http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 2

CASE NO.:

Appeal (civil) 392 of 1992

PETITIONER:

UNION OF INDIA AND ORS.

RESPONDENT:

NANDI PRINTERS PVT. LTD.

DATE OF JUDGMENT: 11/01/2001

BENCH:

B.N. KIRPAL & RUMA PAL & BRIJESH KUMAR

JUDGMENT:

JUDGMENT

2001 (1) SCR 329

The Judgment of the Court was delivered by

KIRPAL, J. The respondent herein at his printing press manufactures playing

cards 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

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

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.

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 of the High Court, the clearances in respect of printed cartons

could not be taken into consideration. Hence, this appeal.

The aforesaid Notification dated 19.6.1980 mentions that excisable goods of

the description specified in column (3) of the Table annexed thereto, which

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:

(I) if the aggregate value of clearances of the specified goods, if any, by

him or oh 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 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 2

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

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 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. Vazir Sultan Tobacco Co. Ltd., [1996] 83 ELT 3 at page 10, while

referring to an earlier decision in the case of Wallace Flour Mills Company

v. Collector of Central Excise, [1989] 44 ELT 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 ELT 262.

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 on each of them may be different. The mere fact

that the rate of duty on printed cartons 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 corning 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 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.