P L D 1969 Dacca 559 (PLP)

SIDDIKY, C. J.‑This Rule was obtained by Karnaphuli Rayon and Chemicals Limited, incorporated under the Companies Act, for a declaration that the demand notices issued on the petitioner, directing them to pay duty on "DILPHANE" before clearance from the factory premises and also to pay duty for the quantity of DILPHANE" already cleared, were issued without lawful authority. They further prayed for a direction upon the respondents to withdraw, rescind or cancel the impugned demand notices. The petitioner's case is that Karnaphuli Rayon and Chemi cals Limited is a newly established company and they have invented a packing material from bamboo pulp, which they have named as "DILPHANE" keeping resemblance of the name with the parent organization of the company, namely, Dawood Industries Ltd. The petitioner received a handwritten letter dated 1‑9‑67 purporting to be a notice from one S. T. Ahmed, Inspector of Central Excise, Chandraghona Circle, Chittagong, intimating that the Collector of Central Excise and Land Customs, Chittagong, East Zone, has been pleased to issue an order to assess "DILPHANE" under item 35 of the 1st Schedule to the Central Excise and Salt Act, 1944. In the said notice the petitioner was further asked by the Inspector not to remove any quantity of "DILPHANE" from the Factory without payment of duty, as assessed. The petitioner's case is that item 35 of the 1st Schedule to the Central Excise and Salt Act, 1944, mentions "Cellophane, Plastic, Resin and all materials made of Plastic and Resin" but it does not mention "DILPHANE" and therefore "DILPHANE" cannot be charged with duty under item 35 of the 1st Schedule to the Central Excise and Salt Act, 1944. The notice issued by the Inspector, which has been marked as Annexure `A' to the petition, is therefore wholly unauthorised, without jurisdic tion and mala fide. Further case of the petitioner is that the Inspector of Central Excise is not empowered under law to issue any such notice nor any assessment can be made by the Collector of Central Excise and Land Customs on "DILPHANE". It was further stated by the petitioner in his petition that, although in the notice given by the Inspector mention has been made of the order of the Collector of Central Excise and Land Customs in respect of imposition of duty on "DILPHANE" produced by the petitioner, yet the actual order made by the Collector of Central Excise and Land Customs was not given to him, thus depriving the petitioner from making any appeal against the said order to the higher authorities. The respondent No. 1, the Collector of Central Excise and Land Customs, East Zone, Chittagong, has appeared in the case and contested the petition of the petitioner. An affidavit‑in- opposition on behalf of the respondent No. 1 has been sworn by one Md. Athar Hussain Siddiqi, Inspector of Central Excise and Land Customs. In the said affidavit‑in‑opposition it has been contended by respondent No. 1 that `DILPHANE' is nothing but `CELLOPHANE' which is dutiable under item 35 of the 1st Schedule to the Central Excise and Salt Act, 1944. In different countries `CELLOPHANE' is given different trade names; for example, it has been mentioned in the affidavit‑in‑ opposition that in Japan it is given the trade name of `SNOW', in China it is given the trade name of `PEARL', and so in the case of the petitioner herein the trade name of `CELLOPHANE' has been given as `DILPHANE'. It has been further stated. in the affidavit‑in‑opposition that the chemical examination report of the Assistant Chemical Examiner, Customs House, Chittagong, ,discloses that the petitioner's product `DILPHANE' is nothing but `CHELLOPHANE' which is a transparent film produced from regenerated cellulose by the viscose process and is commonly used as a packing material. In the affidavit‑in‑opposition it was further contended by the respondent No. 1 that in Article III(3)(f) of the Memorandum of Association of the company they have mentioned "exporters and manufacturers of and dealers in viscose cellophane film" as one of the objects of the company. The same object has been repeated in para. (9) of Article III wherein also one of the objects is found to be "exporters and manufacturers of and dealers in viscose, cellophane film," and the Company when it submitted its plan for establishment of the factory also showed in the blue print the different shades and compartments wherein viscose and cellulose will be produced and ultimately manufactured into "Cellophane". Nowhere the company mentioned `DILPHANE' to be one of their products. According to the respondent No. 1, the petitioners have purposely given t he name of `DILPHANE' to their `Cellophane' products with a view to avoid, if possible, payment of duty on the same. The petitioner, in reply to paragraph 5(a) of the affidavit‑in -opposition, has stated in para. 6 of his affidavit‑in‑reply that the Accountant of the petitioner inadvertently and negligently mentioned `Cellophane' in the declaration submitted by the company with the Authorities. It was further asserted by the petitioner in the same paragraph of his affidavit‑in‑reply that the inadvertent use of the word "Cellophane" by the Chief Accountant in some applications cannot bind the petitioner and `DILPHANE' cannot be dutiable for mis‑description alone. Yet, again, the petitioner in the same paragraph stated that the petitioner is not bound by his declaration wherein it was mentioned that they were going to manufacture `Cellophane'. The report of the Chemical Examiner annexed to the affidavit‑in- opposition of respondent No. 1 was challenged by the petitioner in para. 7 of his affidavit‑in‑reply saying that it was unauthori tative, incompetent and not fit for consideration as the report does not say what `Cellophane' and `DILPHANE' are produced from and what are the productive processes of the two, whether same or different, and as to what materials are used in the production of `Cellophane' and `DILPHANE' and what are the respective qualifies of the two materials. The petitioner contended in his affidavit‑in‑reply that `Cellophane' is produced from wood, pulp whereas `DILPHANE' is produced from bamboo pulp and, therefore the two are completely different materials and he also contended that the process of manufacturing the two materials are also different. He further denied `Cellophane' to be the generic name of the soft packing material produced from wood, and bamboo pulps by the viscose process. Mr. Hamidul Huq Choudhury, appearing for the petitioner; contended that the demand for duties made by the Inspector on 1‑9‑67 is without authority as he is not the proper officer to make the demand nor any order was made by the Collector of Central Excise and Land Customs in that behalf. Rule 2 (b) (xi) of the Rules framed under the Central Excise and Salt Act, 1944 defines "proper officer". It is in the following terms "2. . . . . . . . . . . (6) . . . . . . . . . . . (xi) "proper officer" means the‑ officer in whose jurisdiction the land or premises of the producers of any excisable goods, or person engaged in any process of production of, or trade in such goods or containers thereof, whether as a grower, curer, wholesale dealer, broker or commission agent, or manufacturer, or intended grower, curer, wholesale dealer, broker, commission agent, or manufacturer, are situate ;" From the designation of the officer who issued the impugned' notice (Annexure 'A') it is found that he is an Inspector of Central Excise, Range Karnaphuli Rayon and Chemicals Ltd., Chandraghona, Circle III, Chittagong. He, therefore, in our opinion, in accordance with the Rules, is a "proper officer" to make the demand. In answer to the contention of the petitioner that the Collector of Central Excise and Land Customs did not make any order and. the demand made by the Inspector was unauthorised, the Deputy Attorney‑General has placed before us the file of the Depart ment containing the original order. From that it is found that the Collector of Central Excise and Land Customs, Chittagong had made an order directing the officers concerned to assess and levy duty on `DILPHANE' produced by the petitioner at 10 % ad' valorem under item 35 of the 1st Schedule to the Central Excise and Salt Act, 1944. Mr. Hamidul Huq Choudhury was shown this original order. Mr. Choudhury having looked into the order, did not challenge the same. This point, therefore, that there was no proper demand made by a "proper officer" or that the Collector had not made any order in that respect as contended: by the petitioner, has no force. The next contention of the petitioner that the Collector's order having not been given to him, he had no opportunity to prefer an appeal against the said order to the Central Board of Revenue in terms of section 35 of the Central Excise and Salt Act, 1944, is also not tenable for reasons that no material has been placed before us by the petitioner to show that he had either applied for a copy of the Collector's order or that he was refused a copy of the said order by the Collector. The demand notice, which is in the following terms IR No. 346 dated 1‑9‑

67. To The Manager, Karnaphuli Rayon & Chemicals Ltd., Chandraghona. Dear Sir, Sub: Assessment of duty on Dilphane.‑Please note that the Collector of C. E. and L. C., Chittagong, East Zone has been pleased to issue an order to assess "Dilphane" under item 35 of the 1st Schedule to the C. E. and Salt Act, 1944 at 10 % ad valorem. Please ensure that no Dilphane is removed from the factory without excise formalities and payment of duty. Please declare the present stock in your possession immediately. Further particulars can be had from the undersigned. Yours faithfully, (Sd.) (S. T. Ahmed), Inspector, Central Excise, Range‑K.R. & C. Ltd., Chandraghona, Circle‑II, Circle, Chittagong." contains a reference to the Collector having made the order for assessment of `DILPHANE' under item 35 of the 1st Schedule to the Central Excise and Salt Act, 1944. After receiving the demand notice dated 1‑9‑67, if the petitioner intended to prefer an appeal against the said order, he could have done so, but we find no reason for the company not to have either applied for a copy of the order of the Collector or to have appealed to the Collector against the order of the Inspector if the petitioner thought that the Inspector, on his own, had made the demand. Mr. Hamidul Huq Choudhury's contention that the 8 demand made by the Inspector on 1‑9‑67 is no order at all and therefore is not appealable, does not seem to be sound. We, therefore, do not find any force in this contention of the petitioner that he has been deprived of the opportunity of preferring an appeal to the Board of Revenue against the demand made for duties on `DILPHANE'. The fault, if any, for the petitioner not preferring any appeal, lies at his door and not at the door of the Collector. However, since we are dealing with the merits of the case, we don't think that the petition should be dismissed only on the ground that the petitioner has not availed of the alternative remedy by way of appeal and revision as provided for in sections 35 and 36 of the Act, as contended by the learned Deputy Attorney‑General. On merits, there arises only one point for our consideration in the case, and that is, as to whether 'DILPHANE' is covered by the word 'Cellophane' mentioned in item 35 of the 1st Schedule to the Central Excise and Salt Act, 1944 incorporated therein by the Finance Act of 1967. If 'DILPHANE' is what `Cellophane' is as mentioned in item 35 of the 1st Schedule, then it is liable to duty; but if 'DILPHANE' is not what is meant by `Cellophane' in item 35 of the 1st Schedule, then it will not be dutiable at all under the said item of the 1st Schedule, as contended by the respondent. 1964 edition of the Concise Oxford Dictionary of current English describes "Cellophane" to be "transparent wrapping material made from Viscose". The World Book Encyclopedia published from Chicago describes 'Cellophane' at page 1300 of its Volume 3 as follows "CELLOPHANE, SEL oh fayn, is the name of a flexible cellulose film, widely used for packaging. It is made in many types and thicknesses, Cellophane is usually transparent, either colorless or ill a variety of shades, but it is also made in an opaque form. Jacques Edwin Brandenberger, a Swiss‑born chemist, was tryicig to make a stain proof tablecloth when he invented the formula for cellophane in 1908 (See BRANDENBERGER, JACQUES EDWIN). The greatest use of cellophane is for packaging food and tobacco, where transparency and moisture proof protection often are required. Weapons and munitions are sometimes wrapped in moisture proof cellophane to protect them from the weather. Flame‑resistant cellophane has been used to make gas proof capes for soldiers. Flame‑resistent cellophane also is used for decorations and for the winding of electric wire. Cellophane is used as a base for pressure‑ sensitive tape, which has many uses in sealing and mending articles. Cellophane is stuck, or laminated to materials to give them gloss, protect them against moisture, and preserve print. Cellophane is made from plant fiber, called cellulose. Highly purified sheets of cellulose prepared from wood are soaked in sodium hydroxide, or lye. The resulting material is reacted with carbon bisulfide. It is then dissolved in a dilute solution of sodium hydroxide to form viscose. Viscose is an orange colored colloidal solution about as thick as molasses. The highly filtered and gas‑free liquid is forced through a long, narrow slit into a bath containing sulfuric acid, and the viscose is immediately converted into cellulose in sheet form. Impurities are removed by passing the film through suitable baths and by thorough washing. Before drying, the pure cellulose film is dipped into a bath containing glycerol, a form of alcohol. It is this material which gives softness, flexibility, and durability to the cellophane. Cellophane is made moisture proof and gas proof by coating it with a very thin layer of nitro‑cellulose lacquer containing wax and resins, followed by drying. Uncoated film will allow water vapor and certain gases to pass through it slowly. Some types of coated cellophane seal one layer to another when put under slight pressure at temperatures a little above that of boiling water. Normally, cellophane will burn slowly, giving off the odor of burning wood. But it is also made as a non‑flammable, or flame‑resistant, film. See also CELLULOSE; PLASTICS." At page 1301 it has printed a diagram showing how Cellophane is made. It is found from this Encyclopedia that `Cellophane' is made from wood pulp, from cotton seed and from such other vegetables. Mr. Choudhury has contended that, since `Cellophane' is produced from wood pulp mainly and 'DILPHANE' manu factured by his client is produced from bamboo pulp, there is a basic difference between the two products and 'DILPHANE', therefore, cannot be said to be 'Cellophane' and even to belong to the same family. 'Cellophane' has been described in the Oxford Dictionary as well as in the World Book Encyclopedia as a wrapping material produced from viscose which is the gum substance extracted from wood pulp as well as from bamboo pulp. The petitioner's manufacture is also produced from viscoses extracted from bamboo pulp. Item 35 of the 1st Schedule to the Central Excise and Salt Act, 1944 does not propose to tax either the wood pulp or the bamboo pulp or the viscose produced from any of the two. It proposes to tax the product made out of the viscose which is a flexible cellulose film widely used for packaging. The process for making 'DILPHANE' and 'Cellophane' is the same. It therefore, will not make any differ ence whether the viscose is obtained from bamboo ,pulp or from wood pulp or from cotton seed and consequently, therefore, there will be no difference between 'DILPHANE' and 'Cellophane' both of which are soft cellulose films used as packing materials. The test report of 'DILPHANE' paper submitted by one S. P. Lala, for Assistant Chemical Examiner, Custom House Chittagong to the Collector of Central Excise and Land Customs, East Zone, Chittagong, is in the following terms: "Test report of "Dilphane" paper under Lab. No. L. C 10 dt. 23‑8‑

67. The sample described as "Dilphane" paper is nothing but what is meant by "Cellophane", a transparent film produced from regenerated cellulose by the viscose process. It has been tested in the Custom House Laboratory and found to be composed of regenerated cellulose made by the viscose process. It is in the form of transparent film and is likely to be used as wrapping material for food‑stuffs, fruit, tobacco, etc. (Sd.) S. P. Lala, 30-8‑‑67, For Asstt. Chemical Examiner, Custom House, Chittagong." The result of the chemical analysis of `DILPHANE' clearly establishes the fact that it is nothing but `Cellophane'. `Cello phane' is the common name for the soft packing material produced from viscose obtained from wood pulp or from any other pulp and it has been termed to be the generic name for this product. Any country or any company may give a trade name to `Cellophane' to distinguish it from the products of any other country or any other company. This is clearly established from the fact that from the samples of `Cellophane' placed before us by the learned Deputy Attorney‑General manufactured in Japan and in the Peoples Republic of China. In Japan the trade name of `Cellophane' which is transparent paper used for packaging has been the trade name of `SNOW' whereas in China the trade name for the same has been given to be `PEARL'. The name `DILPHANE', therefore, given by the petitioner to its product which is nothing but `Cellophane' is a trade name for the purpose of distinguishing the products of Karnaphuli Rayon and Chemicals Limited from the products of other companies and/or of other countries. The first three letters of `DILPHANE' stand for `DAWOOD INDUSTRIES LIMITED' which is the parent company of Karnaphuli Rayon and Chemicals Limited. This new trade name given to `Cellophane' to distinguish it from products of other companies, will not make `DILPHANE' a .D different product than what `Cellophane' is to take it out of the mischief of item 35 to the 1st Schedule of the Central Excise and Salt Act, 1944. Mr. Choudhury's contention that if the Legislature wanted to tax `DILPHANE' or any product made out of viscose to cover `Cellophane' and `DILPHANE' as well, then the Legislature would have mentioned the product in the usual way as "any product of viscose or any thin soft wrapping paper produced from viscose or from wood or any other pulp". This would have been necessary had this soft packing paper produced from viscose would not have come to be known throughout the World as 'Cellophane'. Apart from the declaration of factory premises and equip ment made by the petitioner‑company under rule 44 of the Rules framed under the Act, they have mentioned in their signed latter (Annexure `A' to the affidavit‑in‑opposition) that they will produce Rayon pulp viscose and have shown in the blue print attached thereto the `Cellophane' plant where `DILPHANE' is being produced. In their application for licence in Form A. L. 6 which has been signed by the Chief Accountant of the Company with which a schedule has been attached, it is shown, in item 5 of the Schedule "Purpose to which manufactured product is applied", to be manufacture of Pulp, Paper, Rayon, Cellophane and various other industrial purposes. From before the establishment of the Rayon factory, the company has in its blue print, applications for licence and other relevant documents and forms clearly described the by‑product of Rayon to be obtained from viscose to be `Cellophane' and not `DILPHANE' .and on the :basis the Authorities also have .dealt :with the .whole ,matter .from the inception of the petitioner company. Now for the company to turn round and say that what the Chief Accountant of the company stated in various letters, forms applications and the blue print to be `Cellophane' and not `DILPHANE' is a ‑mistake or a negligent act of the said Accountant, is an argument which cannot be accepted. In this context the submission of the learned Deputy Attorney -General that to avoid payment of excise duty the petitioner- company has after manufacturing `Cellophane' gave it a trade name of `DTLPHANE' ,is of great force. The petitioner could not meet this argument of the respondent except saying that it was a mistake or negligence of ‑the Chief Accountant of the company to have described the product as 'Cellophane'. From the meaning of the word `Cellophane' as found in the Oxford Dictionary and the World Book Encyclopedia mentioned a earlier as well as from the report of the Chemist and the nature of the produce, samples of which were placed before us, we are sati9fied that what the petitioner tries to pass off as `DILPHANE' and contends to be a product other than `Cellophane' is in fact `Cellophane' and therefore comes within the mischief of item 35 of the 1st Schedule to the Central Excise and Salt Act, 1944. In the result, therefore, we are of the opinion that the petitioner has failed to make out a case for exemption from excise duty of its product known as `DILPHANE' which, as already stated, is covered by the word `Cellophane' mentioned in item 35 of the 1st Schedule to the Central Excise and Salt Act, 1944 and as therefore entitled to no relief under Article 98 of the Constitution as prayed for in this petition. The Rule nisi is accordingly discharged with costs which we assess at fifteen Gold Mohurs. MAKSUM‑UL‑HAKIM, J.‑I agree. Rule discharged.