ORDER
M. Santhanam, Member (J)
1. The appellants are engaged in the manufacture and sale of aluminium foils backed with polythene and/or paper as re-in-forcing materials. The same are classified under Tariff Item 27(c) of the First Schedule. The aluminium foils are backed either in one reinforcing material by a single lamination or with more reinforcing by double or multiple laminations. The appellants contend that Item 27(c) did not indicate the duty would be liable for further laminations of foils. The Asstt. Collector was of the view that the duties are chargeable on double or multiple foils after the double or multiple laminations are completed. On appeal, the Collector confirmed the findings.
2. Sh. N. Mookherjee, Ld. Counsel for the appellants submitted that the appellants are paying duty at the stage of the first backing with reinforcing materials and there was no justification for charging duty at the stage of subsequent reinforcements. He further submitted that the duty could be charged only under Tariff Item 68 and not under Tariff Item 27(c). He showed us samples of the products and urged that the demand for duty under Tariff Item 27(c) was not justified. He placed reliance on the following rules :-
(1) 1986 (23) ELT 217 (Tri.) Swastik Packaging, Bombay v. Collector of Central Excises, Bombay.)
(2) 1986 (23) ELT 446 (Shriram Jute Mills, Calcutta v. Collector of Central Excise, Calcutta).
(3) 1986 (26) ELT 1032 Birla Jute Manufacturing Co. Ltd. v. Collector of Central Excise, Calcutta).
3. Sh. J.N. Nigam, SDR submitted that the recourse to Item 68 would not arise inasmuch as the foils continued to be the same despite the further reinforcements. He urged that the appellants were paying duty at the stage of the first lamination because the value at that stage would be less. The SDR urged that the department would seek to levy duty at the final stage namely, when the product was cleared with multiple laminations.
4. The Ld. Counsel for the appellants produced before us samples of the several foils manufactured by the appellants. These foils are single laminations with paper. Mul-tiple laminations foils/paper/polythene. Multiple laminations are polyester/foils/polythene etc. The appellants endeavour to make out that the aluminium foils are backed either with one reinforcing material by single lamination or with more reinforcing materials by double or multiple laminations. They would contend that a single polythene or paper lamination is classified under Item 27(c) and hence the further backing with reinforcing materials could only be classified under Tariff Item 68 and not under Tariff Item 27(c). It is well settled that the recourse to Item 68 should be the last resort and we have to examine whether the product could be classified under Items 1 to 67 before we assign Item 68. The Tariff Entry 27(c) refers to foils (whether or not embossed), cut to shape, perforated, coated, printed or backed with paper or other reinforcing material), of a thickness (excluding any backing) not exceeding 0.15 mm. The products whether with a single lamination of paper or multiple laminations with foil/paper/polythene etc., would only qualify to attract duty under Item 27(c) for the product despite the multiple laminations would continue to be foils. The main contention of Sh. N. Mookherjee, Ld. Counsel for the appellants was that the duty cannot be charged a second time on a product or commodity already charged under the item or sub-item if the manufacture leaves the product under the same item. The department contends that the appellants adopted a procedure by which they pay duty at the initial stage as the valuation would be less at that stage and avoid paying duty on the “foils” at the later stage when its value is bound to be higher. A close examination of this argument indicates that there is considerable force in this contention. It cannot be denied that the foil with a single lamination would be less costly and a foil with multiple laminations with costlier reinforcements like polythene or paper in addition to polythene would definitely be of higher value. At different stages, the product assumes different values but the tariff classification would be under the same sub-item. According to the department, the appellants are not expected to pay any duty at the initial stage of a single lamination and that the duty would be charged only at the final stage. The decision in Bombay Tyres International reported in 1983 (14) ELT 1896 indicates the scope of value for the purpose of assessment of duty. In 1985 (20) ELT 179 (Empire Industries), the Supreme Court has emphasised that the intrinsic value of the product should be the price under Section 4 of the Central Excises and Salt Act, 1944″. It is, therefore, clear that the determination for the purpose of duty should be the intrinsic value of the product at the time of clearance. The totality of the several processes would normally result in substantial transformation at each and every stage and the ascertainment of duty should be determined at the point of clearance. In this background, if we analyse the facts of the present case, it is reasonable to conclude that the payment of duty at the stage when a single lamination is only to get-over the liability to pay duty at a higher value despite the transformation of the product by virtue of the multiple laminations. The SDR also drew our attention to the principles of interpretation and where words are used in the regulation of identical, singular words will include plural and vice-versa. The tariff entry cannot, therefore, be restricted to the first stage of a single lamination even though the words used are “backed with paper or other reinforcing material”. The expression “foils” indicates that foils with single lamination and foils with multiple laminations would also come under the same item.
5. The decision cited by the Ld. Counsel for the appellants has no application to the present facts for, they deal with different kinds of situation and the foil after printing remained foil whether printed or embossed as in the case of Swastik Packaging. The other two cases deal with products which do not change their character and the transformation does not result in another product. We, therefore, agree with the contentions . of the SDR that Item 68 will not apply whether the foils are with a single ply or multiple plies. The use of the words “reinforcing material” should, in the circumstances, would apply to multiple plies also. We are, of the view that the impugned orders are correct and do not call for any interference.
The appeals is, therefore, rejected.
H.R. Syient, Member (T)
6. The problem is not of charging the “foil” duty over again, or charging duty under Item 68 on the multiple laminated foils. The problem is only at what stage should the duty be charged when a foil undergoes lamination and later is given further lamination/backing/reinforcing. The assessees argue that only the first lamination should be charged to duty under Item 27(c) CET; subsequent reinforced multiple backed foils are not to be charged duty because the same foil, later give backing/reinforcement, had already been charged the same duty.
7. This demand has one aim – to pay duty on a foil priced much less than the multiple backed foil. By so doing, the factory would avoid duty. This is not permissible. The duty must be calculated at the highest value that the foil attains when it enters the market. This is the essence of assessment.
8. The learned counsel for India Foils made much of the terminology in Item 27(c). He said the words “backed with paper or other reinforcing material” specify one backing, not a plurality of them. Hence, under the law, the first lamination or backing with only one backing material is the true duty stage. That stage cannot embrace a multiple-backed foil because it has become a foil backed with more than one reinforcing material.
9. The argument is not tenable : if the foil is backed with layers of paper, it is backed with paper, not with papers. When it is backed by other (non-paper) reinforcing materials, it is backed by reinforcing material, not by reinforcing materials. The grammatical number must not be read for the number of layers. Two or three reinforcing materials are, each one of them, a reinforcing material. Thus, if polythene sheet, a fabric and a polyster sheet, are used to back a foil, the foil is backed by a sheet of polythene; it is backed by a sheet of fabric; it is backed by a sheet of polyster. Each is a backing for the foil qualifying it as a reinforced foil.
10. However, such play upon words must be discouraged. They know and we know quite well the law speaks about: a foil backed by backing material. Let us not see a hair everywhere, just so we can split it. Laws of taxation are not grounds for dialectics. We aim only at what is just, at what is reasonable, at what is not absurd. Once we are able to see the way clearly, the proper course is to apply the law in the right spirit, and with due needfulness. It avails one nothing to thrash about to find as escape from a position that the law obviously and necessarily intended. Surely, no one truly believes that when the law said “backed with paper or other reinforcing material” it meant the backing must always be a single layer, as if it did not know that there are multiple-layered backings too. If anything, the multiple backed foil is a better backed foil, stronger, more durable, not to mention the higher value, and hence a stronger contender for taxability. A reasonable construction is what we are always called upon to make. Would it not be unreasonable to say that the multiple-backed foil goes duty free but the single backed foil must pay? The more reasonable reading is to say that all backed foil, whatever the number of backings, must be levied to duty,
11. I, therefore, order that the foil must be assessed at or after the stage of last backing or backings.