Tribunal rules in favor of M/s. M. Vadilal & Co. regarding excise duty on "Printed Sample Folders"

M VADILAL & CO. PVT. LTD. Versus COLLECTOR OF CENTRAL EXCISE, BARODA

M VADILAL & CO. PVT. LTD. Versus COLLECTOR OF CENTRAL EXCISE, BARODA - 1987 (31) E.L.T. 773 (Tribunal) Issues:
1. Whether the "Printed Sample Folders" of M/s. M. Vadilal & Co. were liable to pay excise duty under Notification No. 55/75-C.E.

Detailed Analysis:

1. The appeal addressed whether the "Printed Sample Folders" of M/s. M. Vadilal & Co. were subject to excise duty under Notification No. 55/75-C.E. A show cause notice demanded duty for the period from 1-3-1975 to 31-3-1978. The Additional Collector of Central Excise, Baroda, in his order, concluded that the folders were not products of the printing industry and thus not exempt from duty. The appellants appealed this decision to the Central Board of Excise and Customs, which led to the present deemed appeal.

2. The tribunal heard arguments from both sides. The Additional Collector's decision was based on the folders not being used for communication purposes, leading him to deny the benefit under the notification. The appellants' representative argued that the folders should be considered products of the printing industry, citing previous decisions, including Collector of Central Excise Versus RMDC Press (P) Ltd.

3. The appellants' representative contended that the folders, designed to protect sample fabric, were products of the printing industry since they were manufactured by printers based on customer-approved designs. On the other hand, the Department representative argued that the functional purpose, not the cost element, determined the product's classification. Reference was made to a Supreme Court decision regarding the essential characteristic of a product.

4. It was highlighted that customers approach printers for the production of these folders, emphasizing the role of printing in their manufacturing process. The cost of printing was identified as a significant component of the product's price.

5. The Department representative relied on a tribunal decision involving office files, asserting that it differed from the current case involving sample printed folders specifically designed for textile products. The distinct nature of the products was emphasized, suggesting that the office files case was not directly applicable.

6. The Additional Collector's argument that the product should communicate knowledge to be classified as a product of the printing industry was challenged. The tribunal found this condition unnecessary, especially considering that the folders contained information about the sample fabric's quality and other relevant features important to customers.

7. After careful consideration of both parties' submissions, the tribunal concluded that the denial of the benefit claimed by the appellants under Notification No. 55/75 was unjustified. As a result, the appeal was allowed, and the impugned order was set aside, granting consequential relief to the appellants.