ivil Appeal No 3097 of 1989
From the Judgment and Order dated 1531989 of the Central Excise and Gold Control Appellate Tribunal New Delhi in Order No 10089 C in Appeal No E5587 C K Swami and P Parmeswaran for the Appellant
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
This is an appeal under section 35Lb of the Central Excises  Salt Act 1944 hereinafter referred to as the Act  against the order dated 15th March 1989 of the Customs Excise  Gold Control Appel late Tribunal New Delhi hereinafter referred to as the Tribunal 
The question for consideration in this appeal is wheth er the bulb sleeves and tube light sleeves manufactured by the respondent for the purpose of packing the electric bulbs and electric tube lights are printed boxes and cartons  and are subject to excise duty or whether the respondent is entitled to exemption under notification No 6682 dated 28th February 1982 as amended by notification No 15 183 dated 13th May 1983
The said amended notification reads as follows GSR No
In exercise of the powers conferred by subrule 1 of rule 8 of the Central Excise Rules 1944 the Central Government hereby exempts articles of paper or paper board falling under sub item 3 of Item No 17 of the First Schedule to the 1 of 1944 from the whole of the duty of excise leviable thereon 125 Provided that no such exemption shall apply to printed boxes and printed cartons including flattened or folded printed boxes and flattened or folded printed cartons whether in assembled or unassembled condition
 The respondent was manufacturing printed bulb carton and printed tube carton falling under erstwhile Tariff Item No 173 of the Central Excise Tariff
The revenue it is alleged ascertained that the sleeve rolls had a width of 175 cms
consisting of corrugated kraft paper on one side and plain paper on the other side having printed thereon the name monograms and so on pertaining to the lamps from the corrugated paper manufacturers
The rolls are mounted on a packing machine and are cut to adequate length to circum scribe the lamps and the joint is automatically covered by gum tapes
The sleeves are conveyed automatically to a conveyer on which the lamps are inserted manually
Further the ends of the above sleeve are folded to prevent lamps from falling out
The entire machine is operated by means of electric motor
It is stated that it was further ascertained that for the florescent tubes the sleeves already cut to the proper length are supplied to the factory by outside manu facturers
The tube lamp is manually put in and the sleeve edges folded over manually and gum tape is also applied manually
The tube lamp is inserted in the tube and then put in the outside card box packing
It is the case of the revenue that the respondent manufactured printed cartons for bulbs by way of printing on papers printed and writing and pasting the printed paper on the corrugated board and thus converting the said corrugated board to printing cartons
According to the revenue this process of manufacture ren ders the carton having printing and paper pasting on the surface to make these manufacture in terms of section 2f of the Act and classifiable under Tariff Item 173 as aforesaid
According to the revenue the exemption contained in the notification No 6682 was not applicable as the notification exempted articles of paper and paper board falling under Tariff Item No 173 except printing boxes and cartons from the duty
According to the revenue the respondent manufactured and cleared bulb cartons printed and tube cartons during the period June 1985 to 30th April 1986 of the value of Rs102446125 involving central excise duty to the tune of Rs15981767 without applying for and obtaining a central excise licence for erstwhile Tariff Item No 17 and without maintaining any statutory record thus wilfully suppressing and mis stating the facts with the intention to evade central excise duty and thereby contravening provisions of the Act and the rules
126 A Show Cause notice was issued followed by a corrigendum and demand was made of Rs 15981757 under rule 92 of the Central Excise Rules 1944 hereinafter referred to as the said rules  as to why penalty should not be imposed on them under rule 173Q of the said rules for the various alleged contraventions under the provisions of the Act and the rules
Written submissions were made
By an Order dated 24th November 1986 Additional Collector of Central Ex cise Chandigarh held that cartons bulb and light were manufactured by the respondents and were classifiable under item 173 of the erstwhile Central Excise Tariff Act and thus chargeable to excise duty
But the duty was liable to be reduced in view of the exemption notification No 21786 dated 2nd April 1986 for the period 2486 to 30486
The Additional Collector therefore passed an order dated 24th November 1986 for demand of duty of Rs 14415812 from the respondent under rule 92 of the said rules and im posed a penalty of Rs25000 under rule 173Q
There was an appeal to the Tribunal
The Tribunal referred to Tariff Item 17 pertaining to paper and paperboard
Sub item 4 of the said item reads as follows 4
Boxes cartons bags and other packing containers including flattened or folded boxes and flattened or folded cartons wheth er or not printed and whether in assembled or unassembled condition
 Tariff Item 174 makes a distinction between boxes cartons bags and other packing container
There can be no doubt according to the Tribunal that boxes cartons and bags would also be packing containers
Out of the various types of packing containers of paper and paper board ac cording to the Tribunal only printed boxes and printed cartons are dutiable if we read notification 6682 as al ready set out hereinbefore
The Tribunal was of the view that the boxes and cartons have a definite understanding
Reference was made to Shorter Oxford English Dictionary Vol
I where box  has been defined as a case of a receptacle usually having a lid
In that view of the matter according to the Tribunal the product drums or sleeves manufactured by the respondent could not be called box  or carton 
Therefore the Tribunal held that these will be exempt from excise duty under the aforesaid notification even assuming that the product is a container
In that view of the matter the Tribunal did not go into the question of limitation which had been raised before it
The Tribunal however mentioned in the order that before the adjudicating authori ty no mention had been made by the respondent regarding the fact that they were undertaking manufacture of drums and sleeves out of paper and 127 paper board sheets purchased by them from the market inas much asthey had not filed any classification list to that effect which they were under an obligation to do under the law
It was contended on behalf of the respondent that the manufacturing of the drums and sleeves was undertaken in manufacturing bale and therefore the revenue knew its manufacturing
But this factor the Tribunal held is of no consequence because in the system of Self Removal Procedure the respondent is not absolved of the responsibility of bringing the product manufactured by them to the notice of the authorities even if they are using that product for their captive consumption
The respondent had their respon sibility
In the light of the Tribunal s findings on the question of classification the appeal of the respondent was allowed with consequential relief
Revenue challenges the same in this appeal
We have perused the order of the Tribunal
It is evident that one of the meanings according to the Shorter Oxford English Dictionary Vol
I which the Tribunal had referred is that box is a case of a receptacle usually having a lid  and in view of the purpose for which this is used in the transaction the Tribunal found that drums or sleeves manu factured by the respondent could not be called a box  or a carton  because the box must have a lid
The Tribunal noted that sleeves by themselves could not contain anything be cause these are open ended from both sides
In order to consider the question whether the exemption notification was applicable or not in view of the terms of the notification it is necessary to find out whether these sleeves bulbs or sleeves or tube light sleeves manufactured for the purpose of packing the electric bulbs and tubes are printed box and cartons
In our opinion the Tribunal ap proached the question from the literal meaning as well as the functional use of the expressions employed
As these sleeves and tube sleeves manufactured by the respondent had no independent market as such and as these were utilised for captive consumption for the end product manufactured by the respondent in our opinion in the absence of any posi tive and reliable evidence that there was either a market for these goods manufactured by the respondent and in that market these bulb sleeves and tubesleeves are known and marketable as corrugated boxes and cartons a fact of which in the record there is no positive evidence either way in our opinion the Tribunal proceeded on a correct basis
We have considered the submissions advanced on behalf of the revenue
But we have not been able to persuade ourselves to accept the contention that Tribunal committed any error either on the principle of law to be applicable or the appreci 128 ation of the facts in this case
In the aforesaid view of the matter the conclusion reached by the Tribunal cannot be assailed in this appeal
The appeal therefore fails and is accordingly dismissed
There will however be no order as to costs
TNA Appeal dis missed


Summary:
One Sh
GV Ranade took four policies on his own life from the LIC during the period
1958 to 1960
In April 1969 GV Ranade assigned absolutely all these four policies in favour of his wife Smt
Kamalabai G Ranade and the assign ment was duly registered by the LIC
These policies were paid up and the date of maturity of these were 14972 281273 91175 and 211275
There were some income tax dues against the said GV Ranade for recovery of which income tax officer commenced recovery proceedings
The Income Tax Officer on 27171 issued a notice under Section 2263 of the Income Tax Act 1961 to the Manager of the LIC at Nagpur directing the LIC to pay to ITO forthwith any amount due from the LIC to or held by the LIC for or on account of the said Ranade to meet the amount due from Ranade as arrears of income tax
The Divisional Manager of the LIC at Nagpur intimated this fact of receipt of the notice under section 2263 of the Income Tax Act 1961 to the assignee of these policies Smt
Kamalabai G Ranade suggesting that she take steps to get the notice vacated in order to safeguard her interest in the policies
By further correspondence the ITO required the LIC to deposit the amount of Rs341570 payable against the first policy which was to mature on 14972 and the LIC informed the assignee that the moneys due under the policies will be paid to her only after her getting the notice served on LIC by the ITO vacated
On 5972 Smt
kamalabai G Ranade flied a Writ Petition in the High Court of Bombay impleading LIC and the ITO claiming several reliefs including a direction to the LIC for payment of Rs341570 and also to make a statement that no part of the said amount is due to GV 98 Ranade nor does the LIC hold any part of the sum for or on account of Ranade
This Writ Petition was dismissed in limine
Kamalabai G Ranade filed an appeal by special leave in this court and this court disposed of the appeal on the counsel for the LIC stating that he would file the necessary statement on oath in accordance with section 2263vi of the Income Tax Act 1961 stating that no sum of money is due to the Assessee insured person before the ITO except one policy in respect of which the LIC having already paid the money to ITO no statement need be made and consequently no order can be made us 2263vi and the appeal was disposed of accordingly
It appears that the ITO did not revoke the order of attachment inspite of the LIC making the requisite statement on oath under section 2263vi of the Income Tax Act on 51275
This led to the filing of another Writ Petition in the Bombay High Court by Smt
Kamalabai praying for a direc tion to the ITO to revoke all notices issued under section 2263 to the LIC and to the LIC to pay her the amount due against the policies which had matured
On 441977 counsel for the ITO produced before the High Court a copy of the order dated 1477 passed by the ITO withdrawing the notice us 2263 of the Income Tax Act and the Writ Petition was dismissed as withdrawn
Kamalabai then sent notice to the LIC demanding payment of the total amount due against the four policies together with interest  15 since the delay in payment had been occasioned by the default of the LIC
LIC made the payment of these amounts to her but disputed its liability to pay interest thereon for the period subsequent to the date of maturity on the ground that the delay was occasioned by the ITOs notice us 2263
This dispute regarding the LIC s liability to pay interest led to the filing of Writ Petition No 1248 of 1977 decided on January 7 1981 which gives rise to this appeal
The impugned judgment holds that the last two policies having matured on 91175 and 211275 a few days before or after 51275 when the statement on oath us 2263 of the Income Tax Act was made by the LIC did not qualify for award of such interest which was payable in respect of the first two which had matured earlier on 14972 and 281273
This view of the High Court on which the award of interest is based is assailed on behalf of the appellant
The dispute in this appeal is only about the LIC s liability for payment of interest on the principal amount from the date of maturity of the first two policies to 311275 and the rate of 15 pa which is alleged to be excessive
99 Dismissing the appeal with costs this Court HELD In the instant case admittedly assignment of the policies was made by the insured GV Ranade and the same was duly accepted and registered by the LIC in April 1969
It is therefore obvious that the LIC was bound to act on that assignment in favour of Smt
Kamalabai G Ranade unless the assignment was held to be invalid by a competent author ity on a proper proceeding taken for this purpose 111B Mere issuance of notice under section 2263 of the Income Tax Act 1961 did not have the effect of invalidating the assignment nor did the casual mention of section 281 of the Income Tax Act 1961 by the ITO in his letter dated 28872 result in this consequence
Any further step towards formation of the final opinion by the ITO could be taken only after the LIC had made the requisite statement on oath under section 2263vi of the Income Tax Act 1961 on the basis of the registered assignment of policies
111C D The question of revocation of the notice under clause vii of subsection 3 of Section 226 of the Income Tax Act 1961 arose in the present case only after the LIC made the requisite statement on oath under section 2263vi of the Act in view of its consistent stand throughout that the moneys due under the policies were held by it for and on behalf of the assignee and not the defaulter
Mere informa tion of the assignment to the ITO and keeping the assignee informed of the ITO s action did not amount to discharge of the statutory obligation under section 2263vi of the Act by the LIC
Sub section 3 of Section 226 of the Income Tax Act 1961 clearly shows that on a notice thereunder being issued by the ITO to the LIC in the present case it was incumbent on the LIC to make the requisite statement on oath under clause vi thereof raising an objection on the basis of the registered assignment
It was then for the ITO to proceed further and form his final opinion and revoke the notice under clause vii
112D E 113G H The inordinate delay in making the statement on oath by the LIC under section 2263vi of the Income Tax Act 1961 was the result of misconstruction of the provisions and misappreciation of its liability thereunder
114B Obviously the assignee of the policies who had become entitled to receive the amount due thereunder on the dates of their maturity must be compensated by the LIC for its failure to perform its statutory 100 obligation under section 2263vi of the Income Tax Act 1961 within a reasonable time
Performance of this statutory obligation by the LIC in the present case being after inor dinate delay award of interest to the assignee of the poli cies to whom the payment thereunder had to be made even according to the stand of the LIC is therefore clearly justified
114C D