JUDGMENT B.P. Jeevan Reddy, C.J.
1. The petitioner a manufacturer of branded chewing tobacco, is seeking issuance of an appropriate writ, order or direction quashing the orders of third respondent (Assistant Collector, Central Excise Division II, Kanpur) dated 24-12-1979 (Annexures 3,4,5 and 6 to the writ petition) as well as his order dated 28-1-1980 (Annexure 7) and the consequential demand of duty.
2. The petitioner is a registered partnership firm. It is engaged in the business of manufacturing Khaini tobacco. It is a chewing tobacco within the meaning of the said expression as used in the Central Excise Act. Chewing tobacco was liable to excise duty, during the relevant period, under Entry No. 411(5) of the First Schedule to the Act. The rate in force prior to 1-3-1979 was 10 per cent ad valorem. On 1-3-1979 two notifications. were issued by the Central Government being Notifications No. 34/79 and 35/79, under Rule 8(1) of the Central Excise Rules. Notification No. 34/79 granted total exemption from duty to "chewing tobacco falling under sub-item 11(5) of Item No. 4 of the First Schedule to the Central Excises and Salt Act, 1944... subject to the condition that such chewing tobacco is manufactured by a manufacturer who or on whose behalf no chewing tobacco is sold under a brand name." The said notification also defined the ex pression "brand name" in the following words :
"For the purposes of this notification 'brand name' shall mean a brand name, whether registered or not, that is to say, a name or a mark, such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to such chewing tobacco for the purpose of indicating, or so as to indicate, a connection in the course of trade between the chewing tobacco and some person using such name or mark with or without any indication of the identity of the person."
3. Under Notification No. 35/79 partial exemption was granted to "chewing tobacco of the description specified in column (1) of the Table hereto annexed and falling under sub-item 11(5) of Item No. 4 of the First Schedule" to the Act. The table contained in the notification, the language whereof falls for interpretation in this writ petition, reads thus:
"TABLE ____________________________________________________________________________________ Description Rate of duty ____________________________________________________________________________________ (1) (2) ____________________________________________________________________________________ Chewing tobacco of which the value per one kilogram
(i) does not exceed rupees ten Fifteen per cent ad valorem
(ii) exceeds rupees ten Twenty-five per cent ad valorem."
____________________________________________________________________________________ The expression "brand name" is defined by this notification in the same terms as the said expression is defined in Notification No. 34/79.
4. The controversy in this writ petition is this :
5. According to the petitioners, the weight of chewing tobacco should be taken inclusive of the weight of the sachet and the wrapper. The chewing tobacco manufactured by the petitioner is put in small paper sachets, which are in turn packed in thick paper wrapper. For the purposes of determining the value of the product for determining the duty and rate of duty, the cost of both the sachet and wrapper are taken into account. If so, there is no reason why for the purposes of determining the weight of the product, weight of the sachet and the wrapper should not be taken into account. On the other hand, the case of the Department is that for purposes of weight, the net weight of the chewing tobacco shall be taken, although for the purposes of determining the value for determining the duty or the rate of duty, the cost of sachet and wrapper is also taken into account. The action of the Department is wholly in accordance with the provisions of the Act, contends the Department. In short, the question is one relating to the interpretation of the language employed in the Table contained in Notification No. 35/79.
6. So far as the inclusion of the cost of the sachet and the wrapper in the value of the product for the purposes of determining the duty and the rate of duty is concerned, there is practically no dispute before us that it has to be so included. The sachet and the wrapper are only the cheapest and convenient form of delivery of the petitioner's product, as would be evident from a look at the petitioner's product. (The learned counsel for the petitioner showed us the package containing the paper sachets). By virtue of the provisions contained in Section 4 of the Act, there can hardly be any dispute about this proposition. The only question that survives is whether the weight of the sachet and the wrapper should also be included in determining the weight of the chewing tobacco.
7. It may be noted that according to the Table contained in Notification No. 35/79, the value of one kilogram of branded chewing tobacco should not exceed ten rupees for attracting a lower rate of duty of 15 per cent. The question to repeat, is whether one kilogram of chewing tobacco should include the weight of the sachet and the wrapper?
8. Notification No. 35/79 is an exemption notification. As such it has to be construed strictly. Exemption will be available only if the terms and conditions prescribed by the notification are satisfied. At the same time, a reasonable interpretation must be placed upon the notification so as to subserve the underlying object. On a consideration of rival submissions, we are of the opinion that when the notification speaks of one kilogram of chewing tobacco, it means one kilogram of chewing tobacco itself, which naturally would exclude the weight of sachet and wrapper. The mere fact that for the purpose of determining the value for the purpose of determining the duty and rate of duty, the value of the sachet and the wrapper is taken into account, is no ground for holding that even for the purpose of determining the weight of the chewing tobacco, the weight of the sachet and wrapper should also be included. We see no inconsistency in what the Department is doing, so far as the value of the product is concerned, it has to be determined in accordance with Section 4 of the Act. That aspect could not have been and is not affected by the said notification. We are also of the opinion that there is nothing in the said notification which induces us to hold that while speaking of one kilogram of chewing tobacco, it contemplated inclusion of the weight of the sachet and the wrapper in such weight. We are, therefore, of the opinion that there is no substance in the grievance made by the petitioner.
9. Learned counsel for the petitioner brought to our notice an unreported decision of the CEGAT in Excise Appeal No. 1510 of 1987-A, being Order No. 154/89-A [since reported in 1989 (43) E.L.T. 382 (Tri.)]. The copy produced before us does not show the date of the order. The point arising for consideration before the Tribunal was set out in the following words :
"Whether the value for the purpose of the Notification 35/79 should be in terms of Section 4 and if so, whether for the purpose of arriving at the value of the tobacco for the same purpose, the cost of packing etc. should be excluded?"
After considering certain decisions of the Supreme Court and the provisions of Section 4, the Tribunal held that "taking the value of the package as it moves in the market stream as the basis, the value of the tobacco should be arrived at for notification purposes after abating therefrom the value of the polythene, gunny bags, cartons so that the value of the chewing tobacco in the primary packing bearing the brand is obtained."
However, the Tribunal further proceeded to observe that "the value so arrived at should be divided by the total weight of all the branded packets in which the tobacco is packed and the value so arrived should be taken as value per kg. for the purposes of the notification."
Based upon this observation and also the observation occurring at the end of the preceding paragraph (Para 13), counsel for the petitioner contends that the said judgment bears out the submissions put forward in the writ petition. We are not prepared to agree. The main question before the Tribunal was whether for the purpose of determining the value (for the purpose of the said notification), the value of the packages should be included or not. It does not appear from a perusal of the judgment of the Tribunal that the question now before us was raised or dealt with by the Tribunal. Be that as it may, we have expressed ourselves on the interpretation of the said notification, which, in our opinion gives effect to the object underlying the notification.
10. No other decision for or against the question arising herein was brought to our notice by counsel for either side.
11. We may also mention that this writ petition is filed against the orders of the Assistant Collector, Central Excise (third respondent), without availing of the alternative remedy of appeal provided by the statute. There is no reason why the petitioner should not have followed the said statutory remedy. However, since the writ petition was admitted as far back as 1980 and has remained pending on the file of this court all these years, we did not think it appropriate to dismiss the same on the said ground and proceeded to decide the matter on merits.
12. For the above reasons, the writ petition fails and is accordingly dismissed. No costs.