Jumbo paper cutting not manufacturing under Central Excise Act. Appellant's genuine belief upheld. Demand barred by limitation.

The Tribunal held that the conversion of jumbo paper rolls into smaller sheets through cutting and slitting did not amount to manufacture under the Central Excise Act, 1944. The demand for excise duty was deemed unsustainable as the appellant had a genuine belief that no manufacturing occurred, and there was no intent to evade duty or suppress facts. Additionally, the demand was barred by limitation since the appellant's clear declaration in invoices showed no intent to evade duty. Consequently, the Tribunal set aside the order considering the activity as manufacturing and allowed the appeals.

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Issues:
1. Whether the conversion of jumbo paper rolls into smaller sheets through cutting and slitting amounts to manufacture under Section 2(f) of the Central Excise Act, 1944Rs.
2. Whether the demand for excise duty on the converted paper sheets is sustainableRs.
3. Whether the demand is barred by limitationRs.

Analysis:
Issue 1:
The case involved the appellant engaging in activities of slitting duty paid Jumbo paper Rolls into smaller paper sheets. The department contended that this conversion amounted to manufacture, justifying the imposition of excise duty. The appellant argued that no manufacturing occurred as the paper remained the same, only the size changed. The Tribunal examined various judgments and found that cutting and slitting of already manufactured goods do not constitute manufacturing. It highlighted that there was no specific chapter note regarding paper conversion, unlike thermal paper, where such activities were considered manufacturing. The Tribunal concluded that the conversion of jumbo paper rolls into smaller sheets did not amount to manufacture under Section 2(f) of the Act.

Issue 2:
The Tribunal also addressed the sustainability of the excise duty demand. The appellant had consistently declared in their invoices that the conversion did not amount to manufacture, indicating a bona fide belief. As there was no intent to evade duty and no suppression of facts, the demand was deemed unsustainable. Therefore, the Tribunal held that the demand for excise duty on the converted paper sheets was not justified.

Issue 3:
Regarding the limitation, the Tribunal noted that the appellant's clear declaration in invoices about the non-manufacturing activity showed no intent to evade duty. As a result, the demand raised beyond the normal period was considered barred by limitation. Consequently, the Tribunal ruled that the demand and the personal penalty imposed on the director were unsustainable. The impugned order, holding the activity as manufacturing, was set aside, and the appeals were allowed.

In conclusion, the Tribunal found that the conversion of jumbo paper rolls into smaller sheets through cutting and slitting did not amount to manufacture under the Central Excise Act, 1944. The demand for excise duty was deemed unsustainable due to the appellant's genuine belief and lack of suppression of facts, and the demand was barred by limitation.

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