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Judgment
Mahaswaran, J.—Appeal u/s 378 Sub-section 2 of the Code of Criminal Procedure, against the acquittal of the aforesaid respondent
(Accused) of an offence u/s 6(a) read with Section 9(b) of the Central Excise Act and Rules 1A of the Central Excise Rules by the Judicial First
Class Magistrate, Vellore in C.C.No. 355 of 1976 on his file.
This appeal coming on for hearing on Monday the 14th day and Wednesday the 16th days of April, 1980 upon perusing the petition of Appeal
any the Record of the evidence and proceedings before the said Lower Court and upon hearing the arguments of Mr. K. Ilias Ali for the Central
Government Prosecutor on behalf of the Appellant and of Mr. K.P. Jagadeesan, Advocate for the respondent (Accused) and having stood over
for consideration till this day, the Court delivered the following Judgment:
This appeal by the Assistant Collector of Central Excise, Vellore is against the judgment of the learned Judicial First Class Magistrate, Vellore
acquitting the accused who has been charged for offence ""punishable under Rule 174 and Section 6(a) read with Section 9(b) of the Central
Excise Act.
The accused-respondent (hereinafter referred to as the accused) is the proprietor of M/s Mohan Match Factory at Thandarampet Road,
Tiruvennamalai. He has a valid licence issued by the Central Excise Department to use the approved trade labels on the matches manufactured in
his factory. He is himself a resident of 91, Kammalar Street, Tiruvannamalai. On certain information that the accused is engaged ia manufacture of
matches and is running a mini match factory without a valid licence to do so at his residence, the officers of the department proceeded to the
residence of the accused on 29.9.1975. The door which was locked outside was opened by an employee and they noticed that ""a part of
manufacture of matches"" was carried on by three children and a woman Ruktmani who is the wife of an employee of the accused, in Mohan Match
Factory. The match boxes were found to be in labelling and packing stages. There were also 13 frames used for side painting of matches, A
bucket of potash, match labels and empty boxes were found and they were seized under a mahazar. The accused came at 5.30 p.m. to his
residence but refused to attest the mahazar. Rukmani gave a statement voluntarily when examined. She admitted the statement to be correct. The
accused gave a statement voluntarily to the Superintendent of Police, Tiruvannamalai on 4.10.1975 at about 11.30 a.m. and he contended that the
matches seized from his house were duty paid and as they were drenched they were brought to his house for drying and the matches were covered
by the delivery note dated 27.9.1975. A complaint was lodged by the Assistant Collector. The learned Magistrate found that ""there is no sufficient
and satisfactory evidence in this case to conclude that the accused has manufactured ''matches'' in his residence without a valid licence.
The real question that falls for determination is whether the packing of ''match'' in a match box is a process incidental or ancillary to the
completion of the manufactured ''match; The other question is whether the accused committed the offences punishable under Rule 174 of the
Central Excise Rules and Section 6(a) read with Section 9(b) of the Central Excise Act.
A reference to the Central Excise Tariff shows that ""matches'' are described in tariff item No. 38. It runs thus:
''match'' includes a fire work in the form of a match; and where a match stick has more heads than one capable of being ignited by striking, each
such head shall be deemed to be a match.
It is therefore contended for the respondent by his learned Counsel that a match stick with a match head shall be deemed to be a ''match'' and
once when the manufacture of match stick with match head is complete, the manufacture of a ''match'' is complete and packing them in the boxes is
not a process of manufacture and even if the employees of the accused were packing match sticks in boxes, the accused Would not be guilty of the
offence with which he is charged. He derives support from the fact that duty in payable on the match and not on match boxes with match sticks.
The rate of duty as seen from tariff item No. 38, is ""65 paise for every thousand matches or fraction thereof"". The learned Counsel for the appellant
referred me to the exemptions entitled in Notification No. 43/61-CE , dated 1.3.1961 which shows that in the case of matches in or in relation to
the manufacture of which any process is ordinarily carried on with the aid of power the rate of duty is Rs. 4.60 per gross of 50 matches each and
in the case of matches in or in relation to the manufacture of which no process is ordinarily carried on with the aid of power, the rate is Rs. 4.30
per gross of 50 matches each. It is argued for the appellant that actually duty is levied on gross of matches of 50 each. But, it is pointed out for the
respondent that there is no reference to match box in this notification, but only to matches. Learned Counsel also pointed out that for purposes of
easy calculation and for purposes of affixing banderols, they are packed in boxes. This leads on to the question as to whether the packing of
''match'' in match boxes is a process which is incidental or ancillary to the manufacture of ''match''. This question is bereft of authority. In CEN-
CUS 1975/67C Alembic Glass Industries Ltd. v. Union of India (1979) ELT(J. 461) it was held that packing is not incidental or ancillary to the
manufacture of bottles. We are not concerned with bottles in this case, but with ''match'' and match boxes. This ruling is therefore of not much use.
Rule 63 of the Central Excise Rules says:
All matches, other than matches of the type known as ""Bengal Lights"" or packed in booklets which are issued by the manufacturers for home
consumption shall be packed in boxes containing on the average 50 sticks.(proviso omitted)
In my view until all the process, incidental or ancillary, have been completed, one cannot say that the product has been manufactured. In other
words the definition of ""manufacture"" in Section 2(f) of the Act suggests that the process which is regarded as incidental or ancillary must have
some relation to the manufacture of the finished product. For example, in the case referred to the packing of glass and glassware is not a process
incidental or ancillary to the completion of manufacture, for the glassware could be taken delivery of in the buyer''s own packing materials like
baskets or boxes or in vehicles. So also printing or lacquering cannot be said to be incidental or ancillary to the completion of manufacture of the
product. Could the same thing be said of the ''match'' ? What is contended for the respondent by his learned Counsel is that the method or manner
of marketing of excisable goods which have been manufactured should not be the criterion for determining whether a product has been
manufactured, and that it would depend on the nature of the goods and the construction of the relevant entry in the First Schedule of the Act and
invited my attention to item 38 and stated that the manufacture of ''match'' is complete when a match stick has a head which is capable of being
ignited by striking. He further contended that when once the manufacture of excisable goods is complete, there is an end of the matter. It is no
doubt true that the duty is payable on every thousand matches or fraction thereof. But then could it be said that the goods, namely, a match stick
with a head, can be marketed as such without being placed in a box and without the sides of the box being painted for striking the head of the
''match''. What use is a bundle of ''match'' to a user without the box for igniting the match. A ''match'' by itself cannot ignite unless struck '' on the
painted surface of the match box. Though the duty is leviable on every thousand matches, the matches are packed in boxes of 50 each. Reference
was already made to Rule 63 which requires matches to be packed in boxes. It is not merely to facilitate easy counting of matches that they are
packed in boxes, nor is it done as a matter of convenience to facilitate delivery. It is done because the rule requires it. In my view, the test is
whether such excisable goods as ''match'' can be used without being packed in a box and without the sides of the box being painted for striking the
''match''. If that could be done, then packing in boxes cannot be considered as a process of manufacture. But if packing in a box has some direct
relation to the manufacture of that product called ''match'', then, in my view, packing of ''match'' in boxes is a process which is incidental or
ancillary to the completion of the manufactured product so as to come within the purview of the expression ""manufacture"" as found in Section 2(f)
of the Act. Though a match stick with a head capable of being ignited by striking can be deemed to be a match for purposes of levy of duty,
something more is necessary to make use of it, for without a match box having its sides painted a match cannot be ignited. The box with the sides
painted has clearly an impact on the excisable product itself. I am therefore of the view that packing of ''match'' in boxes with the, sides painted is
clearly a ""process incidental or ancillary"" to the completion of manufacture of ''match''.
The next point to be considered is whether the accused is guilty of the offences with which he is charged. P.W. 2 Superintendent of Central
Excise, admitted in cross examination, that he went to the house of the accused and saw loose boxes without side paint. He also stated that he has
not made any enquiry whether the goods were duty paid as mentioned in Ex. D.1 and that he also did not verify the address found in Ex. D.1 with
the entries in the records maintained in the factory of the accused. Rukmani who is said to have been pasting labels on the boxes, has not been
examined though she is said to have given a statement, Ex. P. 1 P.W. 3 is a gold- smith who has attested Ex. P. 3, a mahazar for seizure of the
material objects from the house of the accused. He admits that the Excise Officials P.W. 1 and P.W. 2 are officials who also implement the Gold
Control Act. He further admitted that he filed a suit against the accused and withdrew it later. He also admitted that he was not on terms with the
accused, but would later say that he is on friendly terms with the accused now. The evidence of such a witness is not entitled to any weight. P.W. 4
proved Ex. P.5, the statement of the accused. But the accused states that statement, Ex. P. 5, was taken under compulsion. The accused also
slates in his statement u/s 313 Cr. P.C. that Rukmani is not the wife of the foreman of the factory. The defence in the case is that the goods found
in his house were duty paid. Ex. D. 1, the credit bill, shows that duty has been paid on the stock. It is in evidence of P.W. 2 that there is ho
prohibition to take duty paid goods from the licensed premises to any non-licensed premises. But then he later stated that even for duty paid
goods, repacking in non-licensed premises is prohibited and added that there is no clear orders about it. Therefore, a doubt arises as to whether
the accused was having these duty paid goods in his house and was re-packing them on account of the fact that they were drenched. The
prosecution has not ruled out that possibility and therefore the benefit of that doubt must go to the accused. In that view, the prosecution has not
proved the offences with which the accused is charged. The Judgment of the Magistrate acquitting the accused is confirmed though not for the
reasons stated by him. The appeal is dismissed.