The Supreme Court has held that a cigarette packet containing the shell and the slide covering all sides would be a paper box for which excise duty at the rate of 32.5 per cent ad valorem has to be paid by the manufacturer.

The Customs, Excise and Gold Control Appellate Tribunal had earlier accepted the contention of ITC Ltd that it was not a paper box but only a packing container, which was exempted from the levy by a notification of the central government. This view was set aside by the Supreme Court on the appeal of the department.

The Bench consisting of Justice M B Shah and Justice Arun Kumar also rejected the argument of the cigarette manufacturer that there would be double taxation if both cigarettes and packets were subjected to the levy.

The judgment clarified that "there is no question of double taxation because excise duty on cigarettes is separately levied and in regard to packet containing cigarettes, duty is to be levied on the basis of Tariff Item 17."

The court examined the meaning of "boxes, cartons and bags" mentioned in the tariff list in the dictionary sense, in the trade sense and in the light of earlier decisions on other products.

It concluded that the meaning of the word "box" for the purpose of interpreting the tariff item would be "a case or receptacle, usually rectangular or cylindrical and with a lid of wooden, metal, card etc." Hence the description of a cigarette packet would fit in the meaning of the word "box".