Pvt. Ltd. Vs. Collector of Central Excise, Bombay  INSC 1462 (20 November 1996)
Bharucha, K. Venkataswami Venkataswami, J.
only question that arises for our consideration in all these Appeals is whether
`Printed Aluminium Labels' (hereinafter referred to as "labels")
manufactured by the appellant are `products of the printing industry"
within the meaning of Notification 55/75-CE dated 1.3.1975 (hereinafter called
"the Notification") issued under Rule 8(1) of the Central Excise
not in dispute that but for the exemption under the Notification, the labels in
question, would fall under Item No. 68 of the First Schedule to the Central
Excise and Salt Act, 1944 (hereinafter called the "Act"). The
relevant portion of the said Notification is extracted below:- "In
exercise of the power conferred by Rule 8(1) of the Central Excise Rules. 1994,
the Central Government hereby exempts goods of the description specified in the
Schedule annexed hereto, and falling under Item No. 68 of the First Schedule to
the Central Excise and Salt Act, 1944, (I of 1944) from the whole of the duty
of excise leviable thereon.
All products of the printing industry including newspapers and printed periodicals."
It appears that the appellants claimed and got the labels in question exempted
from the levy of duty on the ground that they come within the category of
products of the printing industry, under the orders of Assistant Collector
dated 24.12.1979. Later on the Collector of Central Excise, Bombay, invoking
his powers under Section 35A of the Act issued a notice for revising the said
order of the Assistant Collector dated 24.12.1979 and for bringing the goods
under Item 68 for the purpose of levy of excise duty. After hearing the
objections of the appellants, the Collector revoked the exemption granted by
the Assistant Collector and directed assessment of the goods under Item 68.
by the order of the Collector, the appellant preferred four appeals to the
Customs. Excise and Gold (Control) Appellate Tribunal. New Delhi for different assessment periods.
The Tribunal, New Delhi for different 13.6.1986 held that
the printing on the aluminium label being incidental to its use as a label or a
wrapper and that being inherently not a piece of reading matter, will not fall
under the above-said exemption Notification. On that view, the Tribunal
dismissed the appeals. Hence the present appeals by special leave.
Laxmikumaran, learned counsel for the appellants has submitted that the
Tribunal went wrong in coming to a conclusion that the printing on the aluminium
label was incidental to its use. According to the learned counsel, the printing
was the primary purpose and without it, the metal on which the matter was
printed, is of no use to the appellant's customer. It is the contention of the
learned counsel that it is the printing that gives the aluminium labels their
use without which they would not be called labels and would serve no purpose.
In other words, the printed words on the product inform the customer that he is
buying the product of his choice or his brand. He also submitted that in the
trade as well as in common parlance, these aluminium labels are treated as
products of printing industry. According to the learned counsel, this was
specifically pleaded before the Tribunal, but the Tribunal unfortunately not
accepting this test has stated that this will not be a correct test. He also
distinguished on facts the judgment of this Court in Rollatainers Ltd. &
Another vs. Union of India & Others, reported in 1994 (Supp) 3 SCC 293.
According to the learned counsel, the test laid down in that judgment, if
applied to the facts of this case, even then the appellant is entitled to
Mohan, learned Senior. Counsel appearing for the Revenue, contending contrary
submitted that the labels in question are not products of printing industry and
the ratio laid down in the judgment referred to by the learned Counsel for the
appellant wold directly apply to the facts of this case and the distinction
sought to be made on facts was without substance. It is his contention that the
Tribunal has considered elaborately the facts placed before it and the
reasoning and ultimate conclusion of the Tribunal that the printing is only
incidental to the use of the labels and, therefore, they cannot be treated as
products of printing industry are unassailable.
have considered the rival submissions. The labels in question are printed on
flatbed off-set printing press and the printing is done on a deep offset
labels are meant to be fixed to refrigerators, radios, air-conditioners,
telephone sets etc. It is seen from the order of the Tribunal that a
certificate of an award was printed on aluminium sheet of an association. The
Tribunal in the course of its order has observed as follows:- According to the
appellants, all these aluminium sheets are meant to serve a purpose connected
any with the printing on them. This can be very briefly described as a
communication to the reader that the commodity, product, device, machine etc.
etc. to which the printed aluminium plate is attached is such and such product
made by so and so. It is not an advertisement plate or a decorative plate but
serves a communication need that the reader or a potential customer feels the
need of when he looks at a product be it a refrigerator or a clock, or an
air-conditioners or a motor car or a fan. It tells him what he want to know in
precise and certain word and to chose from, perhaps, a variety of brands of the
same kind of product or machine.
In other words, the printed word on the product informs the customer that he is
buying the product of his choice or of his brand. These aluminium printed
plates serve the purpose of written word that conveys to the buyer what he
needs to know about the product he is contemplating to purchase and to pay
money for." Having said so, the Tribunal at the end comes to a conclusion
that the printing on the labels was only incidental to its use and therefore,
they cannot be treated as products of printing industry. The Tribunal in its
earlier part of the order observed that the answer to the question depends upon
the conclusion whether the printing on the metal plates manufactured by the assessee
was or was not incidental to the primary use of the goods.
Ltd. case (supra), this Court was considering whether printed cartons
manufactured by the appellants in that case were products of the printing
industry. This Court held as follows:- "We are of the view that to a
common man in the trade and in common parlance a carton remains a carton
whether it is a plan carton or a printed carton. The extreme contention that
all products on which some printing is done, are the product of printing
industry, cannot be accepted." This Court accepted the reasoning of the
Division Bench of the Karnataka High Court to hold that the printed cartons are
not the products of the printing industry. The following reasoning of the
Division Bench reads as follows:- "The classification of manufactured
goods cannot be dependent merely upon their place of production. The product
wherever produced must be classified having regard to what it means and how it
is understood in common parlance. The guiding factor is not where it is
produced, but what is produced (See Collector of Central Excise vs. Calcutta
Steel Industry 1989 Suppl (1) SCC 139).
appears to be no principle on which a distinction can be drawn between an
ordinary carton and a printed carton, and to hold that an ordinary carton is a
product of a packaging industry, while a printed carton is a product of the
printing industry, if it emerges in its final shape from a printing press.
best it can be said that with technological advancement. It has become possible
to have composite industries which can provide a variety of services, not
necessarily confined to a single industry as conventionally understood, and
which may produce a variety of manufactured items. In such cases the products have
to be classified having regard to their purpose and as they are understood in
ordinary parlance. So viewed, a paper carton, whether printed or not must be
classified as a product or the packaging industry, and not a product of the
paper industry or printing industry. A carton is used for packing goods whether
it is made or printed paper or not, and therefore, the printing of cartons does
not add to its essential function as a container. Mere printing does not make a
carton. An ordinary an in the trade has no use for a printed paper, unless it
can be given shape as a container in which he can pack his products.
makes it a carton is its capacity to contain which is its essential
characteristic and not the printing work on it, which is merely incidental. In
our view, the fact that sometimes more money may be spent on printing than
other things, will make no difference." (Emphasis supplied) It was argued
that the trade also understood likewise.
this argument was repelled by the tribunal by observing that classification of
goods can never be based on what the industry regards the goods to be. This
approach seems contrary to the view expressed by this court in Rollatainers
case. There this Court approved the test based on understanding of trade parlance/common
parlance of a particular product. In the case on hand, but for the printing,
the aluminium label world serve no purpose and as seen above, it is the
printing on the aluminium sheet, which communicates the message to the buyer
that makes the sheet as a label, unlike a carton printed or plain which always
remained a carton.
label announces to the customer that the product is or is not of his choice and
his purchase of the commodity would be decided by the printed matter on the
label. The printing of the label is not incidental to its use but primary in
the sense that it communicates to the customer about the product and this
serves a definite purpose. This Court in Rollatainers case held that what is
exempt under the notification is the product' of the printing industry.
`product' in this case is the carton. The printing industry by itself cannot
bring the carton into existence".
apply this above formula to the facts of this case.
product' in this case is the aluminium printed label.
printing industry has brought the label into existence.
being the position and further the test of trade having understood this label
as the product of printing industry, there is no difficulty in holding that the
labels in question are not products of printing industry. It si true that all
products on which some printing is done, are not the products of printing
industry. It depends upon the nature of products and other circumstances.
Therefore the issue has to be decided with reference to facts of each case. A
general test is neither advisable not practicable.
therefore, of the opinion that the Tribunal was not right in concluding that
the printed aluminium labels in question are not 'products of printing
the appeals are allowed and the impugned orders of the Collector, Central
Excise are set aside and the appellants are entitled to claim exemption on the
labels in question under the above-mentioned Notification. There will be no
order as to costs.