Case: Collector of Central Excise, Baroda Vs. Ojas Corporation

2. The appellant has been manufacturing fibre drum, which consists of a circular tube exclusively made out of paper or paper-board.. The lid and the botto m are made of ply wood which is reinforced with mild steel rings and clamps. According to the appellant, in the total weight of the fibre drum, the predominant weight is of the paper or paper board. The same is the position in respect of value o f the said fibre drum, the predominant value being of the paper or paper board. Commercially, it is known as a paper product.3. The dispute is as to whether the fibre drum should be classified under Item No. 17(4) as claimed by the appellant or under the residuary Item No.68, which is the stand of the Revenue. There is no dispute that prior to the Finance Act, 1982, it was classified under the residuary Item No.68. But thereafter the appellant sought classification of the said fibre drum under Item No. 17(4) and exemption under Notification No.66 of 1982. By an order dated 24.3.1982, the Assistant Collector of the Central Excise, approved the classification as sought by the appellant. The Trade Notice No.49(MP) paper (2) 1 982 dated 24.3.1982 (hereinafter referred to as the Trade Notice) in respect of Item No. 17(4)covers packing, transport, storage, or sale of merchandise whether or not having a decorative value, bags, canes, packets, sacks, boxes, cartons, drums fitted with reinforcing circular bands of other materials, tubular containers for posting documents, garment bags, the like are also covered under thisAssistant Collector of Central Excise however, by an order dated 14.4.1982 called upon the appellant to file a revised classification list classifying fibre drum under Item 68, on the ground that as the fibre drum was not made exclusively out of paper, it was not eligible for classification under Item No. 17(4). In view of the letter aforesaid, the appellant filed revised classification list No.3/82 classifying the fibre drum under Item No.68 under protest. The appellant addressed a letter dated 29.6.1982 representing its case that fibre drum was classifiable under Item No. 17(4) and was not classifiable under Item No.68. Ultimately-by an order dated 20.10.1982, the Assistant Collector of Central Excise, held that Item No. 17(4) and Notification No.66/82 were only applicable to such goods and articles which were made exclusively out of paper or paper board. Aggrieved by the said order, an appeal was filed before the Collector of Central Excise (Appeals). The said appeal was allowed on the finding that fibre drum was classifiable under Item No.17(4). The Collector of Central Excise (Appeals) referred to the composition o f the fibre drum and the aforesaid Trade Notice in support of his finding.4. The Revenue preferred an appeal before the Customs, Excise &Gold (Control) Appellate Tribunal (hereinafter re- ferred to as the Tribunal). The Tribunal cam e to the conclusion that the fibre drum manufactured by the appellant was classifiable under Item No.68 of the Central Excise Tariff and not under Item No.17(4). On that finding the order of the Collector of Central Excise (Appeals) was set a side.

Court's reasoning:
On a plain reading, boxes, cartons, bags and other packing containers manufactured from paper or paper board shall be covered under Item No. 17 because paper, paper boa rd and all sorts including paste board, mill board, corrugated board and articles thereof have been specified in clauses 1 to 4 of Item No. 17. It need not be pointed out that boxes, cartons, bags and other packing containers, mentioned in I tem No.17(4) must have been manufactured out of paper or paperTribunal has referred to the details of the fibre drum by saying that the cylinderical portion of the fibre drum is made of paper and its bottom and top are of ply wood, reinforced with mild steel ring and clamp. The Tribunal has also mentioned in the impugned order that according to the appellant, in terms of the percentage content, paper constitutes 51.18% of the finished product, the plywood content is about 23.57% and rings and clamps about 19.1/2%. Even before this Court, there was no dispute, that the percentage of the paper content is 51.18% only and the remaining 48.82% consists of plywood, rings and clamps etc. In this background, can it be said that the fibre drum which is a container is made of "paper and paper board, -ill sorts (including paste-board, mill board, straw board, cardboard and corrugated board), -and articles thereof........for being covered by tariff Item No. 17. Tariff Item No. 17 read as a whole alongwith different sub-clauses makes it abundantly clear that to be included in the said tariff Item, the product must be of paper, paper board and all sorts.The Glossary of Terms relating to Paper and Flexible Packaging issued by Indian Standards Institution (IS: 7186 -1973) defines Fibre board Drum as "a shipping package with cylindrical sidewall composed of paper or board having disc ends of similar or different materials, such as steel, wood etc." Thus, in spite of plywood discs at the top and the bottom, the fibre drum is to be treated as a fibre boa rd drum, according to the Glossary of Terms relating to Paper and Flexible Packaging issued by the Indian Standards Institution. Whatever may be the classification by the customs Co-operation Nomenclature (CCCN - Brussels), but Tariff Item N o. 17, including 17(4) clearly specify that products covered by said Item No. 17 must be the product of paper, paper board and all sorts.The Tribunal has placed reliance on the judgment in the case of M/s.Indian Textile Paper Tube Company Ltd. Madras v. Collector of Central Excise, Madurai 1984 (18) ELT 35, where it was said that Vim Containers and Defence Containers cannot be said to be articles of paper or paper board; they are composite containers made of paper, paper board and other metal components. The material components like lids and bottoms were made of tin plates and black plates and printed aluminium foils were added. Paper or paper board was one of the raw materials. It was classified under Item No.68 and not under Item No. 17(4), because it was held that they cannot be held to be articles of paper or paper board, in view of the lids and bottoms of such Vim Containers and Defence Containers having been made of tin plates and black plates with printed aluminium foils having been added. We are informed that a Special Leave Petition filed against the said judgment has been rejected by this Court. According to us, there is not much difference in the components of Fibre Drum from Vim Container and Defence Container. The Tribunal has rightly come to the conclusion that such fibre drums shall not be covered by Item No. 17(4) and they shall be covered by residuary Item No.68.