TaxTMI 
TaxTMI 
2017 (10) TMI 552
X X X X Extracts X X X X
X X X X Extracts X X X X
....w Cause Notice, yet, having regard to the fact that the question was raised in the synopsis of submissions before the Appellate Authority, but was not dealt with specifically by it, further it was urged before the Tribunal and no objection was taken as to maintainability of the contention on the ground that it was not raised before the Original Authority, we do not consider it appropriate to reject the appeal on this ground. The Apex Court was further of the view that the interest of justice would be met if the Orders under appeals, confirming the orders of Collector appeals which do not specifically record the material finding are set aside and cases are remanded to any of the Appellate Authorities for disposal of the cases afresh after giving an opportunity to both the parties to lead evidence. Accordingly, the Apex Court remanded the matter to the Commissioner (Appeals), Meerut-I Uttar Pradesh. Similarly, on the same facts and circumstances the appeal of the appellant before the Apex Court regarding its Bangalore unit being Civil Appeal No.7515-7517 of 2004 was also disposed of in same terms, vide order dated 08/02/2006 remanding the matter to the Learned Commissioner (Appeals),....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f a better description, the 'cut out' is also described as a 'Slide.' This 'cut out' is not a commercial commodity and is not bought and sold in the market. As described herein, it has different specifications and markings for each brand of cigarettes. The 'cut out' for one brand of cigarettes, cannot be used for another brand of cigarettes. For 'cut outs' for each brand of cigarettes, in the first instance, a suitable paper board is procured which is duty paid. The paper board required for packing different cigarettes is of different specifications. The difference in specification may be on account of (a) thickness, which varies from 205 to 250 gsm (grams per sq. mtr). (b) Nature of the Board i.e. foil, metalized, coated, folding box Board, etc. (c) colour, which may be white, yellow, gold etc. After identifying the suitable paper board for preparing the 'cut out' required for the packet of a particular brand of Cigarettes, such duty paid paper board is obtained in Jumbo rolls, which are cut to the desired width in the form of 'Slit Reels'. Printing is first done on the 'slit reels'. The 'slit re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tes himself within his factory and he has to necessarily use it himself and that too for the purpose of packing only a particular brand of cigarettes. It is not possible for the appellant to use such 'cut out' for packing any other cigarette of a different brand. This pre printed 'cut out' cannot be sold to any other competitor producing cigarettes which are of a different brand. The 'cut out' required for packing cigarettes of different brands are not interchangeable. Such 'cut outs', which are design specific are not marketable. They are in process material required for closing the shell type of cigarette packets and are entirely used in the process within the factory. They are suitable only for a particular brand of cigarettes and are not a standard item, which can be interchangeably used by competing manufacturers packing cigarettes of different brands. These cut outs have never been sold by the appellant nor are they capable of being sold to any other manufacturer of Cigarettes. Such printed cut outs are nothing but duty paid paper board having the requisite material printed thereon and cut to specific size and shape. Such cut outs are not avail....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch machine itself. The process for packing cigarettes in the hinge lid type of packets is given hereinafter. For the purpose of packing cigarettes in hinge lid type of packets, such packets are first obtained in a flat form which are pre printed and cut to the desired size, shape and design. These are also referred to as Hinge lid blanks (HL blanks). The brand and trade name, licence no., name and address of the factory, MRP and other details, as required by law and in particular the declarations required to be made under Rule 93 of the Central Excise Rules, 1944 and the Package Commodity Rules, 1977, framed under the Standard of Weights & Measures Act, 1976 are already printed on the 'HL blanks'. These printed HL blanks are stacked on a conveyor belt or hopper depending on the type of machine used and are fed into the machine in a flat form. These HL blanks travel on one route within the said machine and at different stages, the requisite folding and gluing is done on the inner sides of the folded HL Blanks . On another stream within the same machine, preparation of the cut outs for HL type of packets is carried out. These cut outs are the subject matter ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rate of about 110 to 420 packets per minute. In this manner on an average, (keeping into consideration packets of 10s and 20s), about 3,000 cigarettes are packed per minute. On the slowest machine, 110 packets per minute i.e. about 1.8 packets per second are prepared and on the fastest machine 420 packets per minute i.e. about 7 packets per second are prepared. These are the only machines available for packing cigarettes in hinge lid type of packets which are all imported. It is impossible to conceive that at any stage of this process of packing on such high speed automatic machines, Cut Outs of paper board can be taken out from this automatic machine or that such cut outs can be fed into the said packing machine. Such paper board Cut Outs are not a marketable commodity and are not known to the market. The cutting of paper board has to be necessarily done within the said packing machine as an in process material in a continuous process, which culminates in a hinge lid packet of Cigarettes. These are cut within the machine by a cutter which is specially designed to cut the desired size and shape of the 'cut out', and such specially designed cutter is a component part of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ally dealt with in the market. It is not a product having a commercial name. They are cut to size and shape for a particular brand of cigarette having a hinge lid type of packet of a specification of size and design to suit the requirement thereof, The preparation of these paper board Cut Outs within the machine in a continuous and uninterrupted process, cannot be described as an independent process of manufacture and such cutting of paper board, does not bring into existence a new, distinct and different commercial commodity known to the market, so as to attract duty of excise. The twin tests for excisability of marketability and manufacture is not satisfied in respect of such paper board 'Cut Out'. I say that the aforesaid paper board 'cut out' for both type of packets, i.e., Shell type as well as hinge lid type, cannot be described as a marketable commodity and the preparation thereof, in the manner aforesaid, cannot be described as a manufacturing process. As such no duty of excise is leviable thereon. -Sd- DEPONENT 4. The appellants also appeared for personal hearing and also led evidence in support of the contentions. They a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that the contention is not tenable in view of the ruling in M/s Zupiter Printing (supra). It was further observed that the test of marketability is established. The articles of cigarette packets i.e. slides/slits (inner frames) is marketable beyond doubt in the light of above case law as well as the ruling in M/s Zupiter Printing (supra). 5. Being aggrieved the appellant assessee is before this Tribunal challenging the finding of the Learned Commissioner on the ground that the slides/slits (inner frame) are not marketable, whereas the Revenue is in cross objections in support of the order of the Learned Commissioner (Appeals). 6. The Learned counsel for the appellant in support of the contentions have taken us through the ruling of the Apex Court in the case of Union of India Versus M/s Sonic Electrochem (P) Ltd. - 2002 (145) E.L.T. 274, wherein the question before the Court was whether plastic body, a part of Electro Mosquito Repellent (EMR) and fragrant mat are chargeable to excise duty under clause 5(f) of Notification No.160/86 C.E. and sub-heading 3307.49 respectively of CETA 1985. It was the argument of the assessee that plastic bodies were manufactured to suit the de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....test of marketability is in issue. It is well settled that goods are manufactured with the object being sold in the market. If the goods are not capable of being sold then the test of marketability is not fulfilled. Further, the burden is on the Department to prove whether there is the process which constitutes manufacture and secondly, whether the product is marketable. The Hon'ble Court further observed that the CCAU are essentially in prisomoid form. These blocks or units are made to order. They are of certain specifications and are harbour or location specific. It would depend on the water level required to be maintained in the harbour. There is no evidence to show that these blocks could be used in any other harbour. Accordingly, it was held that the goods CCAU fail the test of marketability and hence not excisable to excise duty. The Learned counsel also relies on the ruling in the case of M/s Gujarat Nermada Valley Fertiliser Company Ltd. versus Collector of Excise & Customs - 2005 (184) E.L.T. 128 (SC), wherein also relying on the ruling in the case of Union of India Versus M/s Sonic Electrochem Private Ltd. (supra), it was held that the marketability onus lies on Reven....
X X X X Extracts X X X X
X X X X Extracts X X X X
....kets/wrappers of the GLS bulbs were commercially known and marketable as packets, boxes or containers. It was held that the bulbs or tube shells had no independent market and were utilised for captive consumption for the end product. In the present case, it is to be understood that in context, cigarette packet cannot be termed as container as discussed in M/s Punjab Anand Lamp industries (supra), but it can be considered a small packet or a box containing cigarettes. Further, with respect to marketability, reliance was placed on the ruling in M/s Asia Tobacco Company Ltd. Versus Union of India, 1992 (58) E.L.T. 418 Madras High Court, which indicated that cigarette packets are marketable. In that case, what was marketed and purchased was outer shell of cigarette packet for keeping in the cigarettes but it was held not to be a container. Similarly, in M/s Zupiter Printing and another Versus Union of India (supra). The petitioner M/s Zupiter Printing was manufacturing cigarette outer shells of printed sheets supplied by M/s Godfrey Philip India Ltd, manufacturer of cigarettes. There are facts on record revealing that such packets or parts thereof are manufactured as per the order and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arettes is inserted in the shell, it becomes a cigarette packet. The High Court further observed that the question for consideration, whether the outer shell manufactured by M/s Zupiter Printing which has no lid and open from both sides can hold and keep cigarettes. The answer would be in the negative. This is neither an encasement nor a receptacle which can hold the thing in itself. Even if we do not give much importance to the dictionary meaning of the word box still the currect guide in such a case is the context and the trade meaning. It was further observed that the definition of goods makes it clear that to become goods an article must be something which can ordinarily come to the market to be sold and bought. But at the shell stage, it can neither be bought nor sold in the market. Accordingly, it was held that the shells of cigarette packets manufactured by M/s Zupiter Printing can neither be bought nor sold in the market. Accordingly it held that the shells of cigarette packets manufactured by M/s Zupiter Printing are not excisable under Entry 17(4) of the first schedule, as introduced by Finance Act, 1982. The Learned counsel have also relied on the ruling in the case of C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ettes. Thus, a cigarette packet cannot be subjected to duty twice over. Even otherwise, it is submitted that the outer shells and inner slides cannot be subjected to any separate assessment. Whatever it may be, there is absolutely nothing to show that the outer shells are to be called box. Thus, as packets are not liable to excise duty. Accordingly, it was held against the Revenue that shells are not dutiable. The Learned counsel also relied on the ruling of the Apex Court in the case of Commissioner of Income Tax Versus Brij Lal Lohia and Mahabir Prasad Khemka - 1972 (84) I.T.R. 273, wherein it was held that there is no res judicata in tax matters and under similar facts and circumstances for a subsequent period, wherein an assessee brings additional material on record and the courts below. It could the Tribunal held in favour of the assessee the same was upheld by the Apex Court. 11. Accordingly, the Learned counsel for the appellants prays for allowing the appeals holding that slides /slits (inner frames) are not taxable/dutiable under the Central Excise Act since they are not marketable and no material is brought by Revenue in support of marketability. 12. The Learned AR ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tentions and averments made by Mr. Aniruddha Sengupta have to be accepted in support of the contentions of the appellant as true and correct. Further we find that the Learned Commissioner have relied upon the ruling in the case of M/s Zupiter Printing (supra). We find that the said ruling supports the case of the appellant herein, as the issue therein was taxability of cigarette shells only manufactured by M/s Zupiter Printing by way of job work for the cigarette manufacturer. The question in that case was limited to whether the cigarette shells are excisable if they are considered as a box. Further we find that in spite of opportunity given by the Apex Court in the second round of litigation. The Revenue have not brought a single iota of evidence in support of marketability of slide/slits (inner frames). Further we find that the findings of the Apex Court in the case of M/s Sonic Electrochem Private Ltd. (supra) are squarely applicable, wherein the Apex Court held that the plastic body of the EMR is specific to a particular manufacturers as per their design and logo and as such is not marketable or a product known in the market, hence not marketable. Similarly, we hold that in the....