J U D G M E N T Venkataswami, J.
The only question that arises for our consideration in all these Appeals is whether ‘Printed Aluminium Labels’ (hereinafter referred to as "labels") manufactured by the appellant are ‘products of the printing industry" within the meaning of Notification 55/75-CE dated 1.3.1975 (hereinafter called "the Notification") issued under Rule 8(1) of the Central Excise Rules, 1944.
It is not in dispute that but for the exemption under the Notification, the labels in question, would fall under Item No. 68 of the First Schedule to the Central Excise and Salt Act, 1944 (hereinafter called the "Act"). The relevant portion of the said Notification is extracted below:-
"In exercise of the power
conferred by Rule 8(1) of the
Central Excise Rules. 1994, the
Central Government hereby exempts
goods of the description specified
in the Schedule annexed hereto, and
falling under Item No. 68 of the
First Schedule to the Central
Excise and Salt Act, 1944, (I of
1944) from the whole of the duty of
excise leviable thereon.
13. All products of the printing
industry including newspapers and
printed periodicals."
It appears that the appellants claimed and got the labels in question exempted from the levy of duty on the ground that they come within the category of products of the printing industry, under the orders of Assistant Collector dated 24.12.1979. Later on the Collector of Central Excise, Bombay, invoking his powers under Section 35A of the Act issued a notice for revising the said order of the Assistant Collector dated 24.12.1979 and for bringing the goods under Item 68 for the purpose of levy of excise duty. After hearing the objections of the appellants, the Collector revoked the exemption granted by the Assistant Collector and directed assessment of the goods under Item 68.
Aggrieved by the order of the Collector, the appellant preferred four appeals to the Customs. Excise and Gold (Control) Appellate Tribunal. New Delhi for different assessment periods. The Tribunal, New Delhi for different 13.6.1986 held that the printing on the aluminium label being incidental to its use as a label or a wrapper and that being inherently not a piece of reading matter, will not fall under the above-said exemption Notification. On that view, the Tribunal dismissed the appeals. Hence the present appeals by special leave.
Mr. V. Laxmikumaran, learned counsel for the appellants has submitted that the Tribunal went wrong in coming to a conclusion that the printing on the aluminium label was incidental to its use. According to the learned counsel, the printing was the primary purpose and without it, the metal on which the matter was printed, is of no use to the appellant’s customer. It is the contention of the learned counsel that it is the printing that gives the aluminium labels their use without which they would not be called labels and would serve no purpose. In other words, the printed words on the product inform the customer that he is buying the product of his choice or his brand. He also submitted that in the trade as well as in common parlance, these aluminium labels are treated as products of printing industry. According to the learned counsel, this was specifically pleaded before the Tribunal, but the Tribunal unfortunately not accepting this test has stated that this will not be a correct test. He also distinguished on facts the judgment of this Court in Rollatainers Ltd. & Another vs. Union of India & Others, reported in 1994 (Supp) 3 SCC 293. According to the learned counsel, the test laid down in that judgment, if applied to the facts of this case, even then the appellant is entitled to succeed.
Mr. R. Mohan, learned Senior. Counsel appearing for the Revenue, contending contrary submitted that the labels in question are not products of printing industry and the ratio laid down in the judgment referred to by the learned Counsel for the appellant wold directly apply to the facts of this case and the distinction sought to be made on facts was without substance. It is his contention that the Tribunal has considered elaborately the facts placed before it and the reasoning and ultimate conclusion of the Tribunal that the printing is only incidental to the use of the labels and, therefore, they cannot be treated as products of printing industry are unassailable.
We have considered the rival submissions. The labels in question are printed on flatbed off-set printing press and the printing is done on a deep offset printing machine. These labels are meant to be fixed to refrigerators, radios, air-conditioners, telephone sets etc. It is seen from the order of the Tribunal that a certificate of an award was printed on aluminium sheet of an association. The Tribunal in the course of its order has observed as follows:-
According to the appellants, all
these aluminium sheets are meant to
serve a purpose connected any with
the printing on them. This can be
very briefly described as a
communication to the reader that
the commodity, product, device,
machine etc. etc. to which the
printed aluminium plate is attached
is such and such product made by so
and so. It is not an advertisement
plate or a decorative plate but
serves a communication need that
the reader or a potential customer
feels the need of when he looks at
a product be it a refrigerator or a
clock, or an air-conditioners or a
motor car or a fan. It tells him
what he want to know in precise and
certain word and to chose from,
perhaps, a variety of brands of the
same kind of product or machine.
.... In other words, the printed
word on the product informs the
customer that he is buying the
product of his choice or of his
brand. These aluminium printed
plates serve the purpose of written
word that conveys to the buyer what
he needs to know about the product
he is contemplating to purchase and
to pay money for."
Having said so, the Tribunal at the end comes to a conclusion that the printing on the labels was only incidental to its use and therefore, they cannot be treated as products of printing industry. The Tribunal in its earlier part of the order observed that the answer to the question depends upon the conclusion whether the printing on the metal plates manufactured by the assessee was or was not incidental to the primary use of the goods.
In Rollatainers Ltd. case (supra), this Court was considering whether printed cartons manufactured by the appellants in that case were products of the printing industry. This Court held as follows:-
"We are of the view that to a
common man in the trade and in
common parlance a carton remains a
carton whether it is a plan carton
or a printed carton. The extreme
contention that all products on
which some printing is done, are
the product of printing industry,
cannot be accepted."
This Court accepted the reasoning of the Division Bench of the Karnataka High Court to hold that the printed cartons are not the products of the printing industry. The following reasoning of the Division Bench reads as follows:-
"The classification of manufactured
goods cannot be dependent merely
upon their place of production. The
product wherever produced must be
classified having regard to what it
means and how it is understood in
common parlance. The guiding factor
is not where it is produced, but
what is produced (See Collector of
Central Excise vs. Calcutta Steel
Industry 1989 Suppl (1) SCC 139).
There appears to be no principle on
which a distinction can be drawn
between an ordinary carton and a
printed carton, and to hold that an
ordinary carton is a product of a
packaging industry, while a printed
carton is a product of the printing
industry, if it emerges in its
final shape from a printing press.
At best it can be said that with
technological advancement. It has
become possible to have composite
industries which can provide a
variety of services, not
necessarily confined to a single
industry as conventionally
understood, and which may produce a
variety of manufactured items. In
such cases the products have to be
classified having regard to their
purpose and as they are understood
in ordinary parlance. So viewed, a
paper carton, whether printed or
not must be classified as a product
or the packaging industry, and not
a product of the paper industry or
printing industry. A carton is used
for packing goods whether it is
made or printed paper or not, and
therefore, the printing of cartons
does not add to its essential
function as a container. Mere
printing does not make a carton. An
ordinary an in the trade has no use
for a printed paper, unless it can
be given shape as a container in
which he can pack his products.
What makes it a carton is its
capacity to contain which is its
essential characteristic and not
the printing work on it, which is
merely incidental. In our view, the
fact that sometimes more money may
be spent on printing than other
things, will make no difference."
(Emphasis supplied)
It was argued that the trade also understood likewise. But this argument was repelled by the tribunal by observing that classification of goods can never be based on what the industry regards the goods to be. This approach seems contrary to the view expressed by this court in Rollatainers case. There this Court approved the test based on understanding of trade parlance/common parlance of a particular product. In the case on hand, but for the printing, the aluminium label world serve no purpose and as seen above, it is the printing on the aluminium sheet, which communicates the message to the buyer that makes the sheet as a label, unlike a carton printed or plain which always remained a carton.
The label announces to the customer that the product is or is not of his choice and his purchase of the commodity would be decided by the printed matter on the label. The printing of the label is not incidental to its use but primary in the sense that it communicates to the customer about the product and this serves a definite purpose. This Court in Rollatainers case held that what is exempt under the notification is the product’ of the printing industry. The ‘product’ in this case is the carton. The printing industry by itself cannot bring the carton into existence". Let us apply this above formula to the facts of this case. The product’ in this case is the aluminium printed label. The printing industry has brought the label into existence. That being the position and further the test of trade having understood this label as the product of printing industry, there is no difficulty in holding that the labels in question are not products of printing industry. It si true that all products on which some printing is done, are not the products of printing industry. It depends upon the nature of products and other circumstances. Therefore the issue has to be decided with reference to facts of each case. A general test is neither advisable not practicable. We are, therefore, of the opinion that the Tribunal was not right in concluding that the printed aluminium labels in question are not ’products of printing industry’.
Accordingly, the appeals are allowed and the impugned orders of the Collector, Central Excise are set aside and the appellants are entitled to claim exemption on the labels in question under the above-mentioned Notification. There will be no order as to costs.