Holding

Printed aluminium labels are products of the printing industry, and the exemption under Notification No. 55175‑CE applies.

Summary

Metagraphs Pvt Ltd manufactured printed aluminium labels to be affixed to appliances and claimed exemption from excise duty under Notification No. 55175‑CE, which exempts ‘all products of the printing industry’. The Assistant Collector granted the exemption, but the Collector later revoked it and directed assessment under Item 68 of the First Schedule of the Central Excise and Salt Act, 1944. The Excise Tribunal held that the printing on the labels was merely incidental and therefore the labels were not products of the printing industry. On appeal, this Court held that the printing is the primary purpose of the label, that the label exists only because of the printed matter, and that in trade the label is understood as a product of the printing industry. Consequently, the Tribunal’s conclusion was reversed, the exemption was restored, and the Collector’s orders were set aside. The appeals were allowed.

Issues considered

Whether printed aluminium labels qualify as ‘products of the printing industry’ within the meaning of Notification No. 55175‑CE under the Central Excise and Salt Act, 1944.
Whether the printing on the labels is incidental to their use or constitutes the primary purpose of the product.

Legislation cited

Central Excise and Salt Act, 1944s. 35A
Central Excise Rules, 1944s. Rule 8(1)

Subjects

central exciseexemptionprinted aluminium labelsproducts of printing industryclassification of goodstrade parlanceSection 35ANotification 55175‑CE

Judgment

A MIS. METAGRAPHS PVT. LTD.
v.
COLLECTOR OF CENTRAL EXCISE, BOMBAY

NOVEMBER 20, 1996

B [S.P. BHARUCHA AND K. VENKATASWAMl, JJ.]

Central Excises and Salt Act, 1944 :

First Schedule-Item 68- 'Exemption Notification No. 55175-CE dated
1.3.1975-Printed Aluminum Labels-Held, are products of printing
C industry within the meaning of the Exemption Notification.

The appellant-assessee manufactured 'Printed Aluminum Labels'
which were printed on flatbed off-set printing press, and the printing

D
was done on a deep off-set printing machine. The labels were to be
fixed to refrigerators, radios, air conditioners, telephone sets etc. The
..
appellant claimed the said labels to be 'Products of printing industry'
within the meaning of Exemption Notification No. 55175-CE dated
1.3.t 975, and accordingly was allowed exemption from levy of duty
by the Assistant Collector. But the Collector of Central Excise revoked
the exemption and directed assessment of the goods under Item No.68
E of the First Schedule to the Central Excises and Salt Act, 1944. The
appeals filed by the assessee were dismissed by the Central Excise and
Gold (control) Appellate Tribunal, holding that the printing on the
aluminum label being incidental to its use as a label or a wrapper, the·
label inherently was not a piece of reading matter. Aggrieved, the
assessee filed the appeals before this Court.
F
Allowing the appeals, this Court

HELD: 1.1. The Tribunal was not right in concluding that the
printed aluminum labels in question are not products of printing
G industry. But for the printing, the aluminium label would serve no
purpose and it is the printing on the aluminium sheet, which 4... ...
communicates the message to the buyer that makes the sheet as a
label, unlike a carton printed or plain which always remained a carton.
[876-D, 877-G[

H 1.2. The label announces to the customer that the product is or
872
MET AGRAPHS PVT. LTD_ 1• COLLECTOR OF CENTRAL EXCISE [VENKATASWAMI,J.J 873

is not of his choice and his purchase of the commodity would be A
~ 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.
(877-H, 878-A(

1.3. The product in the instant case, is the aluminium printed B
label, which the printing industry has brought 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 the products of printing
industry. (878-B(
c
Rol/atainers Ltd. and Anr. v. Union of India and Ors., (1994) Supp.
3 sec 293, referred to.

2. It is true that all products on which some printing is done,
are not the products of printing industry. It depends upon the nature
D
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 nor practicable .. 1878-C)

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3011-14
of 1986. E

From the Judgment and Order dated 13.6.86 of the Customs, Excise
and Gold (Control) Appellate Tribunal, New Delhi in O.B. No. 353, 357-
59 of 1986-B-1.
F
V. Lakshmikumaran, V. Sridharan and V. Balachandran for the
Appellant.

R. Mohan and Ms. Sushma Suri for the Respondent.

The Judgment of the Court was delivered by
G
""~-··

VENKATASW AMI, 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 ofNotificati.on 55/ H
874 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A 75-CE dated l.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").
B The relevant portion of the said Notification is extracted below:-

"In exercise of the powers conferred by Rule 8(1) of the
Central Excise Rules. 1944, the Central Government hereby
exempts goods of the description specified in the Schedule
annexed hereto, and falling under Item No. 68 of the First
c 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."
D
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.
E 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.
F
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 by its order
dated 13.6.1986 held that the printing on the aluminium label being
G incidential 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 ..._,a:
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
H that the Tribunal went wrong in coming to a conclusion that the printing
METAGRAPHS PVT. LTD.,. COLLECTOR OF CENTRAL EXCISE [VENKATASWAMI, J.] 87 5

on the aluminium label was incidental to its use. According to the learned A
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 B
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 st~ted
that this will not be a correct test. He also distinguished on facts the judgment
of this Court in Rollatainers Ltd. and Another. v. Union of India and C
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 D
of printing industry and the ratio laid down in the judgment referred to by
the learned Counsel for the appellant would 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 E
Tribunal that the printing is only incidential to the use of the labels and,
therefore, they cannot be treated as products of printing 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
off-set printing machine. These labels are meant to be fixed to refrigerators, F
radios, air-conditioners, telephone sets etc. It is seen from the order of the
Tribunal that JI certificate of an award was printed on aluminium sheet of
an association. The Tribunal in the course of its order has observed as
follows:-
G
"According to the appellants, all these aluminium sheets are
1 meant to serve a purpose connected only 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 su~ product made by so and so. H
876 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A 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 airconditioner or a motor car or a fan. It
tells him what he want to know in precise and certain word
and enables him to make his choice to pick and to chose
B 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
c 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
D upon the conclusion whether the printing on the metal plates manufactures
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
E 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
plain carton or a printed carton. The extreme contention that
all products on which some printing is done, are the product
F 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
G 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 nzeans and holti it is understood in cbmmon parlance. The
H guiding factor is not where it is produc.ed, but what is
METAGRAPHS PVT. LTD. 1'. COLLECTOR OF CENTRAL EXCISE [VENKATASWAMI, l} 877

produced (See Collector of Central Excise v. Calcutta Steel A
Industry, [1989] Suppl. 2 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 B
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 C
and as they are understood in ordinary parlance. So viewed,
a paper carton, whether printed or not must be classified as a
product of 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 D
essential function as a container. Mere printing does not make
a carton. An ordinary man 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, E
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 F
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 G
printing, the aluminium label would 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 H
878 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A 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 incidential 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
B 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 the products of printing industry.
C It is 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 nor 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
D 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.
E
R.P. Appeals allowed.