2006 (3) TMI 539 - AT - Central Excise

Tribunal Decides Printing Process Not Manufacture; No Duty Payable, Goods Under Sub-heading 4811.90; Input Credit Allowed.

The Tribunal set aside the impugned orders, allowing the appeals. It concluded that the goods are classifiable under sub-heading 4811.90, but the printing ... Classification Of Heads - Printing of the duty paid GI paper - Manufacture Or Not - Estoppel - Excisability - Whether the impugned goods mainly GIP wrappers in rolls printed by the appellants out of GI base paper in rolls on which duty has been paid under sub-heading 4805.90 is chargeable to duty under sub-heading 4811.90? - HELD THAT:- The learned Advocate forcefully argued that in their own case, the Tribunal has held that a similar product namely the Printed Plastic Rolls is a product of the printing industry and classifiable under Chapter 49 and the department has not gone in appeal against the Tribunal’s decision. However, this argument of learned Counsel, in our view has been effectively countered by the learned DR by stating that apart from the products being different, in taxation matters there is no estoppel particularly in matters relating to classification. As such, we hold the impugned goods to be classifiable under sub-heading 4811.90. Printing of the duty paid GI paper - Manufacture Or Not - It is well-settled that mere change of tariff classification from one heading to another, in this case, from 48.05 to 48.11, would not make the product excisable unless the process meets the test of manufacture. We find that there are decisions of the Tribunal cited by the learned DR, which have held similar goods such as wrappers for soap, wrappers for biri and printed PVC sheets to be manufactured goods on account of printing. However, the decisions cited by the learned Advocate mainly the decision of the Hon’ble Supreme Court in the case of J.G. Glass [1997 (12) TMI 110 - SUPREME COURT], and decision in the case of Printorium [1999 (2) TMI 674 - SC ORDER], which has been uphold by the Hon'ble Supreme Court and decision in the case of ITC Ltd. [2004 (2) TMI 95 - CESTAT, CHENNAI] upheld by the Hon’ble Supreme Court hold that printing of glass bottles, aluminium foils, paperboard respectively do not result in manufacture of new commodity. We have also kept in view arguments from both sides in the context of classification of the impugned product that the printing is incidental and primary use of GI printed paper roll is for wrapping, which is not changed by the process of printing. Hence following the ratio of the decision of the Hon'ble Supreme Court in the case of J.G. Glass (cited supra), we are of the view that if the impugned printed products are produced in the same factory, where paper is produced, it would be chargeable to duty under Heading 48.11, whereas in this case, the appellants have bought duty paid GI paper and merely carried out the process of printing, hence they are not required to pay duty on such printed GI papers produced from duty paid GI paper as the process of printing in this case does not amount to manufacture. Accordingly, in view of our finding above, we set aside the impugned orders and allow the appeals. Issues Involved:1. Classification of GIP wrappers in rolls.2. Eligibility for input duty credit.3. Assessment on cum-duty price.4. Whether the process of printing amounts to manufacture.Issue-wise Detailed Analysis:1. Classification of GIP Wrappers in Rolls:The primary issue is whether the GIP wrappers in rolls printed by the appellants are chargeable to duty under sub-heading 4811.90 or should be classified as a product of the printing industry under sub-heading 4901.90, which is fully exempted from duty. The appellants argued that printing the rolls with logos does not amount to manufacture and is not excisable. They cited several decisions, including Metagraphs Pvt. Ltd. v. CCE, Johnson & Johnson Ltd. v. CCE, and Fitrite Packers v. CCE, which supported the classification of similar printed products under the printing industry heading. However, the department contended that the goods should be classified under sub-heading 4811.90 as they are printed paper in rolls and the primary function is packaging, not printing. The Tribunal considered the relevant tariff entries, interpretative rules, and case laws, concluding that the impugned goods should be classified under sub-heading 4811.90 as the primary use is for wrapping, and the printing is incidental.2. Eligibility for Input Duty Credit:The appellants contended that if the impugned goods are chargeable to duty under sub-heading 4811.90, they are entitled to take credit of the duty paid on the base paper. The learned DR agreed, stating that based on legal provisions and precedent decisions, the appellants are eligible for input duty credit if the goods are held to be dutiable under sub-heading 4811.90.3. Assessment on Cum-duty Price:The appellants argued that if the goods are dutiable under sub-heading 4811.90, they should be assessed on a cum-duty price basis instead of the sale price adopted by the lower authorities. The learned DR conceded this point, agreeing that the appellants are eligible for assessment on the basis of cum-duty price if the goods are dutiable under sub-heading 4811.90.4. Whether the Process of Printing Amounts to Manufacture:The appellants argued that the process of printing does not amount to manufacture and cited several decisions, including CCE, Madras v. Paper Products Ltd. and Union of India v. J.G. Glass Industries Ltd., which held that printing does not result in a new and distinct product. The learned DR countered by citing cases like RMDC Press Pvt. Ltd. v. CCE and Headway Lithographic Co. v. CCE, which held that printing on wrappers amounts to manufacture. The Tribunal found that mere change of tariff classification does not make the product excisable unless the process meets the test of manufacture. They concluded that since the appellants merely carried out the process of printing on duty-paid GI paper, it does not amount to manufacture, and no duty is payable on the printed GI papers.Conclusion:The Tribunal set aside the impugned orders and allowed the appeals, concluding that the impugned goods are classifiable under sub-heading 4811.90, but the process of printing does not amount to manufacture, and thus, no duty is payable. The appellants are entitled to input duty credit and assessment on a cum-duty price basis if the goods were to be dutiable.