Customs, Excise and Gold Tribunal - Mumbai
Cce vs Gtc Industries on 19 April, 2005
Equivalent citations: 2005(103)ECC204, 2005(184)ELT29(TRI-MUMBAI)
ORDER Krishna Kumar, Member (J)
1. Heard both sides.
2. The following question has been referred for consideration of the Larger Bench :
"Whether in view of the fact, that when operation/process conducted results in changes in sub-heading classification, then considering the Supreme Court decision in the case of M/s J.G.Glass Industries, M/s Laminated Packings (P) Ltd., and M/s Sonic Electrotherm (P) Ltd., whether manufacture under Central Excise Act, 1944 would take place to cause and call for levy of duty once again on embossed cut to shape and size aluminium foil in cigarette industry."
The said question has been referred to Larger Bench because this Tribunal in the case of CCE, Mumbai . Godfrey Philips Ltd., reported in 2003(156)ELT 1026(T) + (2003-TIOL-242-CESTAT-MUM) has held that such activity does not amount to manufacture merely because of meeting change of Tariff entry. The view taken by the referring Bench is contrary to the view taken in Godfrey Philips Ltd.
3. Shri K.K. Srivastava, learned JDR appearing for the Revenue inter alia submitted that the tariff heading changes because cut to shape and size aluminium foil in which the cigarettes are packed is embossed with the word `pull'. The appellants were paying duty before the order of the Assistant Commissioner. He relied on the following decisions :-
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Sr.No. Name of the party Case law Remarks
1 Union of India vs. 2002(145)ELT 274 He mainly relied on
Sonic Electrotherm the para 9 of the said
(P) Ltd decision and submitted
that the fact that the
product in question is
generally not being
bought and sold or has
no demand in the
market would be
irrelevant.
2 Union of India 1998(97)ELT `Printing'whether a
vs. J.G. Glass 5(SC) =(2002-TIOL process amounting to
Industries Ltd -112-SC-CX) _manufacture_ - test
is whether the product
would serve any
purpose but for the
printing - if the
product could serve a
purpose even without
printing and there is
no change in the
commercial product
after the printing is
carried out, the
process cannot be said
to be one of
manufacture.
3 Punjab National 1988(37)ELT 155(T) Merely because
the Fertilisers & goods
are not standard
purity, they cannot be
Chemicals Ltd. treated
unmarketable.
Similarly, if the
entire production is
consumed captively, it
does not mean the goods
are not marketable
rather than if the
goods are usable by the
manufacturer they may
also be usable by
someone else and
consequently to duty in
view of rules 9 & 49 of
the Central Excise
Rules, 1944.
4 Laminated 1990(49)ELT Lamination indisputably
Packings (P) Ltd. 326(SC) by well settled
principles of excise
law, amounts to
manufacture .
Consequently the
process of lamination
of kraft paper with
polyethylene, different
goods come in to being.
The laminated kraft
paper is distinct,
separate, and different
goods known in the
market as such from the
kraft paper and
therefore it is liable
to excise duty. The
contention that duty
paid kraft paper and
the resultant laminated
kraft paper belongs to
the same tariff entry
is not relevant because
both of them are
different identifiable
goods known as such in
the market. However,
if duty has been paid
on the kraft paper then
the benefit or credit
for the duty paid would
be available to the
manufacturer under rule
56A of the Central
Excise Rules, 1944.
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4. He submitted that in view of the above decisions the item in question amounts to manufacture and is excisable.
5. Shri R.Nambirajan, learned Advocate appearing for the respondent inter alia submitted that the Commissioner(Appeals) in his order has clearly recorded that the process involved is a single in-situ process. That is to say the process involved is a continuous process and as such aluminium foil cannot be assessed separately. Drawing the analogy from the Board's Circular no. 11/89 dated 30.03.1989, he submitted that aluminium foil cannot be assessed separately. The packed cigarette is to be assessed. To support his contention he placed reliance on the following decisions :-
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Sr.No. Name of the party Case law Remarks
1 Union of India vs. 2002(145)ELT 274 He mainly relied on
Sonic Electrotherm the para 9 of the said
(P) Ltd decision and submitted
that the fact that the
product in question is
generally not being
bought and sold or has
no demand in the
market would be
irrelevant.
2 Union of India 1998(97)ELT `Printing'whether a
vs. J.G. Glass 5(SC) =(2002-TIOL process amounting to
Industries Ltd -112-SC-CX) _manufacture_ - test
is whether the product
would serve any
purpose but for the
printing - if the
product could serve a
purpose even without
printing and there is
no change in the
commercial product
after the printing is
carried out, the
process cannot be said
to be one of
manufacture.
3 Punjab National 1988(37)ELT 155(T) Merely because the
Fertilisers & goods
are not standard
purity, they cannot be
Chemicals Ltd. treated
unmarketable.
Similarly, if the
entire production is
consumed captively, it
does not mean the goods
are not marketable
rather than if the
goods are usable by the
manufacturer they may
also be usable by
someone else and
consequently to duty in
view of rules 9 & 49 of
the Central Excise
Rules, 1944.
4 Laminated 1990(49)ELT Lamination indisputably
Packings (P) Ltd. 326(SC) by well settled
principles of excise
law, amounts to
manufacture .
Consequently the
process of lamination
of kraft paper with
polyethylene, different
goods come in to being.
The laminated kraft
paper is distinct,
separate, and different
goods known in the
market as such from the
kraft paper and
therefore it is liable
to excise duty. The
contention that duty
paid kraft paper and
the resultant laminated
kraft paper belongs to
the same tariff entry
is not relevant because
both of them are
different identifiable
goods known as such in
the market. However,
if duty has been paid
on the kraft paper then
the benefit or credit
for the duty paid would
be available to the
manufacturer under rule
56A of the Central
Excise Rules, 1944.
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6. As regards the reliance of the J.D.R on the Punjab National Fertilizers & Chemicals Ltd., reported in 1988(37)ELT 155(T), he submitted that it is no more good law because the decision has already been over-ruled by the Supreme Court as reported in 1997 ELT A245 (SC). He also contended that since an item falls in different headings, it should not be construed that it amounts to manufacture. In this regard he relied on the decision in the case of CCE v. Markfed Vanaspati & Allied Inds., 2003(153)ELT 491 (SC). As regards the decision of Johnson & Johnson Ltd., the learned counsel submitted the said decision has also been overruled by the Supreme Court as reported in 1997(94)ELT 286(SC) whereas on the other hand decision in the case of Printorium has been approved by the Supreme Court. He forcefully contended that no evidence has been brought on record by the department that a new product has emerged. Therefore, he contended that in view of the legal position as mentioned above, he is reiterating the order passed in CCE, Mumbai v. Godfrey Philips Ltd., holding that such activity does not amount to manufacture.
7. After hearing, perusal of the records and the case laws relied on by both the sides, we find that the product in question is a result of an integrated and continuous process and the same cannot be assessed separately, particularly in view of the fact that the cigarette is assessed in a packed condition. Besides, we also notice that the Department has brought no evidence on record to prove that the new product has emerged out of the process employed. Therefore, relying on the case laws cited by the learnd counsel, we are of the opinion that the decision in the case of CCE, Mumbai v. Godfrey Philips (I) Ltd., reported in 2003(156)ELT 1026(T) = (2003-TIOL-242-CESTAT-MUM) needs to be approved. We order accordingly.