Printing and slitting plastic films did not amount to manufacture; goods were classifiable under Chapter 49, and duty and penalties fell.

Printing designs, logos and trade marks on cellophane, HMHD and BOPP films, followed by slitting, did not amount to manufacture on the facts because the process did not create a new and distinct product under the commercial identity test. The printing merely made the wrappers identifiable and marketable, while the films remained capable of serving their packaging function without it. The goods were treated as more appropriately classifiable under Chapter 49 rather than Chapter 39, and the duty demand and connected penalties were set aside.

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Issues: Whether the activity of printing and slitting plastic films and wrappers amounted to manufacture and whether the goods were classifiable under Chapter 39 or Chapter 49, with consequent liability to duty and penalty.

Analysis: The record showed that the appellants were engaged only in printing designs, logos, trade marks and other particulars on cellophane, HMHD and BOPP films and thereafter slitting the rolls for supply to customers. Applying the commercial identity test, the process did not bring into existence a new and distinct product; the printing was directed to making the wrappers identifiable and marketable, and the films could serve their packaging function even without such printing. The relevant chapter notes and section notes were found not to support classification under Chapter 39 in the facts of the case, while the cited precedents supported the view that such printing and allied processes did not amount to manufacture on these facts. The consequence was that the demand of duty and the connected penalties could not survive.

Conclusion: The activity was not held to amount to manufacture on the facts, the goods were held to be more appropriately classifiable under Chapter 49, and the duty demand and penalties were set aside in favour of the assessee.

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