G. Sankaran, Sr. Vice-President

1. The facts of the case relating to appeal No. 858/83-D, briefly stated, are that Indian Tobacco Co. Ltd., Madras (hereinafter called the assessee), are engaged in the manufacture inter alia of printed cartons out of duty paid paper boards procured by them. The assessee had been paying duty on printed cartons under Item No. 68 of the First Schedule (hereinafter referred to as 'CET') to the Central Excises and Salt Act, 1944, ever since this item was inserted in the Tariff in 1975. On 11-3-1978, the assessee wrote to the Assistant Collector of Central Excise, Madras, requesting exemption from payment of duty on printed cartons on the plea that they were "products of printing industry" within the meaning of Central Excise Exemption Notification No. 55/75-C.E., dated 1-3-1975, as amended by Notification No. 122/75, dated 5-5-1975. In support of their plea, they relied on Order-in-Revision No. 2057/77 passed by the Central Government acting as Revision Authority under the Central Excises and Salt Act (hereinafter called the 'Act'), in the case of . Allibhoy Sharafally Co., Bombay, holding printed cartons manufactured by that party to be products of printing industry eligible for duty exemption under the aforesaid notification. The Assistant Collector, however, held that the goods were not eligible for the exemption claimed. In his order dated 20.3.78, he observed that when printed paper boards move to the slitting and gumming stage, they do not remain any longer products of the printing industry but passed on to the stage of products of the packaging industry. He also observed that printing in relation to cartons was only an incidental process in their manufacture and even without the printing operation, the cartons retained their identity and use as cartons. In appeal, the Appellate Collector of Central Excise, Madras, by his order dated 5.12.78, set aside the Assistant Collector's order on the basis that printed cartons were mainly meant for product display to push up sales and not packaging. The dominant activity in the manufacture of printed cartons was printing which consumed about 70% of the total cost. Slitting and gumming were only incidental processes.

2. The Central Government, on perusal of the records, formed a tentative opinion that the Appellate Collector's order ought to be set aside and an order should be passed to the effect that printed cartons manufactured by the assessee could not be held to be products of printing industry eligible for duty exemption under the aforesaid notifications. The assessee was accordingly called upon to make its representation against the proposed course of action.

3. The reasons which formed the basis for the Central Government's tentative view were set out in paras 5 and 6 of the notice dated 27.3.79. These read as follows:

"5. On perusal of the case records, the Central Government are, however, tentatively of the view that irrespective as to whether or not the facts of the party's case are distinguishable from the facts of the case in respect of the party to whose favour Order-in-Revision in 057/77 was passed by the Central Government, the issue relating to the applicability of the exemption provided by Notification No. 55/75, dated 1.3.75 amended by Notification No. 122/75 cannot be decided solely with reference to cost criteria as has been done by the Appellate Collector. That correctly printing in relation to manufacture of printed cartons is only an incidental process, and even without printing the cartons retain their basic identity and are used as cartons only. That even though the raw-materials i.e. the printed boards used for manufacture of printed cartons may be products of printing industry, it cannot be said that the end product i.e. the cartons made out of such raw materials are also products of printing industry. That it cannot be said that the printed car-tons in question are mainly meant for product display since these are also used