CHEMICOAT LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner Company, inter alia, carries on the business of metallizing and/or lacquering articles of plastics - all sorts, such as films or sheets of polyester, Cellulose acetate, Polyvinyl Chloride and Polyethylene. It is the say of the petitioner that it buys from the local market or imports polyester films and thereafter does the processing work of metallizing and/or lacquering the same. The petitioner purchases the polyester films from the market or imports the same after paying the necessary Excise duty or import duty.

(2.) IT is the say of the petitioner that 'Stamping Foil' on which the respondents want to recover Excise duty on the basis of Tariff Item 68 is nothing but a polyester film which is metallized and lacquered and is given some colour with suitable dyes. After purchase of the polyester films they are fed into high vacuum metallizing machine where thin coating of aluminium is deposited on the films by condensation of aluminium vapour. Thereafter the said metallized roll or film is further given coating of chemicals which is called lacquering for the purposes of protection against washing, rubbing, etc. Whenever some colour is to be given to the material, suitable dyes are also added to the lacquer. The lacquerized polyester film is made useful for the purposes of preparing metallized yarn or it can be used as stamping foil. For preparing stamping foil while metallizing and lacquering polyester film the metal and lacquer is applied in such a manner that it can be transferred to the article on which name or monogram is to be embossed. This type of polyester film metallized and lacquered is called 'Stamping Foil'. It is the say of the petitioner that in 1972 the second respondent raised the question that metallized and lacquered films were dutiable under Tariff Item 15A(2). Thereafter the petitioner filed Special Civil Application No. 188/73 against the respondents challenging the attempted levy of Excise duty under Item 15A(2) in respect of the metallized and lacquered polyester films. When the matter came up for hearing, the learned Standing Counsel appearing on behalf of the respondents made a statement that the petitioner's product lacquered and/or metallized polyester/PVC/Acetate films or sheets are produced from the plain (bare) polyester/PVC/Acetate film on which appropriate amount of Excise duty under Item 15A(2) of the First Schedule to the Central Excises and Salt Act, 1944 or additional duty under Section 2A of the Indian Tariff Act, 1934 has already been paid, the petitioner's goods i.e., metallized and/or lacquered plastic films or sheets whether Acetate, Polyester or P.V.C. based which are processed by the petitioner do not attract further Excise duty under Item 15A(2) of the First Schedule of the Central Excises and Salt Act, 1944 as it stood on that day. The said statement is produced at Annexure 'A' to this petition.

(3.) THEREAFTER the Deputy Collector (Tech.) for Collector of Central Excise, Baroda, issued Trade Notice No. MP/164/78, dated 12 -7 -1978 wherein it is mentioned that 'stamping foils' made from duty paid plain (bare) polyester/PVC/Acetate films or sheets would be classifiable under Tariff Items 68 C.E.T. on the basis of the said Trade Notice the petitioner was directed to file a classification list before the Superintendent, Central Excise, Baroda. The petitioner raised various contentions in his correspondence with the Department wherein it was sought to be contended that stamping foil is manufactured by metallizing and lacquering polyester film and then by applying lacquer coat on it. Stamping foil are articles of plastic and stand covered under Item 15A(2) as per classification issued by the Collector of Central Excise, Bombay, in his Trade Notice. It was also pointed out that the Central Excise Act and Rules are being enforced uniformly in all the Collectorates of the country by the Central Excise Officers and Audit Party of the Central Excise and the Accountant General. Therefore, there is no question of levying Excise duty on stamping foils. Therefore show cause notice dated 2 -5 -1980 (Annexure 'D') was issued by the Superintendent of Central Excise, Division II, Baroda, wherein the Department claimed payment of the amount of erroneous refund of duty as on detailed inquiry of the party's product it is found that the part is manufacturing 'stamping foil' after colourising the metallized films with imported dyes in different colours according to requirements and cutting in into required size and designs. It is also mentioned that the end use of stamping foil and its characteristics are different from the metallized and lacquered film sheet. The stamping foil is liable to Central Excise duty under Tariff Item 68. The petitioner has challenged before this Court the said show cause notice and has demanded refund of Rs. 4,806.85 collected by the respondent under threats and coercion by contending that stamping foil would not fall under Tariff Item 68.