying the excise duty under protest. Two-show cause notices Annexures-G and H were issued by appellant No. 32 calling upon the respondent-Company to show cause as to why the amount of Rs. 4,13,074.01 allegedly not levied for the period March, 1980 to August, 1980 and a sum of Rs. 1,70,638.30 for the period November, 1979 to February 1980 be not recovered from the respondent-Company under Rule 10 of the Central Excise Rules. Since the respondent-Company had erroneously claimed exemption in respect of printed cartons, which were not the product of the printing industry. The respondent-Company challenged the aforesaid communication, Annexure-E, and the show cause notices Annexure-G and H in the writ petition filed by it before this Court contending that printed cartons were product of the printing industry and as such entitled to the exemption under a notification dated 1st March 1975 read with Notification dated 5th May 1975 issued under Rule 8 of the Central Excise Rules. The respondent-Company also claimed refund of the amount illegally collected from it. 7. The appellants herein, who were the respondents in the writ petition, contested the claim of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authority. There is no dispute about the settled legal position in this regard. It is well settled that in interpreting the meaning of words in a taxing statute, the acceptation of a particular meaning should commend itself to the authority. It should not be construed in any technical sense, but as understood in common parlance, the popular meaning attached to it by those dealing with them, that is to say in their commercial sense (See. AIR 1977 SC 597 - Dunlop India Ltd. v. Union of India, AIR 1961 SC 1325 - Ramavatar Budhai Prasad v. Assistant Sales Tax Officer, AIR 1967 SC 1454 - Commissioner of Sales Tax, Madhya Pradesh v. Jaswant Singh Charan Singh, AIR 1968 SC 922 - South Bihar Sugar Mills Ltd. v. Union of India). 11. The learned single Judge has placed great reliance upon the articles and treatises placed before him to support the contention that in ordinary parlance printed cartons are considered to be the product of the printing industry. He has quoted the extracts from the several articles and treatises in his judgment, and it is not necessary for us to reproduce the same in this judgment. However, those articles do indicate that there has been considerable progress in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been done becomes a product of the printing industry. 13. A carton is a product of the packaging industry, and there can be no dispute about it. The question then is, if something is printed on such carton, does it become a product of the printing industry? Does it cease to be any less a carton if something is printed on it, and to a common man in the trade, does it make a difference whether a carton has or has not anything printed on it? In our view, it would be an extreme proposition to hold that all products on which some printing is done is a product of the printing industry. In that event, printed cloth would be a product of the printing industry and not of the textile industry. A metal can with printed material on it will similarly be a product of the printing industry and not the packaging industry. The same can be said of cardboard packet and even wooden boxes over which some printing is done to identify the goods or its manufacturer. In our view, the mere fact that something is printed on a product by itself does not make it a product of the printing industry. A carton is a carton and has only one use, namely, of packing a product to be sold in the market. The mere fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a process of creasing. Lastly, if so required, gluing is done and a definite shape given to the printed material, which is known as the carton. A few samples were produced before us and the samples disclosed that on the request of the customers sometimes a special type of paper is also provided in the cartons by way of inner lining which protects the product from moisture and prevents its leakage. Obviously such lining is provided by the respondent to make the carton leak proof and moisture proof. The fact that the factory of the respondent not merely prints but also cuts the paper into shapes and provides the creasing, gluing and inner lining, to our mind does not necessarily lead to the conclusion that the final product, namely, the printed carton is a product of the printing industry. It may be that the factory of the respondent is well-equipped to render other services, apart from printing on paper. A particular press may be well equipped to provide services other than what is normally attributable to the printing industry. The finished product which such a printing press produces need not necessarily be a product of the printing industry. On the other hand, in other printin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases is : How is the product identified by the class or section of people dealing with or using the product? That is a test which is attracted whenever the statute does not contain any definition. Portraits and Spencer (Asia) Ltd. v. State of Haryana - (1978) 42 STC 433 = 1983 (13) E.L.T. 1607 (SC). It is generally by its functional character that a product is so identified. In Commissioner of Sales Tax U.P. v. Macneill & Barry Ltd., Kanpur- (1985) 2 SCALE 1093 = 1986 (23) E.L.T. 5 (SC), this court expressed the view that ammonia paper and ferro paper, used for obtaining prints and sketches of site plans could not be described as paper as that word was used in common parlance. On the same basis the Orissa High Court held in State of Orissa v. Gestetner Duplicators (P) Ltd. - (1974) 33 STC 333 that stencil paper could not be classified as paper for the purposes of the Orissa Sales Tax Act. It is a matter of common experience that the identity of an article is associated with its primary function. It is only logical that it should be so. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of manufacture, it could perhaps be treated as the product of the printing industry, since it was not a carton at that stage. However, if such board was further processed i.e., cut/slitted/creased, etc., it became carton though supplied in collapsed condition for reasons of easy transport. The machinery required for making packages may comprise not only a printing press but also separate and additional machines for cutting, slitting and creasing the board for making board into a carton after printing is done. Only those products where printing virtually constitutes a culminating process of manufacture for obtaining the end product could be called a product of the printing industry, and judged by this criterion, the printed cartons could not be held as a product of printing industry. It also observed that the cost factor on account of printing, by the very nature of things, vary from design to design. The same view of the Government of India was reiterated in M/s. Rollatainers Ltd., Faridabad [1982 (10) E.L.T. 281]. It will be noticed that the revisionist in this case was the respondent-Company in the instant appeal. It was observed: "9. .... It is not the assessee's case that eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, for converting it into a carton. As observed by the Government in the case of Vijay Flexibles Ltd., only those products where printing virtually constitutes a culminating process of manufacture for obtaining the end product, could be called a product exclusively of the printing industry. The exemption as provided in Notification No. 55 of 1975 (as amended) could be made available only to products exclusively of printing industry and not to products which have undergone printing at some stage of its manufacture. In this connection, the Government consider it pertinent to observe that trade understands the printed metal containers as metal and not as a product of printing industry - and this is not so because there is a separate entry for metal containers in the Central Excise Tariff. Similarly the printed cartons are known as cartons meant for packaging i.e., a product of packaging industry and not as a product of printing industry..." In Collector of Central Excise, Bombay v. R.M.D.C. Press (P) Ltd., Bombay [1987 (29) E.L.T. 957] the revision before the Central Government was disposed of by majority decision taking the view that the show cause notice issued to the respondent w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not necessary for us to repeat the same reasons over again. In our view, the basic fallacy in the reasoning of the Tribunal is the assumption that whatever comes out of an establishment which undertakes printing work must necessarily be a product of the printing industry without having regard to the primary function of the product, which is produced at such establishment. This brings us to a consideration of the judgment of the Division Bench of the High Court of Andhra Pradesh in Golden Press's case. The decision of the learned single Judge of this Court was relied upon by the petitioner before the High Court of Andhra Pradesh. But their Lordships dis-agreeing with the view of the learned single Judge of this Court, held that printed cartons are not products of the printing industry, but products of the packaging industry. The learned Judges have also referred to some of the text-books, which have also been cited before us. "17. We must approach the issue from another angle : admittedly, printed carton is a manufactured product. In other words, a process of manufacturing is involved in preparing the printed cartons. What is that manufacture ? The only answer must be that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned single Judge of the Karnataka High Court is concerned, the learned Judge appears to have .been impressed by the text-books, which say that printed cartons are products of printing industry; but, if one were to go by those texts, even plastic containers and all other forms of packaging would also become products of printing industry, merely because they involve some printing as well, which, we think, would be an unreasonable thing to say. We are, therefore, unable to agree with the view taken by the learned Judge. It was then observed that the most that could be said in favour of the petitioner was that may be two views are possible. But once the authority has taken one view, this Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India would not interfere unless it is shown that the very reasons for classification are foreign to the proper determination of the classification. We are in respectful agreement with the view taken by the High Court of Andhra Pradesh. 16A. It was also urged before us on behalf of the revenue that in the instant case only show cause notices had been issued to the respondent-Company and it could have ve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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