1. M/s. Indian Textile Paper Tube Company Limited, (hereinafter called the appellants) have been manufacturing and clearing among other things Vim Containers and Defence Containers. These articles were classified under Tariff Item No. 68 C.E.T. and duty at the rate of 8% ad valorem was being paid on these articles prior to 28-2-1982.
2. The amendment of the tariff description to Item 17 (by the Finance Bill, 1982) introduced a new sub-item (4) to cover containers, for packing, whether or not printed and whether in assembled or unassembled condition. The appellants thereafter submitted a classification list showing these items as falling under Item 17(4) C.E.T. and not liable to payment of duty being exempt in terms of Notification No. 66/82 dated 1-3-1982 as these containers were not printed boxes or printed cartons. The Central Excise Officers approved the classification list and allowed the clearances of the goods without payment of duty.
However, after the issue of the Trade Notice No. 175/82 dated 20-8-1982 based on the Tariff Advice No. 45/82, the Suprinten-dent of Central Excise, Virudhunagar issued a show cause notice on 6-10-1982 calling upon the appellants to show cause why duty should not be demanded on these containers as they were made out of mill board, straw boards, kraft paper and metal components and, therefore, according to him were classifiable under Item 68 as composite articles. A demand for Rs. 4,67,645.18 in respect of the clearances made between 10-4-1982 and 31-8-1982 was made.
3. In their reply to the show cause notice, the appellants submitted that the department could not deny the classification of the goods in dispute under Tariff Item No. 17(4) C.E.T. on the ground that the Vim Containers and Defence Containers were made out of the kraft paper and eligible for classification under Item 17(4) C.E.T. and hence entitled to exemption under Notification Nos. 66/82 and 144/82. These containers were simple containers with aluminium foil pasted on Vim Containers and hence not liable for payment of duty. It was emphasised that the materials which give the goods essential character should be considered for the classification under Central Excise Tariff. The Assistant Collector of Central Excise did not accept the contention raised by the appellants and confirmed the demand of duty of Rs. 4,67,645.18 under Section 11A of the Central Excises and Salt Act, 1944. The appeal before the Collector (Appeals) was also rejected vide Order No.213/1983 (Md) dated 29-9-1983 and it was held that the composite containers called as Defence Containers and Vim Containers are correctly classifiable under T.I. No. 68 C.E.T. and the appellants were not entitled to the benefit of exemption notification as claimed by them.
4. Aggrieved by the said order of the Collector (Appeals), the appellants preferred an appeal before this Tribunal under Section 35B of the Central Excises and Salt Act, 1944.
5. We have heard S/Shri Daya Sagar, Consultant alongwith N.C. Jain, Advocate for the appellants and Shri A.S. Sunder Rajan, J.D.R. for the department and have gone through the record.
6. Shri Daya Sagar the learned consultant submitted that the show cause notice dated 6-10-1982 has direct link with the issue of the Tariff Advice No. 45/82 dated 29-7-1982 and Trade Notice No. 175/82 dated 20-8-1982. According to him, Tariff Advice and Trade Notice have no statutory authority. At best they can have a canvassing value on the competent authority whether he be the original authority or the appellate authority to take a decision. The issuance of the show cause notice on the basis of the Trade Notice and Tariff Advice is illegal and not sustainable in law. He cited two decisions, i.e. one of the Delhi High Court in Pune Bottling Co. Ltd. and Ors., v. Union of India and Ors. [1981 E.L.T. 389 (Del.)] and the other of the Supreme Court in Orient Paper Mills Limited, v. Union of India (1978 E.L.T. (J 345) in support of his contention that an Advice given by the Central Government for all purposes amount to directions from higher authorities and show cause notice issued in pursuance thereto is illegal and without jurisdiction. He pointed out that as per the law as laid down by the Hon'ble Supreme Court, no authority, howsoever high can control the decision of a judicial or a quasi-judicial authority.
While functioning as quasi-judicial officer, the Superintendent or the Assistant Collector of Central Excise should not allow their judgments to be influenced by administrative considerations or by the instructions or directions given by their superiors. According to him, the Tariff Advice is dated 9-9-1982 and the show cause notice was issued, on the basis of this Tariff Advice on 10-10-1982 and as such it cannot be said to be a legal show cause notice.
7. The other submission made by Shri Daya Sagar is that the Defence Containers and Vim Containers, the classification of which is under consideration were rightly classified under the residuary general excise Item 68 till sub-item (4) was introduced in Item 17 bringing within the scope of Tariff Item 17, "Boxes, cartons, packets etc." Such boxes, cartons etc. prior to 28-2-1982 were classifiable under Item 68.
but after 28-2-1982 they were brought under this specific Item. 17 and since that date they are classifiable under this Item with exemption allowed under Notification No. 66/82. According to him, in fact the classification list claiming assessment under Item 17(4) C.E.T.,..present Item 17(3)...with exemption under Notification No.66/82 was approved by the competent authority viz. the Assistant Collector of Central Excise under Rule 173B. This is a quasi-judicial decision and if this classification order is to be modified without any reasons, it can be done only under the powers of review specifically provided for under Section 35-A until 11-10-1982 and under 35B after that date. Any decision by a competent quasi-judicial authority cannot be reversed or reviewed by any other officer much less Assistant Collector of Central Excise, who has himself approved the classification list and allowed the clearances of goods under' Item 17(4) with exemption in terins of Notification No, .66/82.
8. He further submitted the mere fact, that the containers' are rnade of Mill Board/Straw Board, Kraft paper and some metal components cannot deny the classification of the goods under Tariff Item 17(4) and the exemption in terms of Notification No. 66/82. He drew our attention towards the clarifi-catory instructions issued at the time of introduction of sub-item (4) under Item 17. According to these clarificatory instructions published at page 17 of R.K. Jains' book "Central Excise Tariff of India 1982-83", this new sub-item (4) covers containers of various kinds and sizes used for packing, transport, storage or sale of merchandise whether or not having a decorative value. Boxes, Cones, packets, bags, cartons, drums, whether or not fitted with reinforcing circular bands of other materials, tubular containers for posting documents, garment bags and the like are covered under the said item. However, by exemption notification, the levy has been restricted to printed cartons and printed boxes, other articles have been exempted from the levy of excise duty.
9. He cited a decision of Delhi High Court in J.K. Sytnthetic Ltd. and Ors., v. Union of India and Ors. (1981 E.L.T. 328) in support of his contention that an authority can depart from his earlier stand only for cogent reasons such as fresh facts are brought on record or the process of manufacture has changed or the relevant entry in tariff has undergone modification or subsequent to the earlier decision, there has been a pronouncement of a High Court or the Supreme Court which necessitates the reconsideration of the issue. In this case according to the learned consultant, the proper officer i.e. the Assistant Collector of Central Excise has changed his earlier decision by changing the classification of this product from Item 17(4) to 68 C.E.T. without any cogent reason and, therefore, this order of the Assistant Collector of Central Excise cannot be said to be legal.
10. Shri Daya Sagar, Consultant further submitted that the appellants have been discriminated by changing the classification of these articles manufactured by them without any cogent reason and denying them the benefit of exemption Notification No. 66/82, whereas other manufacturers of these very articles in other regions continued to enjoy the benefit of this notification. He drew our attention towards a letter written by the Ministry of Defence to whom the Defence Containers were being supplied 'by various parties, in support of his contention that the other suppliers of these articles were not charging the excise duty on the Defence Containers inasmuch as they were exempt under Notification No. 66/82.
11. The last submission made by Shri Daya Sagar is that nowhere it has been mentioned in the exemption Notification No. 66/82 that the articles should be completely of paper to get the benefit of exemption under this notification. Defence Containers and Vim Containers are mostly made of kraft paper using mill board/straw board and metal components to some extent. The predominance in all is that of the paper and therefore, Vim Containers and Defence Containers are articles made of paper and are entitled to the benefit of exemption under Notification No. 66/82.
12. Shri A.S. Sundar Rajan, the departmental representative countered the arguments of Shri Daya Sagar, Consultant of the appellants and submitted that admittedly the articles which are in dispute i.e. Vim Containers and Defence Containers are made of mill board/straw board kraft paper and metal components and as such they cannot be considered as articles of paper only. These are composite containers made out of mill board/kraft paper, metal components made out of tin plates or black plates and printed aluminium labels and so they cannot be considered as articles of paper and therefore, do not come under Tariff Item No. 17(4). The benefit of exemption Notification No. 66/82 can only be availed of by a party if the article is of paper falling under Tariff Item No. 17(4) of the C.E.T. He further submitted that the material composition which gives the essential character is not paper and as such these articles cannot be considered as articles of paper.
Paper is only one of the raw-materials and the other material components are lids and bottoms which are made of tin plates, printed aluminium foils. They constitute important materials for the manufacture of these articles and hence these articles cannot be said to be articles of paper and cannot be classified under Item 17(4) of the C.E.T. and, therefore, are not entitled to the benefit of exemption Notification No. 66/82 which exempts articles of paper from payment of duty.
13. The plea of Shri Daya Sagar Learned Consultant of the appellants that the show cause notice is illegal having been issued on the basis of Tariff Advice, is not tenable in the circumstances of the present case. There is no dispute about the legal proposition as laid down by the Hon'ble Supreme Court and various High Courts that no authority howsoever high can control the decision of a judicial or quasi-judicial authority. In this case, we have to see whether the issuance of the Tariff Advice No. 45/82 dated 29-7-1982 by the Government amounts to controlling the decision of the judicial or quasi-judicial authority who, has issued the impugned show cause notice. A persual of show cause notice dated 6-10-1982 shows that it was issued by the Superintendent of Central Excise, Virudhu Nagar, on the basis of the invoices mentioned by the appellants in their letter No. SO/CEX/9514 dated 17-9-1982. The show cause notice does not talk of this Tariff Advice at all. There is nothing on record to show and prove that any administrative authority has influenced the decision of the judicial or quasi-judicial authority. Mere issuance of Tariff or Trade Advice prior to the issuance of the show cause notice is not sufficient to hold that the show cause notice is illegal. It has been observed by the Division Bench of Delhi High Court in Civil Writ No. 3980/82 M/s. Orient Ceramics & Industries Limited v. Union of India and Ors. as under :- "It cannot be said as a matter of law that the Board is not entitled to issue Tariff or Trade Advice. These may also be followed in some cases by subordinate assessing authorities. If the assessment or classification is not acceptable to the manufacturer, he has a right of appeal. With regard to an Act, like the Excise Act with all India application and thousands and thousands of manufacturers being concerned it cannot be said that a little guidance by the administrative authorities would be something which must be held to be completely ultra vires the powers of the authorities. The Board prior to the amendment of the Act had both administrative and judicial functions to discharge. Today it has only by and large administrative function to discharge. One of the administrative functions is to give general directions or advice so as to make the working of the Act comparatively more easy for those who have to constantly file returns or submit themselves to assessments by virtue of the provisions of the Act." 14. In view of the decision of the Division Bench of the Delhi High Court, issuance of Tariff or Trade Advice does not make the show cause notice illegal, as it cannot be said that administrative authority has controlled the decision of judicial or quasi-judicial authority by issuance of Tariff Advice.
15. The next submission of Shri Daya Sagar, consultant that any decision by a competent quasi-judicial authority cannot be reversed or reviewed by another officer much less the Assistant Collector of Central Excise, who has approved the classification list is also not tenable in the present case. Classification of a product can be changed at any time subsequent to its approval on showing good cause. In this case, admittedly these articles i.e. Vim Containers and Defence Containers were classified under Item 68 C.E.T. till sub-item (4) was introduced under Item 17 C.E.T. After the introduction of this sub-item (4) in Tariff Item 17, the appellants filed the classification list under Item 17(4) and sought the exemption under Notification No. 66/82.
Later on, when the department found that Vim Containers and Defence Containers are to be treated as composite containers and, therefore, their correct classification is under Item 68 C.E.T., they issued a notice to the appellants to file fresh classification list. This action of the department cannot be said to be illegal and unjustified. It is not a case where a decision of the quasi-judicial authority has been changed by an officer subordinate in rank than Assistant Collector.
Asking the appellants to file fresh classification list showing these items under Tariff Item 68 by the Superintendent of Central Excise cannot be said to be an order of a junior officer reversing an order passed by a quasi-judicial authority. A proper officer has inherent powers under Section 11-A of the Central Excises and Salt Act, 1944 to issue a demand notice where he discovers the earlier assessment was erroneous subject to the limitation of time as stipulated thereunder.
The Department has followed the procedure as laid down under the Central Excises and Salt Act, 1944 and issued the show cause notice demanding the difference in duty for the period April, 1982 to August, 1982.
16. The only question which requires determination is whether these containers known as Vim Containers and Defence Containers are to be classified under sub-item (4) of Item 17 C.E.T. or under Item 68 C.E.T, Sub-item (4) of the Item 17 which was applicable at the relevant time reads as under :- "17. Paper and Paper Board, all sorts (including pasteboard, mill board, straw board, card board and corrugated board) and Articles thereof specified below in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power :- (4) Boxes, cartons, bags and other packing containers, (including flattened or folded boxes and flattened or folded cartons), whether or not printed and whether in assembled or unassembled condition." 17. A persual of this tariff entry shows that Boxes, Cartons, Bags and other packing containers (including flattened or folded boxes and flattened or folded cartons) whether or not printed and whether in assembled or unassembled condition fall within this tariff item, There is no dispute about the fact that Vim Containers and Defence Containers are packing containers. The only thing which we have to find out is whether these are the articles of paper and paper board because under this tariff item Paper and Paper Board all sorts and articles thereof are covered.
18. As per the case of the appellants, the Vim Containers and Defence Containers, the product in dispute are composite, containers made of mill board, straw board, kraft paper and metal components. No doubt, weight-wise paper and paper board predominate the other components but this predominance will not have the effect that the appellants seek to give it.
19. Had the intention of the legislature been to extern the principle, of predominance to this item it would Have done so as has,been done in ."other Tariff Items like-22F of C.E.T:- It is true that C.C.C.N.Reading No: 48.16 (Explanatory Notes) speaks of packing containers of paper or paper board fitted with reinforcing circular bands of other materials or of articles which may have accessories of other materials-other than paper (e.g. textile backings, wooden supports, string handles, metal or plastic corners) but a clear distinction has to be drawn between these and the metal components used: by the appellants in their products. While in C.C.C.N. the non-paper parts perform only the non-essential duties like reinforcement of support backings etc. but the metal components used by the appellants perform service as essential part of the containers. They complete the containers and without them, the paper component would not be a complete packing container but remains only a cylindrical tube open at both ends in which obviously nothing can be packed. In this case before us, the paper tubes are prepared first and then other material components like lids, and bottoms which are made of tin plates and black plates and printed aluminium foils are added to the paper tubes.
Without these components like lids, and bottoms made out of the tin plates and black plates and printed aluminium foils, these articles, i.e., Vim Containers and Defence Containers cannot come into existence and, therefore, paper/board is only one of the raw materials and the other material components like lids and bottoms and printed aluminium foils are the other important materials and, under these circumstances, it cannot be said that the paper/paper board gives the essential character of the product in question. Besides this, the principle of essential character of an article for classifying the same under Customs Tariff has no application in Excise Tariff classification. In the Excise Tariff classification, the words mentioned in the tariff itself must be given their natural and popular meaning. Tariff Item 17(4) speaks of articles made of paper and paper board. This evidently suggest articles made of paper with all essential parts of the same material. Thus, there are boxes, cartons etc. for shoes, cigarettes, sweet meats and a host of other goods made of paper/board in all essential parts, At most, they may have metal, staples to hold the corners i.e. for reinforcement, but these articles i.e. Vim Containers and Defence Containers cannot be. said to be the articles of paper or paper board. These are composite containers made of paper, paper board and other metal components. The metal components perform roles as essential as the paper tube viz that of containment. Their correct classification is under Tariff Item 68 C.E .T. and not under Item 17(4) C.E.T. The authorities below have rightly classified these articles under Item 68 C.E.T.20. Regarding the applicability of Notification No. 66/82, this Exemption Notification exempts articles of paper or paper board falling under sub-item (4) of Item 17 of the First Schedule of the Central Excises and Salt Act, 1944 from the whole of the duty of excise levy thereon. As the Vim Containers and Defence Containers are not articles of paper or paper board falling under sub-item (4) of Item 17 of the First Schedule of the Central Excises and Salt Act, so the benefit of this Exemption Notification cannot be availed of by the appellants.
21. The plea of the learned consultant of the appellants that discrimination has been caused to the appellants in classifying these articles under Item 68 is also not tenable. Not even a single instance has been pointed out by the learned consultant that in any other Collectorate these products have been classified under Tariff Item 17(4) C.E.T. The mere fact that 'some other suppliers of the Defence Containers to the Defence Authorities have not charged the excise duty amount from the Defence authorities, does not mean that these articles were not classified under Item 68 C.E.T. A supplier may charge less price in competition and it has nothing to do with the classification of these products. Under these circumstances, we find no merit in this appeal, the same is hereby rejected.