2003 (6) TMI 407 - AT - Central Excise

Appellate Tribunal rules in favor of Appellant on masking tape classification dispute

ASMACO INDUSTRIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI

The Appellate Tribunal CESTAT, Mumbai set aside the lower authorities' decisions and allowed the appeal of the Appellant regarding the classification of ... Manufacture Issues:1. Whether the process of making masking tape by slitting crape paper amounts to manufacture.Analysis:The appeal before the Appellate Tribunal CESTAT, Mumbai raised the issue of whether the process undertaken by the Appellant for producing masking tape through the slitting of crape paper constitutes manufacturing. The Commissioner (Appeals) had upheld the Deputy Commissioner's findings that the process indeed amounted to manufacture. The Appellant, despite being absent, had requested a decision on the merits of the case. The Appellant imported crape paper of 750 mm width and slit it into smaller sizes of 12 mm, 18 mm, 24 mm, etc., marketing them as masking tape. The Deputy Commissioner concluded that this activity qualified as manufacture, leading to a demand for duty from the Appellant. The Appellant contended that the slitting process did not amount to manufacture, citing classification under Chapter Heading 48.00 for duty exemption.The Deputy Commissioner's decision was based on Chapter Note No. 7 of Chapter No. 48, which specified the width requirements for classification under certain headings. The Deputy Commissioner noted that the slit rolls produced by the Appellant did not meet the width specifications under Chapter Heading No. 4811, as they were below 15 cm. Instead, the disputed product was classified as 'Self Adhesive Paper' under Chapter Heading No. 4823.90. The Commissioner (Appeals) affirmed this decision, rejecting the Appellant's argument that the slitting process did not amount to manufacture based on the absence of specific mentions in the chapter notes.The Appellant further argued that the goods were cleared under Chapter Heading 4811.20 for 'Gummed or adhesive paper and paperboard,' which covered their imported materials. However, the department sought to classify the final product under Chapter Sub-Heading 48.23 for cut paper products, disregarding the width dimension of the paper. The Appellant pointed out that the chapter notes did not classify based on paper width and emphasized that the show cause notice did not mention the product being thermal paper, which was the only context where slitting constituted manufacture according to Note 10(a) of Chapter 48.In conclusion, the Appellate Tribunal set aside the impugned orders, allowing the appeal with any consequential relief as per the law. The judgment highlighted the importance of correctly interpreting the classification criteria under Chapter Headings and Notes to determine whether a specific process, such as slitting crape paper for masking tape production, qualifies as manufacturing under the relevant customs regulations.