2011 (2) TMI 64 - HC - Central Excise

Aluminium foil cutting not manufacturing for excise duty

COMMISSIONER OF CENTRAL EXCISE, MUMBAI-V, Versus M/s GTC INDUSTRIES, LTD.,

The High Court upheld the Tribunal's decision that embossing and cutting to shape of Aluminium foil for packing cigarettes does not amount to ... Manufacture- As the embossing and cutting to shape of Aluminium foil is not a manufacturing process?- The process of embossing itself is manufacturing and the product that emerges on embossing is a new product- Secondly aluminium foil brought in bulk by the assessee on payment of excise duty is also subjected to the process of cutting it into small pieces which changes the form and nature of the foil and hence the said process amounts to manufacturing - In Commissioner of Central Excise New Delhi I Vs. S.R.Tissues Pvt.Ltd. (2005 -TMI - 47380 - SUPREME COURT OF INDIA) observed that slitting/cutting of jumbo rolls of plain tissue paper/aluminium foil is not treated as a manufacture - mere mention of the product in tariff heading does not necessarily implies that the said product was obtained by process of manufacture.Aluminium foil is cut to size in a continuous process and it does emerge as a new commodity and hence it is not excisable. Issues involved:Classification of embossing and cutting to shape of Aluminium foil as a manufacturing process for excise duty purposes.Detailed Analysis:Issue 1:Whether the Tribunal was correct in holding that no classification list is necessary for embossing and cutting to shape of Aluminium foil as it is not a manufacturing process.The appellant, a Commissioner of Central Excise, challenged the order of the CESTAT dated 19/4/2005, contending that embossing and cutting Aluminium foil constitutes manufacturing. The process involved cutting and embossing Aluminium foil for packing cigarettes. The appellant argued that embossing is a manufacturing process, and cutting the foil changes its form and nature, thus constituting manufacturing.Issue 2:Whether the Tribunal was correct in holding that embossing and cutting to shape of Aluminium foil for packing cigarettes does not amount to manufacture.The respondent, a manufacturer of cigarettes, utilized duty paid paper back Aluminium foil for packing cigarettes. The process involved cutting the foil to size and embossing it with the word 'PULL.' The notification exempting the resultant product from excise duty was withdrawn, leading to a dispute. The respondent argued that cutting and embossing did not change the nature or form of the foil, making it non-dutiable.The High Court analyzed the definitions of manufacturing under the Central Excise and Salt Act, 1944, emphasizing that not all processes amount to manufacturing. It was noted that a process must produce a distinct and marketable commodity to be considered manufacturing. The Court examined the process of cutting and embossing Aluminium foil for cigarette packing, concluding that it did not transform the foil into a distinct commodity with marketable value.Citing relevant case laws, the Court highlighted that cutting materials into smaller pieces does not necessarily create a new commercial commodity. The judgment in Commissioner of Central Excise New Delhi Vs. S.R.Tissues Pvt. Ltd. was referenced to support the argument that cutting jumbo rolls of foil or paper did not constitute manufacturing.Ultimately, the Court upheld the Tribunal's decision that embossing and cutting to shape of Aluminium foil for packing cigarettes did not amount to manufacturing. The view taken by the Asstt. Collector of Central Excise and the CESTAT was deemed correct, and the appeal was disposed of in favor of the assessee.In conclusion, the High Court's judgment clarified the distinction between processes that constitute manufacturing and those that do not, specifically in the context of embossing and cutting Aluminium foil for packing cigarettes.