Printing on duty-paid paper is not manufacture; duty demand must, if any, arise at clearance by the primary manufacturer.

Printing dots on duty-paid base paper did not amount to manufacture because the process did not create a new and distinct article or change the paper's primary use. Note 11 to Chapter 48 was treated as inapplicable, as the printing was merely incidental and did not justify classification under Chapter 49. The demand could not be fastened on the subsequent printer on the footing that the paper was tipping paper under Heading 48.13; if any classification dispute existed, it had to be addressed at the stage of clearance by the primary manufacturer. The impugned orders were therefore unsustainable.

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Issues: (i) Whether printing of dots on duty-paid paper amounted to manufacture; (ii) whether, if the printed paper was to be treated as tipping paper under Heading 48.13, the demand ought to have been raised on the primary manufacturer rather than the appellant.

Issue (i): Whether printing of dots on duty-paid paper amounted to manufacture.

Analysis: The appellant received duty-paid base paper classified under Heading 48.05 and merely subjected it to printing of dots on one side. The process did not bring into existence a new article with a distinct identity, nor did it create a product whose primary use was changed by the printing. Note 11 to Chapter 48 was held inapplicable because the printing was merely incidental to the primary use of the goods and did not justify classification under Chapter 49. The earlier order in the appellant's own case was followed.

Conclusion: Printing of dots on the duty-paid paper did not amount to manufacture.

Issue (ii): Whether, if the printed paper was to be treated as tipping paper under Heading 48.13, the demand ought to have been raised on the primary manufacturer rather than the appellant.

Analysis: Once the process of printing was held not to amount to manufacture, the appellant could not be fastened with duty on the premise that the paper was more appropriately classifiable as tipping paper. If the base paper was intended to fall under Heading 48.13, that classification issue should have been addressed when the paper was cleared by the primary manufacturer under Heading 48.05. The demand could not properly be shifted to a person who only carried out the printing process.

Conclusion: The demand should have been raised, if at all, on the primary manufacturer and not on the appellant.

Final Conclusion: The impugned orders were unsustainable and the appeal succeeded with consequential relief.

Ratio Decidendi: Mere printing on duty-paid paper which does not create a new and distinct product does not amount to manufacture, and duty cannot be demanded from a subsequent printer when the proper classification issue, if any, lies at the stage of clearance by the original manufacturer.

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