1991(07)LCX0114

BEFORE THE CEGAT, SPECIAL BENCH ‘C’, NEW DELHI

S/Shri S.L. Peeran, Member (J) and P.K. Kapoor, Member (T)

ANDHRA PRADESH PAPER MILLS LTD.

Versus

COLLECTOR OF CENTRAL EXCISE

Order No. 601/91-C, dated 19-7-1991 in Appeal No. E/2576/87-C

Cases Quoted

Collector v. Krishna Carbon Paper Co. - 1988(09)LCX0051 Eq 1988 (037) ELT 0480 (S.C.) [Paras 5, 9]

G. Claridge & Company Ltd. v. Collector - 1991(02)LCX0055 Eq 1991 (052) ELT 0341 (S.C.) [Paras 5, 7, 8]

Advocated By : Shri C. Chidambaram, Consultant, for the Appellants.

Shri L.C. Chakraborty, JDR, for the Respondent.

[Order per: S.L. Peeran, Member (J)]. - The appellants are aggrieved by the order-in-appeal No. 77/87(G), dated 28-5-1987 passed by the Collector of Central Excise (Appeals), Madras who has held that “reel core” is classifiable under Tariff Item 4818.90 as against Tariff Item 4818.12 of C.E.T. Act, 1985 claimed by the appellants.

2. The facts of the case are that the appellants are manufacturing various grades of paper. For winding paper “reel core” is manufactured by using sub-standard Kraft Paper which is cleared at appropriate rate of duty. The appellants had filed a classification list bearing No. 6/85 effective from 1-3-1986 classifying “reel core” under T.I. 4818.12 under Central Excise Tariff Act, 1985 and claimed exemption from payment of duty thereon under Notification No. 140/86-C.E., dated 1-3-1986.

3. The Assistant Collector, Rajahmundry Division, issued a show cause notice dated 19-6-1986 calling upon the appellant to show cause as to why “reel core” should not be classified under T.I. 4818.90 attracting duty liability at 12% ad valorem. The appellant by their reply dated 26-8-1986 contended that “reel core” was manufactured out of sub-standard duty-paid kraft paper and it is consumed internally for winding up of the paper into reels, and the paper so wound up is also cleared on payment of duty. The appellants thus claimed classification of “reel core” under T.I. 4818.12 and that “reel core” having been manufactured out of paper falling under 48.04 and used as container for winding other varieties of paper by the appellant, the appropriate classification was under T.I.4818.12 and eligible for benefit of Notification No. 140/86-C.E., dated 1-3-1986. The appellants had relied upon the Explanation given to Section 4 of the Central Excises and Salt Act to justify their claim of reel core to be treated as packing container. However, both the authorities have rejected their contentions and held “reel core” to be classifiable under T.I. 4818.90.

4. Shri C. Chidambaram, learned Consultant, appearing for the appellants submitted that the Central Excise Board had issued a Tariff Advice No. 46/88, dated 29-3-1988, by which they have clarified that “Reel Cores” are classifiable under T.I. 4818.18 or 4818.19 covering “nil” rate of duty He submitted that prior to 1986, the item was classified under T.I. 68 with complete exemption from payment of duty, as it was also captively consumed. He contended that prior to 1986, Modvat facility was also not extended to paper.

5. Shri L.C. Chakraborti, learned JDR submitted that tariff advice issued by Board was not binding and in support of this contention he relied upon the ruling of the Supreme Court rendered in the case of C.C.E., Kanpur v. Krishna Carbon Paper Co. - 1988(09)LCX0051 Eq 1988 (037) ELT 0480 (S.C.). He referred to para (1) of general explanatory notes of Rules of Interpretation, and submitted that by applying the said para (1) of the note, the product has to fall only under T.I. 4818.90 which has a single dash (-) and hence it would fall within the sub-item “other articles of paper pulp”. He contended that T.I. 4818.19 as “other” has double dash (- -) and therefore would come under the sub-heading, “Cartons etc.” He contended that “reel core” is not carton and hence it would not come under this sub-heading but would be rightly classifiable under T.1. 4818.90 as ‘other articles of paper’. He also relied on the rulings of Supreme Court in support of his contention that “reel core” is not carton as given in the case of G. Claridge & Company Ltd. v. Collr. of C. Ex. as reported in 1991(02)LCX0055 Eq 1991 (052) ELT 0341 (S.C.).

6. We have carefully considered the submissions made and also perused the records. The question that arises for consideration is the correct classification of item “reel core”.

The contesting tariff entries are reproduced below :-

The General Explanatory Note (1) to the interpretation rule is also reproduced below:

1. “Where in column (3) of this Schedule, the description of an article or group of articles under a heading is preceded by ” -", the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading.

Where, however, the description of an article or group of articles is preceded by"- -", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of article or group of articles which has “ -”.

7. The contention of the appellant is that the “reel core” is a container and it serves the purpose of winding into reels the final product “paper” manufactured by them. The Hon’ble Supreme Court examined in great length the classification of “Egg trays”, “Egg filler flats”, “Egg cartons”, “tube light packing trays”, “apple trays” under the same Tariff Items 4818.90 in the light of the definition of “container” as in the dictionaries and glossaries of Packaging Terms. The said finding of the Hon’ble Supreme Court as given in paras 7,8,9, 10 and 11 are reproduced below :

“7. The question which arises for consideration in these appeals is whether the egg trays and other similar products manufactured by the appellants are ”containers" falling under Item 17(4) or 17(3) of the old Tariff and sub-heading 4818.19 of the new Tariff.

8. The learned counsel for the appellant has urged that the products manufactured by it are ‘containers’ and in support of this submission the learned counsel has invited our attention to the meaning of the term ‘container’ as contained in the dictionaries and the Indian Standard Glossary of Terms relating to paper or paper-board, packaging materials. Glossary of Packaging Terms (USA) and Glossary of Packaging Terms (Australia). The submission of the learned counsel is that a ‘container’ is a receptacle which holds, restrains or encloses the item to be stored or transported and that the egg tray and other similar products manufactured by the appellant are ‘containers’ because they are receptacles for holding, storing and transporting the things kept in them. It has been urged that a ‘tray’ is a shallow lidless container and merely because an egg tray is described as a tray does not mean that it is not a ‘container’. It is contended that egg trays are so designed as to protect the eggs from breakage and that egg trays provide the best mode for storage and transport of eggs. The learned counsel has submitted that the Appellate Tribunal was in error in proceeding on the basis that egg tray and other similar products manufactured by the appellant cannot be regarded as - ‘containers’ because when a single egg tray is reversed or turned upside down or tilted sideways vertically at 90 angle, the contents would fall down. The submission of the learned counsel is that it is not required that a container should be closed from all sides and that a container can also be open.

The expression ‘container’ has been thus defined in the dictionaries and Glossaries of Packaging Terms:

“ ‘Container : One that contains; a receptacle or flexible covering for shipment of goods.’

(Abstract from Webster’s New Collegiate Dictionary, 1975)

‘Container : that which contains that in which goods are enclosed for transport’. (Abstract from Chambers’ 20th Century Dictionary)

‘Containers - Any receptacle which holds, restrains or encloses any article or commodity or articles or commodities to be stored or transported’ (Abstract from Indian Standard - Glossary of Terms : I.S. 4261 -1967)

‘Container. (1) In general, any receptacle or enclosure used in packaging and shipping. (2) Relatively large, reusable enclosures to be filled with smaller packages and discrete objects, to consolidate shipments and allow transport on railway flat cars, flatbed trailers, aircraft, in ships’ holds or as deckloads, etc. (See CARGO TRANSPORTER : CONTAINERIZATION).

(3) Any receptacle for holding a product.’ [Abstract from Glossary of Packaging Terms (USA)]

‘Container. A large box for intermodal transport, containing many smaller boxes of different shapes and sizes as well as individual articles.

[Abstract from Glossary of Packaging Terms (Australia).]

9. The above definitions would show that the expression ‘container’ is used in three different senses: in a broad sense, it means a receptacle which contains, in a narrower sense, it means a receptacle in which articles are covered or enclosed and transported; and in a more limited sense, it means enclosures used in shipping or railway for transport of goods. If used in a broad sense, ‘container’ would include a tray because it is a receptacle which contains articles and, therefore, an egg tray would be a ‘container’. But an egg tray would not be a ‘container’ in a narrower sense because articles placed in it are not covered or enclosed and they cannot be transported as such. It is therefore, necessary to ascertain whether the expression ‘container’ in Item 17 of the old Tariff and Heading 48.18 of the new Tariff has been used in the broad sense to include all receptacles or in a narrower sense to mean those receptacles in which the articles are covered or enclosed and transported. For this purpose, the context in which the word ‘container’ has been used in these entries has to be examined. In Item 17 of the old Tariff, the word ‘containers’ is preceded by the words ‘boxes, cartons, bags and other packing’ and in Heading 48.18 of the new Tariff, the word ‘containers’ is preceded by the words ‘cartons, boxes’ and is followed by the words ‘and cases’. It is a well-accepted canon of statutory construction that when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. It is based on the principle that words take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. [See : Dr. Devendra M. Surti v. State of Gujarat -1969 (1) SCR 235 at p. 240]. Considering the expression ‘containers’ in the context in which it is used in the relevant tariff item, we are of the opinion that the said expression has to be construed to mean ‘packing containers’ which are analogous to boxes and cartons, that is, an enclosed receptacle which can be used for storage and transportation of articles. Egg trays being receptacles which are not covered or enclosed cannot be used for transportation of articles and, therefore, they cannot be regarded as ‘containers’ under the above mentioned entries in the Excise Tariff.

10. According to the New Encyclopedia Britannica, the practice followed in the various countries for the packaging of eggs for transport is as follows:

‘Packaging. For retail use in the United States, eggs are repackaged in dozen and half-dozen paperboard cartons. In some other countries they are packed with straw or excelsior in long wooden boxes. In many parts of the world, they are marketed in baskets or boxes and the individual eggs are sold by weight. Several European countries stamp each egg with a date and number to meet the import restrictions of other nations.’ [p. 444, Vol. 6,1974 Edition]

The Glossary of Packaging Terms (USA) also shows that moulded pulp egg trays are put in a standard case which indicates that the egg trays containing the eggs are put in a case for the purpose of transport. In other words, the case in which the egg trays are put are ‘containers’ and not the ‘egg tray’ itself.

11. For the reasons aforesaid, we are of the opinion that the Appellate Tribunal was right in taking the view that the egg trays and other similar products manufactured by the appellant cannot be regarded as ‘containers’ under the relevant items of the Excise Tariff."

8. The item “reel core” is in the nature of a reel on which the paper is wound up. On a similar pattern like “wooden reel” or “Caps” on which threads and yarn are wound up. Now the question is as to whether it satisfies the test of a container. As can be the definition of the term container as noted in the ruling of the Hon’ble Supreme Court, a “container is one that contains, a receptacle or flexible covering for shipment of goods”. Further, it is “that in which goods are enclosed for transport”. It should be a “receptacle which holds, restrains or encloses any article or commodity to be stored or transported”. Further definitions given in the Supreme Court ruling also indicate that a container should be in the nature of a receptacle or enclosure used in packaging and shipment or it should be in the nature of a large box. Does this “reel core” satisfy any of these definitions. Although “paper” is wound over it in reek for shipment, yet in the strict sense in which a container is understood, a “reel core” does not satisfy the definition of a ”container". The appellants have also not shown by any piece of evidence that “reel core” is understood in the trade as a “container”. They are relying on Section 4(d) of Central Excises & Salt Act to urge that packing includes cores. The learned Collector (Appeals) has observed that this plea was not stressed during personal hearing. Even before us, Shri C. Chidambaram, learned Consultant only feebly submitted on this point in his counter argument. It has to be observed that Section 4 exclusively deals on principles of valuation and the factors governing valuation need not necessarily govern the aspect of classification, as classification of items are done on the basis of a separate legislation, namely. Central Excise Tariff Act, which lays down interpretative rules and chapter notes for the purpose of classification of goods. The Collector (Appeals) in his order has also rejected this argument of appellants on a similar ground, which is quite tenable. In the result the prayer of the appellant to classify it under heading 4818.19 has to be rejected. As it does not come in any of the sub-headings under the heading “cartons, boxes etc.”, it has to go under sub-heading 4818.90 as “other”, which comes under heading “Other articles of paper pulp, paper, paperboard cellulose wadding or webs of cellulose fibers”.

9. As regards the contention of the learned Consultant that the Board’s circular treating it as “container” should be accepted by us, on this point the reply of learned JDR that the same is not binding on the quasi-judicial bodies and Tribunal is well-founded as also held by Hon’ble Supreme Court in the case of Krishna Carbon Paper (supra).

10. There is no infirmity in the order of the lower authorities and the appeal is liable to be dismissed and we order accordingly.

Equivalent 1993 (65) ELT 447 (Tribunal)