1998(01)LCX0080
IN THE CEGAT, EASTERN BENCH, CALCUTTA
Shri P.C. Jain, Member (T) and Smt. Archana Wadhwa, Member (J)
COMMISSIONER OF C. EX., CALCUTTA-I
Versus
BATA INDIA LIMITED
Order No. A/80/CAL/98, dated 21-1-1998 in Appeal No. E/5659/92
Cases Quoted
Collector v. Kutty Flush Doors & Furniture Co. Pvt. Ltd. — 1988(03)LCX0021 Eq 1988 (035) ELT 0006 (S.C.) — Referred [Para 3]
Deputy Commissioner of Sales Tax v. Shiphy International — 1988(03)LCX0046 Eq 1988 (034) ELT 0416 (S.C.) — Referred [Para 3.1]
U.O.I. v. J.G. Glass Industries Ltd. — 1997(12)LCX0059 Eq 1998 (097) ELT 0005 (S.C.) — Referred [Para 3.1]
Collector v. Popular Cotton Covering Works — 1994(08)LCX0054 Eq 1994 (073) ELT 0264 (S.C.) — Referred [Paras 3.2, 3.3]
Advocated By : Shri T. Premkumar, SDR, for the Appellant.
Shri S.K. Bagaria, Advocate, for the Respondent.
[Order per : P.C. Jain, Member (T)]. - Briefly stated the facts of the case are as follows :
1.1 The respondents herein upto June, 1988 manufactured Plain Cartons. Thereafter, they started purchasing the same. Those Plain Cartons were affixed with printed labels by pasting method. They also purchased from outside printed Paper Board Cartons/Containers/Boxes in loose and flattened condition. In their factory, they folded and stapled the same so that the footwear could be placed inside the boxes so made. Controversy before us is whether the cartons/containers/boxes so made by them as aforesaid having been ultimately used for taking manufactured product namely, Footwear, can be termed as a manufacture of printed cartons by them, so as to classify the same under Tariff Headings : 4818.13 (upto March, 1988) and thereafter, 4819.12 (from April, 1988 to the end of the period involved).
1.2 A show cause notice was issued alleging that the appellants had suppressed the fact of manufacture of printed cartons by them in their Classification List which simply described the goods manufactured by them as “Plain Cartons (not printed)” and therefore, a demand of duty proposing to recover Rs. 3,20,98,718.33, was issued on 21-2-1991 for the period from 1-3-1986 to 31-12-1990. The adjudicating Commissioner has dropped the proceedings holding that in the aforesaid facts and circumstances of the case, the respondents cannot be said to have manufactured printed cartons falling under the aforesaid Headings. He has, therefore, dropped the demand. He also pointed out that this issue was raised earlier by the Department and those proceedings were also dropped by the Commissioner’s Order dated 29-11-1988. It was, therefore, held that the extended period of limitation would also not be applicable to the present case. Hence this appeal by the Revenue.
2. Learned SDR, Shri T. Premkumar for the appellant Commissioner submits that on purchase of Plain Cartons, the respondents are carrying out the activity of pasting of printed labels with the aid of power. Therefore, he submits that the printed carton has been brought into existence by them from a Plain Carton purchased by them in flattened condition. Further, the respondents are carrying out the activity of folding them and stapling them and then with the aid of power, pasting the printed labels, if not already printed.
2.1 Shri Premkumar submits that in this manner, printed carton has been brought into existence by the respondents from plain flattened containers. Thus there is a manufacture of printed carton which falls under a different heading and therefore, it is an activity liable to duty. Hence the demand of duty is sustainable.
2.2 As regards the limitation, he submits that they did not mention any such thing, in their Classification List upto June, 1988; they only mentioned “Plain Cartons (not printed)”, thereby suppressing materially their activity of folding, stapling and pasting of printed labels. He, therefore, prays for setting aside the impugned Order and confirming the demand of duty.
3. Opposing the contentions, learned Advocate, Shri S.K. Bagaria for the respondent firm, submits that plain flattened carton remains a carton even after folding and therefore, it cannot be said that any new commodity has been brought into existence by them. He further submits that mere pasting of any printed labels on a plain carton does not convert the same into a printed carton. He also submits that folding and stapling of printed flattened containers does not bring into existence any new commodity because it remains printed cartons which they actually brought. He, therefore, submits that there is no activity of manufacture of printed cartons in any manner and hence no duty can be sustained on this activity and consequently, the demand itself is liable to be set aside on merits. In support, he relies on the judgment reported in the case of Collector of Central Excise v. Kutty Flush Doors & Furniture Company Private Limited reported in 1988(03)LCX0021 Eq 1988 (035) ELT 0006 (S.C.). In this Judgment, the Apex Court held that manufacture implies a change, but every change is not manufacture and yet every change of article is the result of treatment, labour and manipulation. But something more was necessary and there must be transformation; a new and different article must emerge having a distinct name, character or use.
3.1 In a similar strain, is another judgment of the Supreme Court in the case of Deputy Commissioner v. Siphy International reported in 1988(03)LCX0046 Eq 1988 (034) ELT 0416 (S.C.). Lastly, he relies on another judgment of the Supreme Court in the case of Union of India v. J.G. Glass Industries Limited reported in 1998 (097) ELT 5. The Apex Court in the said case held somewhat to the following effect, as urged by the ld. Advocate.
“In this recent judgment, the Hon’ble Supreme Court was considering the issue as to whether printing of glass bottles amounts to manufacture within the meaning of Section 2(f). The Hon’ble Supreme Court was pleased to hold that for deciding as to whether any manufacture has taken place, two tests have to be satisfied. First, whether by the said process a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist; secondly, whether the commodity which was already in existence will serve no purpose but for the said process. By applying the said tests, the Hon’ble Supreme Court was pleased to hold that by the process of printing, names or logos on the bottles, the basic character of bottles did not change and the same continued to remain bottles and there was no manufacture of any new or different goods.”
3.2 He also relies on the Judgment reported in 1994 (073) ELT 264 in the case of C.C.E. v. Popular Covering Works wherein it has been held by the Apex Court that if a commodity has once been subjected to excise duty, it cannot be made liable to duty merely because some incidental or ancillary process is carried out on it. Elaborating on this proposition, learned Advocate, further, submits that it has been clearly mentioned in Revenue’s Grounds of Appeal that after purchase of the printed flattened containers or plain containers, the respondent firm is carrying out the ancillary activity of converting the flattened containers into the containers ready for use.
3.3 In view of the foregoing judgment of the Apex Court, learned Advocate submits that the activities undertaken by them after purchase of flattened plain or printed containers, cannot be considered to be activities of manufacture and therefore, no duty-liability devolves on the respondents. He has also stated that the demand of duty will be time-barred, in view of this activity being known to the Department.
4. We have carefully considered the submissions of both sides. We observe that it is not disputed that what the respondent firm is purchasing from the market is the flattened containers. Conversion of the flattened container into a container ready for use, in our view, cannot be considered to be an activity of manufacture because the commodity remains the same. It was a container before, and after the activity, also remains the container. This is particularly so, in view of the definition of cartons/boxes/containers/cases given in Tariff Headings : 48.18 and 48.19 (with effect from 1-4-1988), wherein it has been stated as “cartons/boxes/containers/cases (including flattened or folded boxes and flattened or folded cartons)”. It is, therefore, apparent that flattened or folded boxes and flattened or folded cartons mean the same thing as cartons, boxes or containers, so far as the Central Excise Tariff is concerned. We therefore, hold that the respondents herein have not brought into existence any new commodity for the activities undertaken by them as described above.
5. Next question is whether the pasting of printed labels on plain carton before putting the footwear in the cartons, can be considered to be an activity of manufacture in the sense that they become converted from plain carton to printed carton. We observe that no evidence has been produced by the Revenue on record that affixing a printed label on the plain carton will make the plain carton a printed carton as known in the trade. It is well-settled that burden to adduce this evidence in the matter of classification lies on the Revenue. Therefore, we hold that for lack of any evidence, the Revenue has not proved that the activity of pasting of a printed label on a plain carton would amount to bringing into existence a printed carton. In view of our aforesaid findings, we do not consider it necessary to go into the question of limitation. Consequently, we dismiss the appeal of the Revenue.
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Equivalent 1998 (100) ELT 179 (Tribunal)