1990 (9) TMI 342 - AT - Central Excise

Tribunal rules metallizing printed film not 'manufacture' for excise levy. Order set aside, appeal allowed.

The Tribunal held that metallising printed polyester film on a job-work basis does not constitute 'manufacture' for excise levy purposes. As a result, the ... - Issues Involved:1. Whether the activity of metallising printed polyester film on a job-work basis amounts to 'manufacture' for the purpose of excise levy.2. Proper classification of printed metallised polyester film under the Central Excise Tariff.3. Validity of the duty demand period and applicability of the extended time limit.4. Correctness of the quantum of duty demanded.5. Allegation that the Collector passed the impugned order in a hurry without considering the appellants' submissions.Detailed Analysis:1. Whether Metallising Printed Polyester Film Amounts to 'Manufacture':The appellants argued that metallising printed polyester film on a job-work basis does not constitute 'manufacture' under Section 2(f) of the Central Excises and Salt Act, 1944. They referred to several case laws, including Swastik Packaging v. CCE, Bombay, and Gujarat Steel Tubes Ltd. v. State of Kerala, to support their claim that metallising does not change the fundamental character of the printed film. The Tribunal agreed with this argument, noting that metallising printed film does not result in a new excisable product. The Tribunal emphasized that if the film had already discharged duty at the unmetallised stage, no further duty is attracted upon metallisation.2. Classification of Printed Metallised Polyester Film:The appellants contended that the correct classification of printed metallised polyester film should be under Heading 49.01, which pertains to 'other products of the printing industry,' rather than under Heading 39.20, as held by the Collector. The Tribunal examined the relevant tariff entries and concluded that printed polyester films could not fall under Chapter 39 due to Section Note 2 to Section VII of the CET. The Tribunal also considered the Board's Circulars and Telexes, which supported the classification under Chapter 49 for printed plastic films. However, the Tribunal ultimately did not need to resolve this issue due to their finding on the 'manufacture' question.3. Validity of the Duty Demand Period:The appellants argued that the demand for the period from 1-3-1986 to 26-9-1987 was barred by limitation and that duty could only be demanded from the date of the show cause notice, i.e., 7-6-1988. The Tribunal noted that the CBEC had issued different decisions on classification on different dates, and the circular dated 5-5-1989 instructed Collectors to give effect to the revised classification prospectively from 16-1-1989. Therefore, the Tribunal found that no duty was payable for the period before 16-1-1989.4. Correctness of the Quantum of Duty Demanded:The appellants challenged the quantum of duty demanded, arguing that the rate of duty should be 25% instead of 35% as ordered by the Collector, based on the thickness of the film and Notification No. 269/86. They also claimed eligibility for MODVAT credit of the duty already paid on the polyester film. The Tribunal did not specifically address this issue in detail due to their finding on the 'manufacture' question.5. Allegation of Hasty Order by the Collector:The appellants alleged that the Collector passed the impugned order in a hurry without applying his mind to their written submissions. While the Tribunal did not explicitly address this procedural issue, their decision to set aside the impugned order implicitly acknowledged the appellants' concerns.Conclusion:The Tribunal concluded that the activity of metallising printed polyester film brought from outside did not amount to 'manufacture' for the purpose of excise duty under Heading No. 39.20, sub-heading 3920.31. Consequently, the impugned order was set aside, and the appeal was allowed. The Tribunal did not find it necessary to discuss other aspects such as classification, limitation, and the quantum of duty in detail due to their primary finding on the 'manufacture' issue.