Holding

Both playing cards and printed cartons are excisable goods; therefore, their aggregate turnover must be considered, and the respondent does not qualify as a small‑scale industry for exemption under Notification No. 80/80.

Summary

The respondent, Nandi Printers Pvt. Ltd., manufactured playing cards (Tariff Item 56) and printed cartons (Tariff Item 68). Under Notification No. 80/80 dated 19‑06‑1980, printed cartons were exempt from excise duty, but the notification barred manufacturers whose aggregate turnover of excisable goods under more than one tariff item exceeded Rs. 20 lakhs from claiming the exemption. The excise authorities aggregated the turnover of playing cards (Rs. 14.11 lakhs) and printed cartons (Rs. 10.94 lakhs), concluded that the respondent’s total exceeded Rs. 20 lakhs and therefore was not a small‑scale industry, making it liable to excise on playing cards. The High Court held that the exempted cartons could not be counted, allowing the respondent’s writ petition. The Supreme Court examined clause (2) of the notification and held that both items are excisable goods even if the rate on cartons is NIL, so the aggregate turnover must include both. Consequently, the Court allowed the appeal, set aside the High Court’s judgment, and affirmed the respondent’s liability for excise duty on playing cards.

Issues considered

Whether printed cartons, although exempted from excise duty, are to be treated as excisable goods for the purpose of calculating aggregate turnover under clause (2) of Notification No. 80/80.
Whether the respondent can be regarded as a small‑scale industry and claim exemption on playing cards.

Legislation cited

Central Excise and Salt Act, 1944

Subjects

excise dutysmall scale industryexemption notificationaggregate turnoverplaying cardsprinted cartonsCentral Excisetariff itemsNIL rate

Judgment

UNION OF INDIA AND ORS: A •
'"'( v.
NANDI PRINTERS PVT. LTD.

JANUARY 11, 200 I

[B.N. KIRPAL, RUMA PAL AND BRIJESH KUMA~, JJ.] B
'

Central Excise and Salt Act, 1944:

Tariff Item No. 68-Exemption Notification-Printed cartons-Small-
scale industry-Classification of-Assessee manufactured playing cards as c
well as printed cartons-Excise duty on printed cartons exempted-However,

- ~
benefit of exemption not available if aggregate value under more than one
tariff items exceedeq1the statutory limit-But takin~ into considerction the
aggregate value of playing cards and printed cartons the excise authorities
held that the assessee was not a small-scale industry entitled to claim
exemption of excise duty on playing cards-High Court allowed the writ D
petition on the ground that clearances in respect of the printed cartons could
not be taken into consideration as they were exempted-Correctness of-
Held: Both playing cards and printed cartons are excisable goods though
~ attracting different rates of excise duty-Mere fact that rate of duty on
printed cartons was NIL does not make them non-excisable goods-Hence, E
excise authorities rightly held that assessee not entitled to the benefit of
,,.. exemption notification by aggregating the value of the two items-Exemption
Notification No.80180 dated 19-6-1980.

The respondent manufactured playing cards as well as printed cartons.
By virtue of Notification No. 80/80 dated 19-6-1980 printed cartons were F
exempted from levy of excise duty. However, the notification denied the benefit
to a manufacturer whose excisable goods falling under more than one tariff
items exceeded Rs. 20 lakhs.

The excise authorities came to the conclusion that taking into
consideration the aggregate value of the goods cleared, i.e., playing cards G
... plus printed cartons the respondent could not be regarded as a small-scale
industry since the turnover of the respondent exceeded Rs. 20 lakhs.
Therefore, the respondent was held liable to pay excise duty on the playing
cards. The High Court allowed the writ petition filed by the respondent on
•
the ground that clearance in respect of printed cartons could not be taken H
329
330 SUPREME COURT REPORTS (200 I] I S.C.R. '

A into consideration. Hence this appeal.
The following question arose before this Court:-

Whether for the purpose of levy of excise duty on the manufacture of
playing cards the respondent can be regarded as a small scale industry or
B not?

Allowing the appeal, the Court

HELD: I.I. The High Court had overlooked the fact that Clause (2) of
the Exemption Notification dated 19-6-1980 denied the benefit of the said
C Notification to· a manufacturer whose excisable goods falling under more
than one item exceeded Rs. 20 la.khs: (332-CJ

1.2. It is true that printed carto~s are not specified goods as conte~plated
by the said notification dated 19-6-1980, but Clause.(2) of the said notification
D refers to excisable goods falling under more than one. item of the First
.Schedule. Both, playing cards which fall under Tarfrr Item 56 and printed
.. cartons, which come under tariff Item 68, are excisable goods even though
the rate of dufy on each of them may be different. The mere fact that the rate
of duty on printed cartons was NIL by reason ofan exemption notification
. would not make printed cartons non-excisable goods. The excise authorities
E were, therefore, right in aggregating the value of the turnover of the two
items and coming to the conclusion that the respondent was not a small scale
industry which was entitled to the benefit of Notification dated 19-6-1980 in
respect of clearance of playing cards. (332-E-F-GI

.F ,.... CCE v. Vazir Sultan ·Tobacc.o Co. ltd., J19961 83 ELT 3 and Wallace
Flour Mills Company v. CCE, (1989144 ELT 598, relied on.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 392. of
. 1992.

G From the Judgme11t and Order dated 13.3.1991 of the High
.,,
Court of
..
Kamataka in.WA 760/1989. _j..

Ms. Nisha Bagchi for P. Parmeswaran, for the Appellant and Nand ·

H
.
Kishore for S. Muralidhar for the. Respondent.

Th'e Judgment of the Court was delivered b;
--
r

U.0.1. v. NAN DI PRINTERS PVT.LTD. [KIRPAL J.] 331
KIRPAL, J. The respondent herein at his printing press manufactures A
playing card~ as well as printed cartons. Playing cards fall under Tariff Item
56 of the Tariff Act, while printed cartons fall under Tariff Item 68. The
question for consideration in this appeal is whether for the purpose of levy
of excise duty on the manufacture of printed cards the respondent can be
regarded as a small scale industry or not. The answer to that question B
depends on whether the value of the printed cartons can be taken into
consideration even though by Notification No. 89/79 levy of excise duty on
manufacture of printed cartons was exempted.

The excise authorities came to the conclusion that taking into
consideration the aggregate value of the goods cleared, i.e., playing cards C
plus printed cartons the respondent could not be regarded as a small scale
industry. This was so stated even in the show cause notice which was issued
to the respondent and it was clearly mentioned therein that in the preceding
financial year, that is to say, 1979-80, the turnover of the respondent had
exceeded Rs. 20 lakhs.
D
The decision of the excise authorities was challenged by way of a writ
petition filed by the respondent. The Single Judge as well as the division
bench were of the opinion that the respondent was entitled to the benefit of
~ Notification No. 80/80 dated 19.6.1980 and in respect of the playing cards
no excise duty would be payable because the aggregate value of the
clearances of the playing cards was less than Rs. 20 laks as, in the opinion E
of the High Court, the clearances in respect of printed cartons could not be
taken into consideration. Hence, this appeal.

The aforesaid Notification dated l 9.6.1980 mentions that excisable goods
• of the description specified in column (3) of the Table annexed thereto, which F
excisable goods are referred to as 'specified goods', are exempted.from levy
of exCise duty when cleared for home consumption subject to the conditions
mentioned in the said Notification. This Notification will not apply in the
cases falling under clause (2) thereof which reads as follows :

"2. Nothing contained in· this notification shall apply to a manufacturer: G
(i) if the aggregate value of clearances of the specified goods, if any,
by him or on his behalf, for home consumption, from one or more
factories, during the preceding financial year, had exceeded rupees
fifteen lakhs;
(ii) who manufacturers excisable goods falling under more then one H
332 SUPREME COURT REPORTS [200 I] I S.C.R.

A Item Number of the said First Schedule and the aggregate value of
clearances of all excisable goods by him or on his behalf for home
consumption, from one or more factories, during the preceding financial
year, had exceeded rupees twenty lakhs."

On facts, there is no dispute that in the previous year 1979-80 the
B clearance in respect of playing cards was Rs. 14,11,467.35 while in respect of
printed cartons the figure came to Rs. 10,93,846.04. As has already been
noticed, no excise duty was payable on this value of Rs. 10,93,846.04 in
view of the Exemption Notification No. 89/79.
The High Court appears to have overlooked the fact that clause (2) of
C the Notification dated 19.6.1980 denies the benefit of the said Notification
to a manufacturer whose excisable goods falling under more than one item
exceed Rs. 20 lakhs. This Court in Collector of Central Excise, Hyderabad
v. VazirSultan Tobacco Co. Ltd, (1996) 83 ELT 3 at page IO, while referring
to an earlier decision in the case of Wallace Flour Mills Company v. Collector
D of Central Excise, [ 1989) 44 EL T 598, observed that if by virtue of an
exemption notification the rate of duty was reduced to NIL the goods
specified in the Tariff Act would still be regarded as excisable goods on
which NIL rate of duty was payable. To the same effect is the decision of
this Court in Vee Kayan Industries v. Collector of Central Excise, Chandigarh,
[ 1996) 83 EL T 262.
E It is true that printed cartons are not specified goods as contemplated
by the said notification dated 19 .6.1980, but clause (2) of the said notification
refers to excisable goods falling under more than one item of the First Schedule.
Both, playing cards which fall under Tariff Item 56 and printed cartons which
come under Tariff Item 68, are excisable goods even though the rate of duty
F on each of them may be different. The mere fact that the rate of duty on
printed cartens was NIL by reason of an exemption notification would not
•
make printed cartons non-excisable goods. The excise authorities were, therefore
right in aggregating the value of the turnover of the two items and coming
to the conclusion that the respondent was not a small scale industry which
was entitled to the benefit of Notification dated 19.6.1980 in respect of
G clearances of playing cards.
For the aforesaid reasons, this appeal is allowed and the judgment of
the Single Judge as well as that of the Division Bench are set aside.
There will be no order as to costs.

H V.S.S. Appeal allowed.