1987 (9) TMI 233 - AT - Central Excise

Tribunal rules printed cartons qualify for duty exemption, grants refund in part

COLLECTOR OF C. EX. Versus ITC. Ltd.

The Tribunal held that printed cartons manufactured by the assessee were products of the printing industry eligible for duty exemption under Notification ... Printed cartons Issues Involved:1. Eligibility of printed cartons for duty exemption under Notification No. 55/75.2. Entitlement to refund of duty paid on printed cartons under Item No. 68 CET.Detailed Analysis:1. Eligibility of Printed Cartons for Duty Exemption:The primary issue was whether printed cartons manufactured by the assessee qualified as products of the printing industry and were thus eligible for duty exemption under Central Excise Exemption Notification No. 55/75, as amended by Notification No. 122/75.The assessee argued that printed cartons should be considered products of the printing industry, citing the Central Government's Order-in-Revision in the case of M/s. Allibhoy Sharafally & Co., which held printed cartons to be eligible for duty exemption. The Assistant Collector initially rejected this claim, stating that the process of slitting and gumming transitioned the product from the printing industry to the packaging industry. However, the Appellate Collector overturned this decision, emphasizing that the dominant activity in manufacturing printed cartons was printing, which accounted for 70% of the total cost.The Tribunal considered various precedents, including conflicting judgments from the Andhra Pradesh High Court and the Karnataka High Court. The Tribunal noted that the Karnataka High Court's judgment, which recognized printed cartons as products of the printing industry, was more persuasive. The Tribunal also referred to authoritative publications and trade directories, which supported the view that printed cartons were considered products of the printing industry.The Tribunal concluded that printed cartons manufactured by the assessee were indeed products of the printing industry and were eligible for duty exemption under Notification No. 55/75. Consequently, the show cause notice issued by the Central Government was discharged, and Appeal No. 858/83-D was dismissed.2. Entitlement to Refund of Duty Paid on Printed Cartons:The second issue concerned the assessee's entitlement to a refund of the duty paid on printed cartons under Item No. 68 CET. The assessee claimed a refund of Rs. 11,20,558.17 for the period from March 1975 to September 1978. The Assistant Collector rejected the claim for the period up to 4.5.1975, as Notification No. 122/75, which added the entry relating to products of the printing industry, was issued only on 5.5.1975 and had no retrospective effect. The Tribunal upheld this decision.For the period from 5.5.1975 to September 1978, the Assistant Collector held that the claim was barred by limitation. However, the Tribunal found that the Assistant Collector's action in not passing the claim for refund, which was not barred by limitation, was incorrect. The Tribunal noted that the assessee had filed a claim for refund on 20.1.1978, followed by a detailed claim on 8.2.1978. The subsequent claim filed on 1.3.1979 was considered a continuation of the earlier claim.The Tribunal held that the assessee was entitled to a refund of duty paid during the period of six months preceding 8.2.1978, in accordance with the limitation under Rule 11 of the Central Excise Rules. Additionally, the assessee was entitled to a refund for the period from 9.2.1977 to 6.8.1977. Payments made on and after 20.1.1978, which were under protest, were not barred by limitation.Therefore, Appeal No. 1350/81-D was partly allowed, granting the assessee a refund for the specified periods, while the rest of the appeal was dismissed.