TMI Blog1988 (3) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... ore eligible for exemption under Notification No. 55/75 dated 1-3-1975 as amended from time to time. The Collector, however, held that since the basic and vital stage in bringing about the essential character of the product is achieved by the use of power and just because there are cut and dried and packed in bundles by hand, the concept of making of such goods by hand will not arise. He, in short, held that the goods were not handicrafts and the benefit of Notification No. 55/75 extended to handicrafts as claimed was not available to them. He also held that the dhoop sticks, dhoop coils and dhoop battis and dhoop powder were not Agarbatties as commercially known, and turned down the appellants plea that being Agarbatties as held by Commerce Ministry and other authorities as handicrafts these should be eligible for the benefit of Notification No. 55/75. 3. The learned advocate for the appellants pleaded that the dhoop sticks had been recognised by the All India Handicrafts Board as handicrafts and that dhoop is nothing else but Agarbatties. He produced the letter of Basic Chemicals, Pharmaceuticals and Cosmetics Export Promotion Council to show that dhoop sticks, incense cubes an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s related to personal skill of craftsmen. Mrs. Kamladevi Chattopadhyay , Founder/Chairman, All India Handicrafts Board and Vice-President of the World Craft Council, has rightly observed : Inupholding craftsmanship one does not by implication reject machines or make an impassioned plea for return to hand production. The problem posed before us is not man vs. machine but rather a harmony and cohesion between the two. and argued that this observation of experts would show clearly that Handicrafts, even in 1968, were being manufactured using modern techniques and the use of modern tools machines had become an essential part of manufacturing operation of Handicrafts . and also the findings of the Board in Para 35 and 36 of the said order. The same are reproduced for convenience of reference : The Board has also seen the definition given in the UNCTAD document (reproduced in Para 12 above) and observes that the term Handicrafts is not averse to the use of machines in their manufacture so long as the essential character of the product is derived from the handmade aspect. In passing the Board would observe that for the purpose of determining the essential character, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dhoop are kneaded with the aid of power and after kneading the same, are extruded in an extruder and the manual work that was done in the process was only in feeding of the raw materials by hand and later in the cutting of the sticks to the desired length. Her plea is that neither any manual skill is used nor the product took shape by use of manual effort. She drew our attention to the definition of Handicrafts as given in the case of Shyam Sunder Metal Industries and Others referred to supra, cited by, the appellants. In this context, she stated the definition of Handicrafts as adopted by UNCTAD is as under : Some goods may be produced partly by machine and partly by hand : (i.e. a dress made up by hand from machine made cloth, perhaps with additional hand embroidery or other decorations) ... in such cases a product should be regarded as hand-made or Handicrafts if the essential character of the product in its finished form is derived from the hand-made aspect of its production. She stated that in as much the essential character in the case of appellants products had not been given by hand, the same could not be treated as handicrafts. She pleaded that for the item to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as handicrafts for the purpose of Notification No. 55/75. The appellants in this regard have pleaded as under : (i) The Export Promotion Council has accepted that since Dhoop sticks, coils etc. have the same ingredients and end-use as Agarbatties these should be considered as Agarbatties; (ii) The Ministry of Commerce in a certificate titled To Whosoever It May Concern have certified that the Agarbatties are the products of handicrafts and are under the purview of the All India Handicrafts Board for its alround development; (iii) The Central Excise authorities have by issue of Trade Notice, held that the Agarbatties are handicrafts eligible for the exemptionunder Notification No. 55/75 since handicrafts are exempted under this. They have also tried to draw authority in this regard from a Report on Marketing on Handicrafts published in 1955 referred to supra wherein one of the items listed is Agarbatti under the Heading Miscellaneous . In the list of handicrafts in the Guide Book for Handicraft Cooperatives, brought by the All India Handicarfts Board, incense perfumery articles are listed as handicrafts and the appellants plea is that the Agarbatties since it b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lopment of the Agarbatti and incense stick industry. The Hon ble Supreme Court in the case of MS Company Private Limited v. Union of India : 1985 E.C.R. 110 (S.C.) interpreted the word Industry in a different context and have observed as under : When the word to be construed is used in a taxing statute or a notification issued thereunder it should be understood in its commercial sense. It is well known that under the law levying customs duties sometimes exemptions are given from the levy of the whole or a part of customs duty when the goods in question are sold, either in the form in which they are received or in a manufactured or semi-manufactured state, to a manufacturing establishment, for purposes of using them in manufacturing finished or semi-finished goods in order to lessen the cost of machinery or equipment employed in or raw materials used by such manufacturing establishment. The object of granting such exemption is to give encouragement to factories or establishment which carry on manufacturing business. The appellant, however, relies upon the meaning assigned to the word industry in the Industrial Dispute Act 1947 in support of its case. The expression industry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the portion of the Report from the International Labour Office Report on Meeting of Experts on the Role of Handicrafts in the National Economy-of Developing Countries (supra) was taken note of as also the definition of Hand-Made and Handicraft adopted by the UNCTAD (referred to supra) had been taken note of. The appellants have not shown as to how based on these authorities their products could be considered as handicrafts. These authorities only go to show that some goods may be produced partly by use of machines and partly by hand but these can be considered as handicrafts only if the product acquires its essential character in the finished form by use of hand. All that has been said is that the use of the machine in the manufacture of product is not precluded when essential character of the product is shaped by use of hand. In the case of brassware if the artistic work is by hand and the article is sold for its art-work it has been rightly held to be handicraft. Likewise, in the case of the Agarbatties/Dhoop even when the kneading of the raw materials may have been done by machine if their formation had been done by hand, these could be considered as handicrafts. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured the goods without informing the Central Excise authorities and had been removing them without payment of duty, these will have to be taken to attract the mischief of the provisions of Section 9(2) and the duty demanded for the longer time period is maintainable. However, taking into account the facts and circumstances of the case, levy of the penalty is reduced to Rs. 5,000/-. So far as the confiscation of the goods is concerned on account of what we have stated above, the same is also maintainable. The amount appropriated in respect of the same is not excessive and calls for no reduction. But for the modification as above, the appeal is otherwise dismissed. 8. [Order per : S.D. Jha, Vice-President]. - The evidence of commercial understanding with all the infirmities therein brought out by brother Gulati, Member (Technical) in the order proposed by him is relatable to Agarbatties and not to Dhoop which is the product involved in the present appeal. I agree with brother Gulati that based on that evidence, the appellants could not get benefit of exemption under the notification in respect of Dhoop sticks in manufacture of which no craft or skill of hand is involved and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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