1. According to the appellants M/s. Kwality Containers Pvt. Ltd. they manufacture pilferage proof caps falling under TI 42 CET as also aluminium tear off vial as well as an aluminium tear down vial seals falling under TI-68 CET. In respect of the pilferage proof caps they were claiming exemption under notification 83/83 and in respect of the other aluminium vial seals they were claiming exemption under notification 77/83. In respect of these aluminium vial seals the department had a doubt on the classifiability under TI 68 but, subsequently, the Assistant Collector under order dated 8.10.1980 settled their classification under TI 68 CET.2. After a visit of their factory on 21.1.1985 during the course of which 3,31,000 pieces of tear off and tear down vial seals were seized under the belief that they are classifiable under TI 42 CET and not under TI 68 CET. Action was initiated by issue of notice dated 6.6.1985. It was alleged that as these seals had been manufactured and cleared without payment of duty under TI-42 CET the appellants had contravened various rules and had made themselves liable for penalty, confiscation and demand of duty. After the appellants had sent their reply an adjudication was held by the Collector of Central Excise Bombay II (now Bombay III on reorganisation) in which he held that the vial seals were classifiable as pilferage proof caps under TI 42 CET and the charges against the applicants were therefore made out. But he restricted the demand to the normal period under Section 11-A of the Central Excises and Salt Act. It is against the said order of the Collector dated 24.12.85 that the present appeal has been preferred.
3. We have heard Shri V. Laxmikumaran, Advocate for the appellants and Shri G.V. Naik for the department.
4. Samples drawn of the products in question as manufactured by the appellants as also by another manufacture were also produced for our perusal during the course of our hearing.
(i) The aluminium vial seals in question are not cap at all but only seals, and therefore there is no question of these products being pilferage proof caps; (iii) Reliance of the Collector on two earlier decisions of this Tribunal is misplaced since in one of them the party was not represented and the other did not deal with a product similar to the product in question ; (iv) the classification of the product having been approved by the Assistant Collector the same cannot in law be disturbed by the Collector except by way of proceeding in review; (v) the Collector had no jurisdiction to confirm the demand under Section 11-A of the Act as it then stood; (vi) the confiscation of the goods was in any event not called for; and (vii) the demand as confirmed in any event in excess of the period prescribed in Section 11-A of the Act.
6. As mentioned earlier there is no dispute regarding the classifiability under TI k2 CET of the screw down caps manufactured by the appellants which they themselves have classified under TI 42 CET as pilferage proof caps. The dispute rentes to tear off and tear down aluminium seals manufactured by them. The tear off seals are to be used in injunction glass vial the tear down seals being used in other glass or plastic bottles meant to contain tablet, powder, capsules, etc. Shri Laxmikumaran contended that the function to be performed in case of tear down seals are (i) to hold the plastic cap in position, (ii) to provide decoration packaging and (iii) to prevent accidental spilling of the contents or kept during handling. In respect of the tear up seals he claimed that the functions were (i) to hold the rubber plug in position, (ii) to prevent spillage of the contents during handling and (iii) to prevent conternnation of the plug or the contents. Therefore, in effect he stated that while these tear off and tear down seals may contribute towards safety from pilferage from main function is not that and that these being in the nature of seals only and not caps they could never be classified as pilferage proof caps.
7. The relevant tariff entry reads "pilferage proof cap for packaging, all sorts, with or without washers or other fittings of cork, rubber, polythene, or any other material".
8. Before the Collector as well as before us the appellants have relied on the definition of pilferage proof caps in the Glossary of terms relating to metal containers trade published by the Indian Standard Institution (IS: 1394-1973). It will be convenient at this stage to extract the definition of not merely pilfer proof caps but other definitions also thereon. They are : Bung - a fitting used to seal a sheet-metal container, usually a metal plug provided with threads to fit a screwed flange.
Cap - A light gauge metal or plastic cover used to seal the neck or opening of a container.
Inner Seal - Refers to paper, foil or cork used to line the inside of a general line cap closure.
Lid - The detachable closure component defined precisely by qualification, for example, slip lid, screw, cap, etc.
Pilfer proof caps - Screwed on closure with integral pilferproof arrangements.
Screw Cap - A screw-on (rolled thread) cap incorporating a sealing wax or linear and used in conjunction with an appropriate screwed neck.
Washer - A disk or cork or other soft material inserted in the cap to ensure leak-proof seal.
9. Thus so far as pilfer proof caps are concerned the LSI definition makes it clear that these are screw on closures with integral pilfer proof arrangement. It is explained for the appellants that these are caps that get separated into the bottom and top portions when the caps are opened so that tell-tale evidence is left behind of the factum the cap having been opened to CET at the contents. Further a cap would be a metal or plastic to seal the opening of the container and the same would be available for use time and time again for the same purpose.
Whereas a tear off or tear down seal would get destroyed the moment the seal is broken and could not be used again for preserving the contents thereafter. That is to say they would be off one time use only and cannot be reused periodically. This very circumstance, it appears to us, would establish that these seals are not caps much less pilfer proof cap.
10. Shri Naik contends that these seals safe-guard and, evidently, provide protection against tempering and they would therefore be pilfer proof cops. This argument overlooks the fact that in order that the product may be described as a pilfer proof cap it must first be a cap.
A seal would not be a cap since it cannot be reused after opening. Shri Naik contends in view of the word used in the entry such an argument cannot be accepted. He says that as TI-42 is worded the presence or absence of washer and other fittings would not be material and therefore the seal even without the rubber plug beneath the same would still be a pilfer proof cap. We are unable to accept this contention.
The washer or other fittings referred to in the entry, in our opinion refer to the inner seals of paper, file, or cork used to line the inside of a cap closure. The case before us is rubber plug would be the cap and not the washer or other fittings in order to entitle the seal itself to be called a cap.
11. Shri Naik relies upon two earlier decisions of this Tribunal, both of which have been referred to and relied upon by the Collector also in his order. They are in the case of Ganesh Metal Industries (1983 ELT 2506) and Rekha Industries (1983 ELT 1163). It is pointed out for the appellants that the assessee went on represented in the case of Ganesh Metal Containers and therefore the arguments now advanced were not put before the Tribunal and had therefore not been considered. On the perusal of the judgment we find that this aspect of the cases that seals would not be caps at all not been raised by the assessee and had therefore not been considered by the Tribunal. So far as the case of Rekha Industries it is clear that the product concerned in that case was not the product in issue before us. that case dealt with cap seals used for sealing of drums and not vial seals. The definition of the cap seal in IS: 1394-1973 is as follows : "Capseal (Drums) - A light gauge metal closure component fitted over the primary seal (for example, inner plug, lever cap or cork shives); may be paper lined on the underside, usually applied by rolling-on with special tool." No doubt reference has been made in that judgment to the definition of pilferage caps in 15:1394-1973 but it has been observed that in the absence of any definition of the terms pilferage cap in the tariff entry the entry has to be given widest meaning particularly in the context of the classifying word "all sorts". But in the light of the discussion earlier, a specially that relating to the fact that a seal would never be a cap, it appears to us that the ratio of the said decision, which dealt with cap seals for drums, should not be taken to apply to the facts of the instant case.
12. In the light of the above discussion we are satified that the tear off and tear down vial seals manufactured by the appellants and which are the subject matter of the present appeal, would not be pilferage proof cap for the purposes of levy of duty under TI-42 CET.13. Shri Laxmikumaran further contended that in any event the order of the Collector must fail on two grounds. The first was that the Collector had no jurisdiction to go into the matter since the Assistant Collector had already once gone into the matter and given a finding that these seals are to be classified under TI 68 CET and, in the absence of any further or better material, the Collector was not entitled to come to a conclusion except by way of review under the provisions of Section 35-A of the Central Excises and Salt Act as it then stood. From the order of the Collector we find that no other material then was available to the Assistant Collector earlier had been placed before the Collector, the process of manufacture continued to be the same, the nature of the product continued to be the same and the use to which the product was being to be also continued to be the same.
In view of the circumstances we agree with the Learned Counsel that the Collector had no jurisdiction to differ from the earlier conclusion of the Assistant Collector except by way of taking proceeding for review of the earlier order under Section 35-A.14. Shri Laxmikumaran further contends that so far as the demand for payment of duty is concerned the Collector had no jurisdiction under Section 11-A to do so. As pointed out by him Section 11-A conferred jurisdiction on the Assistant Collector to determine the amount of duty in terms of notice issued earlier by the proper Central Excise Officer.
The jurisdiction was thus conferred on the Assistant Collector only as the Section stood at the relevant time. It was only on and after 20.12.1975 under the provisions of Section 4/79 of 1985 that the said power of the Assistant Collector could have been exercised by the Collector also. It is true that under Rule 6 of the Central excise Rules the collector may perform of or any other duties or exercise of or any other powers assigned to an officer under the Central Excise Rules this empowering of the Collector would relate only to powers exercisable by any other officer under the Rules and not under the Act.
Shri Naik contends that it is a well recognised principle of administrative Law that what a subordinate could do his superior could always do. He, therefore, contends that what an Assistant Collector could do under the provision of the Act the Collector as his supervisor could also do. We are unable to accept this proposition in the absence of any provision in the Act itself, as distinguished from the provision in the Rules, to this effect. Therefore, we are convinced that so far as demand for duty is concerned the Collector had no power.
15. Shri Naik in this connection refers to the fact that the demand has been raised under Rule 9(2) also. But we are satisfied that no demand could have been raised under Rule 9(2) since the manufacture and clearances were in pursuance of an earlier order of the Assistant Collector in terms of which the goods in question were classifiable under TI 68 CET and under that classification the goods were exempt since the exemption limit of clearances had not been crossed. In the absence of any suppression or mis-statement of fact the demand could not be raised under Rule 9(2).
16. Shri Laxmikumaran contends that the order for confiscation of the seized goods were also not proper. As already seen the manufacture and clearances were in terms of the earlier order of the Assistant Collector under which the goods were classifiable under TI 68 CET and were exempt in view of the clearances not having crossed the exemption limit. In view of the circumstances there had been no case made out of infraction of any statutory provision making the goods liable for confiscation. We, therefore, hold that the order for confiscation was also not proper.
17. In the light of the above discussion we hold that the order of the Collector is liable to be set aside on the several grounds discussed earlier. Accordingly this appeal is allowed and the order of the Collector is set aside with consequential relief if any.