Customs, Excise and Gold Tribunal - Delhi
Foils India Laminates Pvt. Ltd. vs Commissioner Of C. Ex. on 24 May, 1999
Equivalent citations: 2000ECR871(TRI.-DELHI), 1999(111)ELT728(TRI-DEL)
ORDER V.K. Asthana, Member (T)
1. These two appeals are against two orders-in-appeal but since they deal with common subject, therefore, they are being considered together by this common order.
2. The short point for consideration is wherher slitting, cutting of Jumbo rolls of aluminium foils to obtain smaller size foils of 0.3 m width and 9 m length, and thereafter winding these on a suitable roll and packing the same as 'house foil' amounts to manufacture or not?
3. Heard Shri K.K. Anand, ld. Advocate 'or appellants and Shri M.P. Singh, ld. DR.
4. Ld. Advocate submits that the aforementioned process amounts to manufacture for the following reasons :
A. The process is not confined to mere sliting or cutting of jumbo rolls of aluminium foils. Instead, the foils are cut to shape, that is as per the desired width and length and are then rewound and packed. Thus the process is involving the activities which are more than mere slitting and cutting of Jumbo rolls.
B. The Jumbo rolls of aluminium foils are obtained from market on payment of duty under sub-heading 7607.10 as plain rolls, and since then they are cut to shape i.e. of width of approximately 0.3 m and length of 9 m, therefore, the product so emerging is clearly attracted by the description of sub-heading 7607.30 which reads as "Perforated or cut-to-shape". He submits that if this process which results in a cut-to-shape product is not held to be falling under this sub-heading, then the sub- heading itself becomes otiose.
C. Ld. Advocate further submits that product which emerges out of this process has distinct and new identity as known to the market and the buyers, namely, 'house foils.' This 'house foils' is used both by individual families as well as by Hotels and Restaurants for the limited purpose of either packing cooked food ui used to assist in cooking of food, particularly in baking. Ld. Advocate therefore submits that it is not in dispute that a clear market exists for this product. He therefore, submits that if the buyer goes to purchase such a house foil, he shall certainly not accept the jumbo rolls instead.
D. Ld. Advocate cites the decision in the case of Ramsey India Pvt. Ltd. New Delhi as in CCE, New Delhi [1985 (19) E.L.T. 193 (Tribunal)] wherein it was held that teleprinter tapes/rolls made by cutting jumbo rolls of printing and writing paper amounts to manufacture under Section 2(f) of the Act. He also cites the case of Dipen Textiles (P) Ltd. [1992 (62) E.L.T. 430 (Tribunal)] wherein a similar activity of slitting and cutting of jumbo rolls of Video Magnetic Tapes into pancakes was held to amount to manufacture. He also cites the case of Electronics Mechanicals Industries v. CCE as in 1995 (76) E.L.T. 309 (Tri.) wherein it was held that slitting of jumbo rolls of audio tapes into tapes of narrower width not exceeding 6.5 mm amounts to manufacture because a new marketable product has come into existence.
5. Ld. JDR on the other hand submits that there are a plethora of case law which have held that mere cutting and slitting of paper or graphic films would not amount to manufacture. He submits that the process of cutting and slitting is obviously to make smaller dimensions in terms of width as well as length. Therefore, this decision clearly apply to the facts of the present case. He cites the decision in the case of Computer Graphics Pvt. Ltd. v. U.O.I, as in 1991 (52) E.L.T. 491 (Madras) wherein it was held that cutting of jumbo rolls of graphite art film into sheets of various sizes, which are thereafter directly sold in the market, does not amount to manufacture. He also cites the case of CC v. Hindustan Photo Films [1991 (52) E.L.T. 301] and CCE v. Reelco Paper Products as in 1990 (40) E.L.T. 435 (Tribunal) which considered the cutting to shape of paper rolls. Ld. DR submits that the process undertaken in this case is not disputed but what is significant is that only the style has been changed. He further submits that end use is not relevant to the issue, as one has to first come to a conclusion that the said process of manufacture is manufacture or not and the end use will be gone into only thereafter. He further submits that the mere existence of sub-heading 7607.30 under the Central Excise Tariff does not necessarily lead to the conclusion that this process amounts to manufacture.
6. We have carefully considered the rival submissions as well as the records of the case. We find that the test to be applied in this case is whether the product which emerges from this process of cutting/slitting and packing has clearly a new and distinct identity, which is clearly a different identity from the goods from which it has emerged. Applying this test we find that it is not disputed that the product that emerges is one which is cut to shape and size of about 0.3 m width and 9m length and have been packed and marketed as 'house foils'. This house foil has a distinct identity in the market of its own for the simple reason that any buyer - whether it be individual or hotel or restaurant is a consumer of such house foils for their own purpose. The market recognises the product as house foil sold to the buyer. Therefore, we find that the product which has emerged has clearly a distinct and a new identity which is quite different from the aluminium foil jumbo rolls from this product is ultimately produced. We find that this very test of whether the process results in goods of new identity has been applied in the case of Electronic Mechanical Industries (supra) wherein it has been held that audio tapes of width not exceeding 6.5 mm were a new marketable product having come into existence. We also find that similar test was considered in the case of Dipen Textiles Industries (supra) wherein it was held that the slitting and cutting of the jumbo rolls of video Magnetic tapes resulted in emergence of Pancakes. It was however held that even if both were covered by same heading of the Tariff, yet since pan-cakes were sold for home consumption and were also proposed to be cleared for export, therefore, they were different products and the process which produce them was a process of manufacture. The Hon'ble Supreme Court judgment in the case of Laminated Packings (P) Ltd. as 1990 (49) E.L.T. 326 (S.C.) is also relevant. Applying the said test contained in the decision of Dipen Textiles (supra), to the facts of the present case, we again find that since the house foil is cleared for home consumption as house foils and nor mere aluminium foils in Jumbo rolls, therefore the distinct and new product has emerged. A similar test, we find was again applied by the Hon'ble Tribunal in the case of Ramsey India Pvt. Ltd. (supra) wherein it was held that after jumbo rolls of printing and writing paper are cut; what emerges is teleprinter tapes and rolls and since said rolls or tapes are known distinctly than printing and writing paper in the market, therefore, the process would amount to process of manufacture. Since house foil also have such distinct identity, the ratio of this decision is also clearly applicable in our considered view. As against this, the decisions cited by ld. DR have not considered the application of the test of a new identity and emerging goods as known in the Trade Parlance. That is why the two decisions cited by ld. DR were considered in the case of Dipen Textiles and were distinguished.
7. In view of the aforesaid decisions and analysis, we find that the order-in-appeal impugned before us need to be set aside. Ordered accordingly. The appeals are allowed with consequential relief as per law.