COLLECTOR OF CENTRAL EXCISE, GUNTURversusM/S ARUNA STRAW BOARDS (P) LTD.

            COLLECTOR OF CENTRAL EXCISE, GUNTUR                                  A
                             v.
              M/S ARUNA STRAW BOARDS (P) LTD.

                            AUGUST 27, 1999

     [K. VENKATASWAMI AND M. JAGANNADHA RAO, JJ.]                                B

      Excise-Central Excise Tariff Act, 1985-Tariff Item 17-Single ply
straw boatds manufactured by the respondents used in manufacture ofmultiple
ply straw boards-Such multiple straw boards cleared on payment of duty-
Held, single ply straw boards and multiple ply straw boards covered by the       C
same Tariff Item 17 as straw boards and both these articles were the same
articles-Hence single ply straw boards not liable to duty.

       The respondents were manufacturers of paper boards falling under
Tariff Item 17 of the Central Excise Tariff. A portion ofsingle ply straw        D
boards manufactured by the respondents was used in the manufacture of
multiple ply boards within the factory of production. A major portion of the
single ply boards was cleared on payment of duty at the factory gate. Multiple
ply straw boards were removed from the factory after payment of duty. A show
cause notice was issued by the Revenue as to why duty should not be levied
on single straw ply boards used for the manufacture of multiple ply boards       E
within the factory. The Assistant Collector after going through the reply of
the respondent, found that there was no essential difference in identity
between the original commodity, namely single ply straw board, and the
processed article, namely, multiple ply straw boards. Revenue thereafter
preferred an appeal before the Collector (Appeals), who affirmed the order
passed by the Assistant Collector. The Collector (Appeals) referring to the      F
tariff description under item 17 at the relevant time which reads as "paper
and paper board, all sorts (including paste board, mill board, straw board,
cardboard and corrugated board) and ....", held that the straw board whether
it was single ply or double ply or triple ply or multiple ply would continue
to be described as straw board and the same would fall under the same sub-       G
item of Tariff Item 17. Revenue then filed an appeal before the Tribunal, and
 it also came to the conclusion that both single ply and multiple ply straw
 boards answered the description of straw boards and multiple straw boards
 could not be considered as paste boards even in terms of definition given in
 the ISi cited by the Revenue. Tribunal also discussed the decision of a five-
                                     529                                         1-1
    530                      SUPREME COURT REPORTS [1999] SUPP. l S.C.R.

A member Bench of the Tribunal in the case_ of Guardian Plasticote* and also
                                                                                      ..
    on the decision of the Bombay High Court in Babubhai Nylchand** to hold
    that in view of the decision of the Bombay High Court(**), the decision of
    five-member Bench of Tribunal(*) could not be followed. The Tribunal also
    referred to the provisions of Rule 49(4) read with Rule 9 of the Central
    Excise Rules before dismissing the appeal filed by the Revenue. The majority
B   decision of the Tribunal was dehors the decision of the Bombay High Court(**)
    and also the five-member Bench decision of the Tribunal(*) and it rested on
    the scope and interpretation of Tariff Item 17. Hence this appeal.

          It was contended by the Revenue that the decision of the Bombay High
c   Court (**) has since been overruled by this Court(***) and therefore, the
    decision of five-piember Bench of the Tribunal (*) had to be set aside.
    However, it was not contended that on the finding of the adjudicating authority
    or lower appellate authority or Tribunal on the scope of Tariff Item 17 as well
    as the findings that single ply and multiple ply boards are both straw boards
    as enumerated in the said Item.
D
          Dismissing the appeal, the Court

          HELD: On the interpretation of Tariff Item 17 the Collector (Appeals)
    held that charging single ply straw board to duty and again charging multiple      '
                                                                                       ~

    ply straw board manufactured out of such single straw board sheets within
E   the same factory to duty would clearly amount ~o double Levy. This view has
    been approved by the Tribunal Vice President (J), with whom the Member
    (Technical) has concurred. That being the position, the reversal of the
    decision of the Bombay High Court(**) by this Court in Babubhai (***),is
    not relevant and the same cannot be pressed into service to upset the decision
    of the Tribunal. (532-B-D]
F
          *Guardian Plasticote Ltd. v. CCE, (1986) 24 ELT 542; **Union of
    India v. Babubhai Nylchand Mehta, (1988) 33 ELT 292 (Born) and ***Union
    of India v. Babubhai Nylchand Mehta, (1991) Supp 2 SCC 348, referred to.

G         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 271of1989.

         From the Judgment and Order dated 19 .4.88 of the Central Excise and         ...
    Customs Gold (Control) Appellate Tribunal, New Delhi in E/Cross/639/85-C in
    A. No. 3088 of 1984-C.

H         M. Ga'urishankar Murthy, Hemant Sharma and P. Parmeswaran for the
      C.C.E. v. MIS ARUNA STRAW BOARDS (P) LTD. [K. VENKATASWAMI, J.]      531

Appellant.                                                                         A
     Ex-parte for the Respondent.

     The Judgment of the Court was delivered by

      K. VENKAT ASWAMI, J. This appeal by the Revenue is preferred against         B
an order dated 19.4.88 of the Customs, Excise and Gold (Control) Appellate
Tribunal, New Delhi, (hereinafter referred to as 'the Tribunal').

      The question that arises for consideration is whether the duty of excise
is leviable under the provisions of the Central Excise Act on the quantities
of single ply straw board manufactured and cleared without payment of duty         C
for manufacture of multiple ply straw board/straw board of higher D.G. in the
same factory of production.

      Briefly stated, the facts are the following:-

       The respondents are the manufacturers of paper boards falling under         D
T.1.17 of the Central Excise Tariff. They manufactured single ply straw boards
and a major portion of the single ply boards was cleared on payment of duty
at the factory gate. A portion of the single ply boards was used in the
manufacture of multiple ply straw boards within the factory of production and
the multiple ply straw boards are removed from the factory after payment of
duty. A show-cause notice was issued by the Revenue calling upon the               E
respondent why the duty should not be levied on single ply straw boards
used for the manufacture of multiple ply boards within the factory. The period
for which the payment was demanded was from 20.2.83 to 22.7.83. The
respondent replied to the show-cause notice denying the liability and the
Assistant Collector, after perusing the reply, found that there was no essential
difference in identity between the original commodity, namely, single ply straw    F
board, and the processed article, namely, multiple ply straw boards, and the
mere joining of two or three single ply straw boards by means of an adhesive
would not necessarily lead to a conclusion that a commercially different and
 distinct commodity came into existence. The Assistant Collector also gave
 other reasons to come to the conclusion that the single ply straw board           G
 cleared for manufacture of multiple ply straw board in the same factory cannot
 be subjected to the duty of excise. Accordingly, by this order dated 6.2.84 he
 dropped all further proceedings initiated against the respondent pursuant to
 the show-cause notice issued for the period mentioned above.

      The Revenue, aggrieved by the order of the Assistant Collector, preferred    H
    532                     SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R.

A an appeal to the Collector of Central Excise (Appeals), Madras. The Appellate
    Authority by its order dated 11.6.84 gave a finding as follows:-

           "During the relevant time the tariff description under Entry No.17 of
           Central Excise Tariff was as under:

B          "Paper and paper board, all sorts (including paste board, mill board,
           straw board, a carboard and corrugated board) and ..."

            From the above description, it is clear that all sorts of paper boards
            including straw boards would fall under T.l. 17 and specifically would
          . fall under sub-item (1) (unless such straw board is elsewhere specified,
c           which is not the case). Therefore the tariff description .does not
            distinguish between single ply and multiple. ply straw boards and
            does not prescribe any standard of thickness, before a board could
            be called a straw.board. Therefore, straw board whether it is single
            ply or double ply or triple ply or-multiple ply would continue to be
            described as straw board and would fall under the same sub-item
D           (I 0) of T.l. 17 during the relevantperiod Hence, charging single ply
            straw board to duty and again charging multiple ply straw board
            manufactured out of such single ply straw board sheets within the
            same factory to duty would clearly amount to double levy.

           On this short ground, application merits rejection."
E
         The Appellate Authority also gave additionai reasons in support of the
    above conclusion. Ultimately, the appeal was dismissed.

         Still aggriev~d, the Revenue preferred a further appeal to.the Tribunal.
F   The Tribunal by its order dated 19.4.88 dismissed the appeal.

          A three-member Bench of the Tribunal, consisting of Vice President and
    two Technical Members, considered the matter. One Technical Member (Shri
    V.P. Gulati), who has written a detailed order, found as follows:-

           "We observe that both the single ply and multiple ply straw boards
G
           answer to the description straw boards and multiple straw boards
           cannot be considered as paste boards even in terms of the definition
           given in the ISi cited by the Revenue".

         Thereafter, a discussion on the decision of a five-member Bench of the
H   Tribunal in the case of Guardian Plasticote Ltd, Calcutta v. Collector of
      C.C.E. v. MIS ARUNA STRAW BOARDS (P) LTD. [K. VENKATASWAMI, J.]     533

Central Excise, Calcutta & Ors., (1986) 24 ELT 542 and also on the decision      A
of the Bombay High Court in Union of India v. Babubhai Nylchand Mehta,
Bombay, reported in (1988) 33 ELT 292, was made. The conclusion reached
by him was to the effect that in view of the decision of the Bombay High
Court (supra), the five-member Bench decision of the Tribunal (supra) cannot
be followed. Apart from this reference to Rule 49{4) read with Rule 9 of the
Central Excise Rules was also made and discussed. Ultimately, the appeal was     B
difulissed. The Vice President (J) (Shri S.D. Jha), in his separate order, has
observed as follows:-

        "From Brother Gulati's order I observe that single ply and multiple ply
        boards are both straw boards. In view of this I would not for the
        present like to say that effect of the Bombay High Court decision in
                                                                                 c.
        Union of India v. Babubhai Nylchand Mehta, (1988) 33 ELT 292
        (Bombay) is to unsettle the Tribunal decision in Guardian Plasticote
        Ltd, case (1986) 24 ELT 542. The product in two stages not being
        distinct in name, character or use there could be no question of
        demanding duty at both the stages. In this view of the matter the D
        applicability of Rule 49(4) and Rule 9 discussed by Brother Gulati in
        para 3 of his order is also in my view of academic importance. With
        these words I agree with Brother Gulati that the appeal should be
        dismissed."

      Another Member (Technical) (Shri D.C. Mandal) concurred with the           E
order of the Vice President (J). It is clear from the above that the majority
decision of the Tribunal was dehors the Bombay High Court judgment and
also the five~member Bench decision of the Tribunal. It rested on the scope
and interpretation of Tariff Item 17.

      The learned counsel appearing for the Revenue, however, argued before      F
us mainly inviting our attention to the fact that the judgment of the Bombay
High Court (supra) relied on in the detailed order of the Tribunal has since
been overruled by this Court in Union of India & Anr v. Babubhai Nylchand
Mehta, [1991] Supp 2 SCC 348. Therefore, according to the learned counsel,
the decision of the Tribunal has to be set aside~ No argument was addressed      G
before us challenging the conclusion of the Assistant Collector, the Collector
(Appeals) and the Tribunal on the scope of Tariff Item 17 as well as the
finding that single ply and multiple ply boards are both straw boards as
enumerated in the said Item.                   ·

      The respor.dent is not represented before us. Therefore, we have           H




                                               '
    534                      SUPREME COURT REPORTS (1999) SUPP. I S.C.R.

A ourselves gone through the orders of the Assistant Collector, the Collector
    (Appeals) and the Tribunal, in particular, the order of the Collector (Appeals)
    and the order of the Vice President (J)

           We are in agreement with the view expressed by the Collector (Appeals)
    on the interpretation ofT.I. 17, which has been approved by the Vice President
B   (J), with whom the Member (Technical) has concurred. That being the position,
    the reversal of the decision of the Bombay High Court (supra) by this Court
    in Babubhai (supra), is not relevant and the same cannot bt: pressed into
    service to upset the decision of the Tribunal.

          In the result, the appeal fails and is dismissed accordingly with no order
C   as to costs.

    RK.S.                                                       Appeal dismissed.