Case No: Civil Appeal No. 64-D of 1970
Judge: Ahsanuddin Chowdhury,
Court: Appellate Division ,,
Advocate: Mr. Mahmudul Islam,Mr. Habibur Rahman,,
Citation: 28 DLR (AD) (1976) 72
Case Year: 1976
Appellant: Karnaphuli Rayon and Chemical Ltd.
Respondent: Collector of Central Excise and Land Customs
Subject: Fiscal Law,
Delivery Date: 1975-11-20
Syed A. B. Mahmud Husain, C.J.
Ahsanuddin Choudhury, J.
Kemaluddin Hossain J.
D. C. Bhattacharya, J.
Karnaphuli Rayon and Chemical Ltd.
The Collector of Central Excise & Land Customs, East Zone, Ctg. & anothers
Nov. 20, 1975
Central Excise and Salt Act (I of 1944)
First Schedule— Item 35
‘Dilphane’ is Cellophane and falls within item No.35 of First Schedule of Act I of 1944. ‘Dilphane’ and ‘Cellophane’ both are soft cellulose film used as packing materials and ‘Dilphane’ is the same thing as Cellophane.
Muhammad Habibur Rahman, with A. K. Khan, Advocates, instructed by A. Backkar, Advocate-on-Record—For the Appellant.
Mahmudul Islam, Assistant Attorney-General, instructed by A. W. Mallik, Advocate-on-Record —For the Respondents.
Civil Appeal No. 64-D of 19 0.
(From the Judgment and Order dated 6. 6. 68 passed by the Dacca High Court in Petition, No. 76 of 1968).
In this case, leave to appeal was granted to consider whether 'Dilphane' manufactured by the appellant company from bamboo pulp is included in item No. 35 of the First Schedule to the Central Excise and Salt Act, 1944 and is chargeable to excise duty under the said item.
2. Appellant's case is that Karnaphuli Rayon and Chemicals Limited is a newly established company. They have invented a packing material from bamboo pulp which they have named as 'Dilphane' the first three letters being the abbreviation of the name of the parent organisation of the company, namely, Dawood Industries Limited. The appellant received a notice from an Inspector of Central Excise, Chandroghona Circle, Chittagong intimating that the Collector of Central Excise and Land Customs, Chittagong, East Zone had issued an order to assess 'Dilphane' under item 35 of the First Schedule to the Central Excise and Salt Act, 1944 (hereinafter referred to as the Act) and they were further directed not to remove ‘Dilphane’ without excise formalities and payment of duties since the commencement of its production. They, thereafter, filed an application under Article 98(2) of the Constitution impugning the validity of the said notices and the directions contained therein as regards demand for Excise Duty.
3. Rule Nisi issued in the above mentioned application was discharged by the Dacca High Court. It was held that the appellant failed to make out a case for exemption from excise. duty of its product known as 'Dilphane' and that as a matter of fact 'Dilphane' was covered by the word 'Cellophane' mentioned in item 35 of the Act.
4. Mr. Habibur Rahman learned Counsel for the appellant contended that the High Court erred in disregarding the fact that 'Cellophane' is a trade mark registered in different countries of the world and in holding, in disregard of the admitted fact, that 'Cellophane' was a generic term and that 'Dilphane' was brand name for 'Cellophane'. It was further contended that 'Dilphane' was not an excisable commodity as defined in section 2(d) of the Act and it did not fall under item 35 of the First Schedule to the Act which embraces 'Cellophane', all sorts of plastic materials and synthetic resins, 'Dilphane' was neither 'Cellophane' nor plastic nor any materials made of plastic or resins and it was different in chemical composition, raw materials and properties mentioned in the same item. In view of the contention raised by the learned Counsel the only point for our consideration in this appeal is whether 'Dilphane' is covered by the word 'Cellophane' as mentioned in item' 35 of the First Schedule of the Act. If Dilphane is in fact 'Cellophane' then it cannot be disputed that it is liable to duty. With a view to ascertain whether 'Dilphane' is nothing but 'Cellophane' their composition is first to be looked into. It was argued by the learned Counsel for the appellant that 'Cellophane' is produced mainly from wood' pulp and "Celophane" manufacture by the appellant is pro-ducted from bamboo pulp. There is, therefore, a basic difference between the two products and as such, 'Dilphane' cannot be said to be 'Cellophane'. It appears that similar argument was advanced before the High Court on behalf of the appellant. High Court noticed that 1964 edition of the Concise Oxford Dictionary of current English describes 'Cellophane' to be '"transparent wrapping material made from viscose"' and the World Book Encyclopaedia published from Chicago described 'Cellophane at page 1300 of its Volume as follows :—
"Cellophone, Sel oh favn, is the name of a flexible cellulose film, widely used for packaging. It is made in many types and thicknesses, 'Cellophone is usually transparent, either colorless or in a variety of shades, but it is also made in an opaque form. Jacques Edwin Brandenberger, a Swiss-born chemist, was trying to make a stain-proof table cloth 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 whether Flame-resistant cellophane has been used to make gas-proof capes for soldiers. Flame-resistant 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 struck, or laminated, to materials to give them gloss, protest 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 bi sulfide. 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 nitrocellulose 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 littlie above that of boiling water.
Normally, cellophane will burn slowly, giving off the odour of burning wood. But it is also made as a non-flammable, or flame resistant, film. See also CELLULE SE; PLASTIC".
5. In this connection further reference may be made to World University Encyclopaedia Volume 4 at page 1025 describing 'Cellophane' as follows : —
"Cellophane, a trade name applied to viscose solidified in thin transparent waterproof strips or sheets used for wrapping foods, surgical dressings, etc. It is made by treating cellulose, such as cotton linters or wood pulp, with caustic alkali solution and carbon disulphide" and to Encyclopaedia Britannica Volume 5 at page 141 which describes 'Cellophane' as under:—
"Cellophane, a thin film of regenerated cellulose, usually clear and transparent, used primarily as a flexible packaging material. While the word "Cellophane" is a trade mark in England, France, Canada and many other countries, in the United States it became, by court decision, a generic term.
In 1892, the English chemists C.F. Croos and E.J. Bevan discovered viscose, a solution of cellulose treated with caustic soda (sodium hydroxide) and carbon disulfide. Six years later C.H. Steam was granted a British patent for producing films from viscose. It was not until 1911, however, that I.E. Brandenberger, a Swiss, designed a machine for continuous production of a strong, transparent film, Brandenberger coined the term "cellophane" by combining parts of "cellulose" and "diaphane", the French word for "transparent".
World War-I delayed large-scale development. In 1920, a French company, La Cellophane, was formed, and a cellophane plant was built at Bezons, near Paris. Three years later E.I. du Pont de Nemours & Co. acquired rights from La Cellophane to manufacture the product in United States and produced the first U.S. made cellophane at Buffalo, N.Y., in 1924.
Several factors contributed importantly to cellophane's growth. Moisture proof cellophane, invented in 1927 by W.H. Charch and K.E. Prindle, gave the film new usefulness as a protective wrap for foods. By the early 1960s, about 90% of the U.S. production was moisture proof, and about 70% of the total went to the food industry. More than 50 varieties of cellophane had been developed. Basically, the film is transparent, odour resistant, tough, greaseproof and gas impermeable. It can be made in various thicknesses and colours. By applying uncial coatings, it can be made moisture proof, partially moisture-proof, and heat sealing.
Cellophane manufacture starts with steeping of sheets of wood pulp in caustic soda to form alkali cellulose. After excess liquids are removed, the sheets are shredded, aged to control molecular weight, ' and discharged into steel drums known as barites. Carbon disulfide is added to the slowly roating barattes, forming sodium cellulose xanthate. The xanthate is dissolved in another caustic solution to t form viscose. Carefully ripened viscose is piped to the casting machine, where it is extruded through a metal slit into an acid bath in which it coagulates to a film and is regenerated into cellulose. Driven rolls carry the film through a further series of baths where it is washed and bleached, and softening materials are added. The film then enters the dryer, passing over heated rolls and through circulating hot air. Finally, it is wound up in mill rolls,? which may weigh as such as 950 Ib. and contain upto 5 mi. of film. If the cellophane is to be coated, the film is led through a coating bath, over doctor knives.or rolls to remove excess coating and to distribute the coating evenly, and then through drying and humidifying chambers.
Finished mill rolls are commonly slit to widths required for use on automatic packaging machinery, though some are unwound on large drums to be cut and trimmed to sheet form for use in hand wrapping operations".
6. The description of 'Cellophane' given in the above books 'Cellophane' is'. His similar. There cannot, therefore, be any dispute as to what 'Cellophane' as noticed above is made from wood pulp, cotton seed, etc. It is a wrapping material produced from viscose which is the gum substance extracted from wood pulp or from any other pulp as also from bamboo pulp. The petitioner's manufacture is produced from viscose which is extracted from bamboo pulp. The High Court has pointed out that item 35 of the First Schedule of the Act 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 of making 'Dilphane' and 'Cellophane' is the same. It, therefore, will not. make any difference 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 packaging materials.
7. It appears that a test report as regards 'Dilphane' paper was obtained from Assistant Chemical Examiner, Customs House, and Chitta-gong. The said report is in the following terms:-
"Test report of 'Dilphane' paper under Lab. No. LC 10 dt 23-8-1967.
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 Customs House Laboratory and found to be composed of generated 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".
8. From the result of the Chemical analysis of 'Dilphane' the High Court has held that 'Dilphane' is nothing but 'Cellophane' which is the common name for the soft packing material produced from viscose obtained from wood pulp or from any other pulp and as such 'Cellophane' has been termed to be the generic name for this product. Any country or any company may give a trade name to its ‘Cellophane product to distinguish it from the products of any other country or any other company. This is clearly established from the fact that in Japan the transparent cellophane paper used for packing has been given the trade name of 'Snow' whereas in China the trade name for the saire product has been given to be 'Pearl'. The name ‘Dilphane’ given by the appellant to their product is a trade name for the purpose of distinguishing the product of Karnaphuli Rayon and Chemical Ltd. from the products of other companies and/or of other countries. It is an undisputed fact that first three letters of 'Dilphane' stand for 'Dawood Industries Limited' which is the parent company of Karnaphuli Rayon and Chemical Limited. This new trade name given to 'Cellophane' product to distinguish it from products' of other companies, will not make 'Dilphane' a different product from what is called 'Cellophane' to take it out from the mischief of item 35 to the First Schedule of the Act. The High Court pointed out further that in Article 111 (3) (f) of Memorandum of Association the appellant company described itself as "exporters and manufacturers of and dealers in viscose and 'Cellophane' film" as one of the objects of the company. Similar description of the Company was repeated in para 9 of Article 111 in the Memorandum of Association when the company submitted a plan for its established. It also showed in the blue print the deferent shades and compartments wherein viscose and cellulose will be produced and ultimately manufactured into 'Cellophane'. The company nowhere mentioned 'Dilphane' to be one of their products. It was, however, submitted on behalf of the appellant that due to mistake of an officer concerned the term 'Cellophane' was mentioned not only in the Memorandum of Association but also in the blue print. The explanation offered by the appellant does not stand to scrutiny in view of what has been observed above.
9. It has already been noticed that the report of the Chemical Examiner is to the effect that 'Dilphane' is nothing but 'Cellophane'. The appellant had nothing to controvert the report of the Chemical Examiner. Whatever name has been given by the appellant to their product; there is no escape from the conclusion that 'Dilphane' is nothing but 'Cellophane' which is covered by item 35 of the First Schedule of the Act.
10. The learned Counsel haying failed to controvert the report of the Chemical Examiner made a faint attempt to. convince us saying that if the legislature intended to tax 'Dilphane' or any product made out of viscose to cover 'Dilphane' 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 from any other pulp. It appears that similar argument was made before the High Court. In our view this contention is without any force because the term 'Cellophane' has been used in item 35 of the First Schedule of the Act in a generic sense implying thereby all papers having the quality of Cellophane by whatever trade names they may have been designated. The word 'Cellophane' by popular use is now assigned to all those papers which have the characteristic quality of 'Cellophane' and that it is so understood can be gathered from the use of the word in the said sense in the Memorandum of Association of the appellant company. But the company could not have used the name 'Cellophane' for their own product as it was the trade name of another company and after manufacturing 'Cellophane' has given the trade name 'Dilphane' to their product.
11. The High Court in our view has rightly pointed out that the description of 'Cellophane' found in the Oxford Dictionary, the World Book Encyclopaedia and also in the report of the Chemist irresistibly leads to the conclusion that what the appellant company has been trying to pass off as 'Dilphane' as a product different from 'Cellophane' is in fact 'Cellophane' and it, therefore, comes within the mischief of item 35 of the First Schedule of the Act. It is thus obvious that the High Court has correctly held that the appellant company has failed to make out a case for exemption from excise duty of its product known as 'Dilphane' which is covered by the word 'Cellophane' mentioned in item 35 of the First Schedule of the Act and has rightly refused to give ' relief under Article 98 of the late constitution.
In the result, there being no substance in the appeal it is dismissed without any order as to costs.