Tribunal: Printing on duty paid paper not manufacturing; classification issues should be addressed with primary manufacturer

The Tribunal held that printing on duty paid paper does not constitute manufacturing. It rejected the Department's argument that the printed paper should be classified as cigarette paper, stating the printing was incidental and did not change the paper's primary use. The Tribunal also noted that any classification issues should have been addressed with the primary manufacturer, not the appellants. As a result, the Order-in-Appeal was overturned, and the appeal was successful.

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Issues Involved:
The primary issue in this case is whether printing a uniform continuous design on paper purchased from the primary manufacturer, after payment of duty, constitutes manufacturing and if the printed paper should be classified as cigarette paper under a specific sub-heading.

Issue 1 - Printing on Paper as Manufacturing Activity:
The appellant argued that printing on duty paid paper does not amount to manufacturing as it does not create anything new, citing a previous Tribunal decision and relevant court cases. The appellant contended that if the paper is to be classified as cigarette paper, it should have been done at the time of clearance from the primary manufacturer.

Issue 2 - Classification of Printed Paper:
The Department argued that the printed paper, used for wrapping cigarette filter mass, falls under a specific sub-heading for cigarette paper based on HSN notes. They maintained that the paper becomes suitable for use as tipping paper only after printing, justifying the notice issued to the present appellants.

Judgment:
Upon careful consideration, the Tribunal found that printing on duty paid paper does not amount to manufacturing, as established in a previous case. The Tribunal rejected the Department's argument based on HSN notes, stating that the printing was incidental to the primary use of the paper and did not warrant classification under a different heading. Additionally, the Tribunal agreed that any demands related to the classification should have been raised on the primary manufacturer, not the present appellants. Consequently, the Order-in-Appeal was set aside, and the appeal was allowed.

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