2017 (2) TMI 896 - AT - Central Excise

Tribunal denies exemption claim for product classified as snap-off cutter, not pencil sharpener

The Tribunal ruled against M/s. Plascap Industries in their claim for exemption under Notification No. 4/97-C.E. for a product they manufactured, ... Benefit of N/N. 4/97-C.E. dated 1-3-1997 - paper cutter - classified under Sr. No. 184 as ‘Pencil Sharpeners and blades thereof’ falling under Chapter Heading 82 of the Central Excise Tariff Act or otherwise - Held that: - the product is in the shape of blade, which is covered by plastic shell. The said blade can be taken out from plastic shell by use of button. The blade is divided into number of segment and each segment can be snapped off after use. While the said snap off cutter can also be use for sharpening the pencil, it has multiple uses - The N/N. 4/97-C.E. exempt the pencil sharpener, whereas this blade cannot be considered as a pencil sharpener - benefit rightly denied - appeal dismissed - decided against appellant. Issues: Classification of product for exemption under Notification No. 4/97-C.E.In this case, the appellant, M/s. Plascap Industries, claimed exemption under Notification No. 4/97-C.E. for the product they manufactured, which they argued was a pencil sharpener falling under Chapter Heading 82 of the Central Excise Tariff Act. The appellant sought clearance of the goods based on this exemption, but the claim was rejected by the lower authorities. The main issue revolved around whether the product manufactured by the appellant qualified as a pencil sharpener for the purposes of the exemption.Analysis:The appellant's counsel contended that the product in question was indeed a pencil sharpener, providing evidence in the form of a purchase order for 1000 pencil sharpeners and literature from the internet describing similar products as safety knives used for sharpening pencils. The appellant argued that the product was known as a pencil sharpener in the market and should be classified as such for the exemption under Notification No. 4/97-C.E.On the other hand, the respondent's argument was that the product manufactured by the appellant was a snap-off cutter (paper cutter) and not a pencil sharpener. While acknowledging that the cutter could be used to sharpen pencils, the respondent maintained that its primary function was as a paper cutter. The respondent also alleged that the appellant had manipulated documents to falsely categorize the product as a pencil sharpener.The Tribunal examined the product in question, noting that it was a blade covered by a plastic shell, with each segment of the blade being snap-off after use. While the product could be used to sharpen pencils, it was determined that it did not qualify as a pencil sharpener under Notification No. 4/97-C.E. due to its multiple uses and design as a snap-off cutter. Consequently, the appellant was not entitled to the exemption, and the value of clearances of this product needed to be added for determining eligibility under a different notification. As a result, the appeals were dismissed by the Tribunal.In conclusion, the judgment focused on the classification of the product manufactured by the appellant and its eligibility for exemption under a specific notification. The decision hinged on the nature and primary use of the product, ultimately determining that it did not meet the criteria for classification as a pencil sharpener for the purposes of the exemption claimed by the appellant.