Gowri Shankar, Member (T)
1. The appellant manufactures aseptic packaging made by laminating plastic with paper and aluminium. The packing manufactured by it is sold on order to customers, in the form of rolls containing such details as the brand name of the product, the logo of the manufacture of the product which is to be packed. The packing is converted at the premises of the manufacturer of the liquid, such as fruit juice, milk etc. into containers, normally refers to as tetrapacks in which the product in question is filled, after which the tetrapack is sealed. The conversion of the sheets into the containers or tetrapacks necessarily involves sealing after folding the sheet at least three times, once along the length of the roll, and once each at the top and bottom for the container emerge out of the machines. In order to ensure a total air tight tetrapack seal a strip of either polypropylene or polyethylene depending upon the product, is inserted between seams of the sheets and, by application of heat, melts and forms with the two sheets ensuring a seam of the requisite quality. The appellant imports various constituents of the manufacture of laminated sheets and also imports the strips of about half a centimetre of the polypropylene or polyethylene. It is not in dispute that the strips are supplied to the customer along with the sheets. There is thus no dispute that the sheets cannot be made into the container without the use of the strips.
2. The question for consideration in this appeal is the eligibility of the additional duty of Customs paid on the inputs for utilisation towards payment of the duty on the rolls of the aseptic packaging manufactured by the appellant. The objection raised by the department to such credit being taken, is on the ground that these strips are not necessary for the conversion of the various constituents of the aseptic roll into sheets by the appellant, has been confirmed by the Commissioner.
3. The contention of the advocate for the appellant is two fold. He first contends that aseptic packaging is not marketable without polypropylene or polyethylene strips being supplied alongwith the packaging. No one would buy the sheets without the strips because they cannot be used to make the container of the requisite quality. They are analogous, he contends, to such articles as tool kits for motor vehicles or droppers supplied with vials of medicines such as pediatric drops requiring administration of a measured dose. Alternatively, he contends that the goods are in the nature of accessories to the sheets, citing case laws in support.
4. The departmental representative relies upon the reasonings that he found in the Commissioner’s order which we have already summarised above. It is in effect the view that in the process of manufacture that the appellant undertakes of conversion of the elements of the aseptic package into the laminated sheets which form the packages, there is no necessity for the use of these strips. These strips therefore are not used in or in relation to the articles which are manufactured and cleared by the appellant.
5. We have difficulty in accepting this view. It seems to us to be too narrow and simplistic. It cannot be disputed that, considering the manufacture simply to be the process of obtaining a roll of aseptic packaging sheets from its constituents, the strips under consideration are not required. These strips, as the Commissioner emphasises, come into use only at the hands of the person who converts the strips into cartons containing the finished product. However, it is now settled that manufacture includes those processes which are required to render the product marketable. The Supreme Court has held in CCE v. Jay Engineering Works -1989 (39) E.L.T. 169 that fixation of a name plate in electric fan does amount to manufacture as it renders the goods marketable. As we have noted, it is not in dispute that the sheets of aseptic cannot by themselves be used to market the cartons or tetrapacks. The aseptic sealing required could only be achieved by use of these strips. It is on the basis of this that the Tribunal in Heal Well Pharmaceuticals v. CCE – 1994 (72) E.L.T. 446 has held that dropper supplied with pediatric drops by its manufacturer, would be an input used in or in relation to the manufacture of the bottle containing medicine for the reason that the medicine required to be administered of measured dose which is not possible without the aid of the dropper. It is on this reasoning that the Tribunal held in CCE v. Swaraj Mazda – 1993 (68) E.L.T. 258 that mats for placing floor of motor vehicle were inputs used in or in relation to the manufacture of such motor vehicles. The Commissioner’s order does not appear to take note of these aspects. We are satisfied that the commodity is therefore an input used in or in relation to the manufacture of the finished product, and therefore do not consider it necessary to consider the other alternative argument, that the goods are accessories.
6. The appeal is allowed and the impugned order set aside.