ORDER
V.P. Gulati, Member (T)
1. The issue in the appeal relates to classification of the goods which have been described by the appellants as containers and which have been classified as bags by the authorities.
2. The learned Consultants for the appellants pleaded that the issue arose in the context of the change in the description of the tariff item which earlier covered bags also under heading 4819.12 prior to 1-3-1988 as the description of the items was containers, cases, boxes and cartons. With the realigning of the tariff with the customs tariff paper bags also came to be specifically included within the tariff description of heading 4819. He pleaded that earlier the appellants goods viz. paper container were assessed under Tariff Heading No. 4819.12 and the department had accepted that position and the appellants had all along shown this under the category of containers in the classification filed by them and their classification had been accepted by the Department. He pleaded that subsequent to the change in the tariff, the appellants voluntarily wanted to pay duty and approached the Supdt. of Central Excise on 7-3-1988 which was followed by a reminder dated 30-5-1988 and also enquired from the authorities as to the classification of the product manufactured by them. The learned Consultants pleaded that the product manufactured by the appellants was by putting together a number of kraft paper sheets usually five sheets by using adhesives and thereafter stitching them into containers with all the sides closed except for a vent at the corner of the top side and this container looked like a bag. The learned Counsel also pleaded that one of the descriptions printed on the container is maximum retail price Rs. 200 per bag. He pleaded that no doubt while this container has been described as a bag, the appellants had all along been describing the goods as a printed paper container before the authorities and the goods were accepted as printed paper containers by the authorities. He pleaded that the Supdt. of Central Excise, informed them by his letter dated 3-6-1988 that the classification of the goods would be under heading 4819.12 as already declared by the appellants. Therefore, they bona fide went on clearing the goods without payment of duty until the show cause notice was received by them on 29-8-1988. He pleaded that the appellants have following proposition to urge:
(i)The item in question answers to the description container;
(ii) Demand should be made prospectively; and
(iii) In case the appellants are required to pay duty, Modvat Credit should be allowed to them.
3. In regard to the first plea, the learned Consultants drew our attention to the meaning of container as defined in various dictionaries as submitted by them on page 8 of the paper book. We observe that the definition of the term bag as set out in the Webster’s New Collegiate Dictionary is as under :
a flexible container that may be closed for holding, storing or carrying something…
We find from the definition, that bag can also be a container. Bag is a class apart and one end of this could be kept closed by pasting or by stitching. In the context of this the appellants product we observe answers to the description bag which is specifically included under heading 4819.12 and the legislature in its wisdom felt it necessary to describe container and bags separately in the tariff. We, therefore, find that so far as the description of the item under heading 4819.12 is concerned, this covers printed cartons, boxes and containers and cases. These are such containers which are in the nature of having a fixed configuration and volume when empty as also when filed in. The appellants goods are something not answering to the above and therefore fall out of the purview of 4819.12. We, therefore, hold that classification of the goods under TI 4819.90 as held by the lower authority is in accordance with law.
4. Coming to the next plea whether the appellants could be asked to pay duty only prospectively after the issue of show cause notice, we find that while the appellants have pleaded that even if duty is demandable the same should be demanded only prospectively from the date of show cause notice. In the latest decision of the Hon’ble Supreme Court in the case of Ballarpur Industries v. Assistant Collector reported in 1995 (76) E.L.T. 499 we find that the position now stands settled and accordingly duty is recoverable prior to the issue of show cause. Therefore the appellants plea in this regard cannot be acceded to.
5. In regard to the other plea of the appellants i.e. benefit of Modvat Credit should be allowed in the context of the finished product we observe that in the facts of this case, this plea is acceptable to the DR since the appellants goods were allowed clearance without payment of duty in terms of tariff heading 4819.12 read with Notification 59/88, dated 1-3-1988. In a situation like this where the appellants made clearance of the goods free of duty with the blessings of the department the appellants cannot be therefore found fault with. The appellants therefore should be restored to the position as on 1-3-1988 for the purpose of allowing their claim for Modvat benefit while demanding duty from that date. We therefore, hold that in such a situation, while demanding duty, benefit of Modvat should be given to them after they file the declaration in terms of Rule 57G, from the date of show cause notice and on satisfaction of the authorities about duty paid nature of the goods. We have held in similar cases, where the assessee could not file the declaration, for no fault of the assessee, they should be given the benefit of Modvat credit if otherwise eligible. Further, at the relevant time, since the appellants were clearing the goods without payment of duty with the approval of the department the question of their filing the declaration from 1-3-1988 could not have arisen. In our view, therefore, in the peculiar facts and circumstances of this case, the appellants, would be entitled to Modvat credit subject to the satisfaction of the other conditions set out in the Modvat Rules and the notifications issued under the said rules. With the above observation we dismiss the appeal.