Full Judgment
3. The respondent is doing job work of certain customers in as much as raw material, namely, Paper Board, is supplied to the respondent by the customers and the respondent prepares cartons and returns the same to the customers. So, the respondent filed classification list claiming exemption under Notification No. 119/75 dated 30.4.1975 contending that they are only doing job work and material is supplied by the customers.
The jurisdictional Assistant Collector approved the classification list, but refused to grant benefits of exemption under the said Notification. Aggrieved by the said order, the respondent preferred an appeal before the Collector (Appeals) and it was disposed of along with other 39 appeals whereby all these appeals were allowed. Against that order, the Revenue has come in this appeal.
4. We heard Shri Sridharan, ld. Advocate for the respondent and Shri L.C. Chakravorthy, ld. J.D.R. for the department.
5. The impugned order is not a speaking order, in as far, as the Collector has not discussed factual aspects of any of the appeals, but has simply decided them on the point of law and so, it is not possible to find out whether any particular assessee (including the present respondent) is entitled to avail of the benefits under the Notification, in question. But both sides submitted that the facts can be gathered from the Order-in-Original, which is on record and both sides admit that the facts, as stated above, are not in dispute. So, the matter may be decided on merits.
6. On perusal of the Order-in-Original, it can be seen that the Assistant Collector has refused to grant benefits of exemption under the said Notification because the material supplied for job work was 'Paper Board' and the article returned after the job work is carton which is entirely different product. This reasoning, adopted by the Assistant Collector, is quite proper. The ld. D.R. cited National Organic Chemical Industries Ltd. Bombay v. Collector of Central Excise Bombay wherein the Larger Bench of this Tribunal has, in para 23 of the judgment (as per majority opinion) specifically laid down test for availability of benefits under the Notification in following terms: The article entrusted by the customer should, after the application of the manufacturing process by the job worker, not lose its essential identity entirely, but should retain its essential identity subject to the effects of the manufacturing process carried out....
The only broad guideline for the applicability of the notification would be that the process applied by the job worker should not be in the nature of manufacture in its primary sense and the resultant product should not be so completely distinct as to lose the original identity itself.
7. The ld. D.R. has contended that in the present case, the article that emerges, as a result of process carried out by the respondent, namely, carton, is entirely different from the raw material, namely, 'paper board' and that the emerging article has different name, characteristics and use and so the respondent is not entitled to claim benefits under the said notification. This contention, advanced by the ld. D.R. is quite correct.
8. L.A. Shri Sridharan has contended that identity of raw material, namely, 'paper board' is not completely lost and as a result of process, paper board does remain identifiable even in the final product, namely, carton and so benefit should be available under the said notification. He has cited following authorities:Bombay Food Pvt. Ltd. Bombay v. Collector of Central Excise Bombay Where the article entrusted by the customers, after application of the manufacturing process by job worker, does not lose its essential identity entirely, but the same is kept intact, after the intended manufacturing process has been carried out, the benefit of said notification will be available. In the instant case, observation of the samples, sent by the appellant indicates that brass rods for manufacture of forged nuts and valve body forged and machined on job basis have not lost their essential identity, the same being kept intact, after the intended manufacturing process has been carried out.Bridge & Roof Co. (I) Limited v. Collector of Central Excise Calcutta It is well-settled that mere fabrication work does not attract duty under Item 68, otherwise than on job charges.
9. On perusal of facts of both the above cases, it can be seen that the Tribunal has, in both these cases, followed ratio of the NOCIL'S case (supra) and on facts of the case, in those cases, they have decided in favour of the assessee. So, in the present case when, as observed by us, a different product emerges, as a result of the job work, the above two citations support the appellant than the respondent.
10. L.A. Shri Sridharan also cited KEC International Ltd. v. Union of India and Anr. wherein the petitioner was manufacturing parts of transmission towers from raw materials such as sections, angles or plates made of steel and zinc supplied to it by its customers. Relying upon judgments in Anup Engineering Ltd. v. Union of India 1978 ELT 533 (Guj.) : 1978 Cen-Cus 242D and Noble Paints and Varnish Co. v. Union of India it was held that the assesses was entitled to avail of benefit under the said Notification.
11. In our opinion, the facts of the KEC International Ltd. case (supra) are apparently different from those in the instant case. The petitioner in that case was manufacturing parts of transmission towers from raw materials such as sections, angles or plates made of steel and zinc supplied to it by its customers. The details of the nature of the processes undertaken by the job worker are not available in the judgment. But while it may be possible to say that transmission tower parts are not materially different from sections, angles, plates etc.
except for certain assembly operation etc., what we have in the instant case is a carton which, though made out of paper board supplied by customers, is materially different from paper board. In name, it is admittedly different. In character, it is a container whereas paper board by itself is not a container: it is merely a raw material therefor. In our view, again, carton contains or packs goods. Paper board, before it is fabricated into a carton, cannot. Therefore, the criterion laid down by Supreme Court in several land mark judgments including those in the case of Union of India v. Delhi Cloth and General Mills Co. Ltd.South Bihar Sugar Mills Ltd. and Ors. v. Collector of Central Excise 1978 ELT (J-336) : 1989 (25) ECR 447 (SC) are satisfied in this case. The processes undertaken by the respondent add up, in our opinion, to "manufacture" in its primary sense and not in its secondary sense of being incidental or ancillary to the completion of a manufactured product. For, the manufactured product in this case is the carton and the processes applied by the manufacturer to paper board supplied by customers result in the carton. Several judicial pronouncements including that in the Anup Engineering Ltd. case (supra) were considered in this Tribunal's five Member Bench's order in the case of National Organic Chemical Industries Ltd. (supra). Our present view is in line with that taken in that case.
12. So, in view of the above discussion, this appeal requires to be allowed.
13. L.A. Shri Sridharan raised a contention that the respondent is manufacturing printed cartons and so it is exempted from paying duty.
He cited Collector of Central Excise v. ITC Ltd. wherein it is held that printed cartons arc products of printing industry and not of packaging industry and they are eligible to avail of benefits of exemption from payment of duty under provisions of Notification No. 55/75-CE dated 1.3.1975 as amended by Notification No.122/75-CE dated 5.5.1975. He has, further contended that the respondent had claimed exemption under these notifications in their classification lists and as the jurisdictional Assistant Collector did not approve this exemption, the respondent had, in their appeal before the Collector (Appeals) also claimed this benefit.
14. Ld. D.R. objected to this plea stating that this is a new case which cannot be put forward at this stage and cited several authorities in support of his contention.
15. L.A. Shri Sridharan contended that this is not a new case and even if it is a new case, it can be raised at this stage and the Tribunal has powers to decide the appeal on any grounds even if they are not raised in the appeal memo or even if they do not arise out of the impugned order. He cited several authorities in support of his contention.
16. But apart from the question, whether the new ground can be raised at this stage, as we shall discuss presently on the facts on record, the respondent is not entitled to claim relief. So, we do not enter into discussion about legality of this contention and it is not necessary to discuss citations submitted by the parties. On perusal of the classification list, produced at exhibit-A with the cross-objections, we find that no exemption is claimed under the said notification and in column No. 10, it is stated as under: Duty will be paid on job charges under protest since the dispute over the assessability of printed carton and wrappers is still afoot.
17. So, the respondent has not, specifically, claimed benefit of exemption under the Notification No. 55/75-CE (as amended). So, obviously, the jurisdictional Assistant Collector had no occasion to decide about the availability of this Notification in his order-in-original. In appeal memo of the appeal, preferred before the Collector (Appeals), it is stated under the heading 'brief facts' as under: Among other jobs we undertake the job of printing cartons according to the specifications of our customers. In view of the present controversy between the Excise Department and printers like us, over the question of the eligibility of printed cartons for exemption from duly under Notification No. 55/75 as amended by Notification 122/75, we had decided to pay under protest, duty on our products, viz. cartons manufactured on job work basis and accordingly, we submitted a fresh classification list No. 4 of 3.4.1980 in which we claimed exemption under Notification No. 119/75 dated 30.4.1975.
18. In prayer clause, no relief had been claimed under the aforesaid notification. The Collector (Appeals) had also therefore no occasion to decide about the availability of the notification. Thus, neither the Assistant Collector nor the Collector (Appeals) had occasion to, nor did they record a finding on whether the goods in question were pointed cartons. In the absence of a finding on this fact, we are not in a position to consider the applicability of the notification even though it may be legally permissible. This apart, the respondents not having claimed the benefit of the aforesaid notification in the proceedings before the lower authorities, our expressing any opinion on the subject would not be proper. It is open to the respondents to resort to proper procedure for claiming refund if it is otherwise permissible. However, such relief cannot be asked for or granted in these proceedings at this stage.