Custom, Excise & Service Tax Tribunal
M/S Kishanbiri Mfg. Co vs Commissioner Of Central Excise, ... on 2 June, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
EAST REGIONAL BENCH : KOLKATA
Ex. Appeal Nos.915-916/11
Arising out of O/ANos.39-40/SLG/2011 dated 03.08.2011 passed by Commr. (Appeals) of Central Excise, Kolkata.
For approval and signature:
DR. D. M. MISRA, HONBLE JUDICIAL MEMBER
DR. I. P. LAL, HONBLE TECHNICAL MEMBER
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not? :
3. Whether His Lordship wishes to see the fair copy
of the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
M/s KishanBiri Mfg. Co.
APPELLANT(S)
VERSUS
Commissioner of Central Excise, Siliguri
RESPONDENT (S)
APPEARANCE Shri S. Mukhapadhyay, Consultant for the Appellant (s) Shri A. K. Biswas, Supdt. (A.R.) for the Department CORAM:
DR. D. M. MISRA, HONBLE JUDICIAL MEMBER DR. I. P. LAL, HONBLE TECHNICAL MEMBER DATE OF HEARING : 02. 06. 2014 DATE OF PRONOUNCEMENT : 11. 09. 2014 ORDER NO.FO/A/75529-75530/2014 Per Dr. D. M. Misra :
These two Appealsare filed against the Order-in-Appeal Nos.39-40/SLG/2011 dated 03.08.2011 passed by Commissioner (Appeals) of Central Excise, Kolkata.
2. Briefly stated the facts of the case are that the Appellants are engaged in the manufacture of handmade biris falling under Chapter Sub-heading No. 24031031, without aid of machine and cleared the said goods on payment of basic excise duty at the rate of Rs.14/-, Education Cess and Secondary Higher Education Cess, as applicable, per thousand biris. The Appellants were also engaged in the manufacture of branded birisknown as Super KishanBiri No.51. classified itunder Sub-heading No.24031039. These biris are packed in pre-printed plastic wrappers (brought from outside) with the aid of power operated machine and cleared on payment of basic excise duty at the rate of Rs.26/-, Education Cess and Secondary Higher Education Cess, as applicable per thousand biris, prior to August, 2008. However, from August, 2008, the Appellants cleared the saidSuper KishanBiri No.51 at lower rate, classifying the same under Sub-heading No.24031031 instead of Sub-heading No.24031039. Two Show Cause Demand Notices dt. 25.02.2009 & 27.03.2009 were issued alleging that the Super KishanBiri No.51 being manufactured with the aid machine, accordingly, classifiable under Chapter Sub-heading 24031039 of CETA, 1985. It is also alleged that on account of such mis-classification, there had been short payment of duty of Rs.3,45,999/- for the period from August, 2008 to October, 2008& Rs.3,21,319/- for the period Nov. 2008 to Dec. 2008. The Adjudicating Authority after considering the replies to the show-cause notices and report by the Assistant Commissioner of Central Excise, Malda Division dated 04.09.2008, dropped the demand against the Appellants observing that the product manufactured by the Appellants is classifiable under Sub-heading No.2404.31 instead of Sub-heading No.2404.39 observing that the packing of the biris alone are carried out with the aid of machine, but not the manufacture thereof. Besides, since the biris are not specified under the Third Schedule of CETA, 1985, the process of packing of biris with the aid of machine, cannot be construed asmanufacture with machine under Section 2(f) of Central Excise Act, 1944. Aggrieved by the said order, the Revenue preferred a Review Application before the ld. Commissioner (Appeals). The ld. Commissioner (Appeals) partly allowed the said Review Application to the extent of confirming duty short paid, which arose on mis-classification and dropped the penalty against the Appellant. Aggrieved by the said Order of the ld.Commissioner (Appeals), the present appeal filed by theassessee-Appellant before this Forum.
3.1 The ld. Consultant appearing for the Appellants, had submitted that the biris are manufactured by the various households and brought to the factory in a basketfor heating and roastingand then the same are packed in pre-printed plastic strips with the help of machine. It is his submission that no re-packing is involved as observed by the ld.Commissioner (Appeals)., which is contrary to the facts of the case as narrated in the Review Application dated 09.12.2009 filed by the Revenue before the ld. Commissioner (Appeals). In the Review Application, there was no mention about re-packing of biris; the order was challenged mentioning that there was packing of biris in the factory with the aid of machines. It is his submission that the grounds of appeal and the impugned order of the ld.Commissioner (Appeals) are contradictory, hence, the Order of the Ld. Commissioner(Appeals) is bad in law.
3.2 Further, he has submitted that Packing is not covered under Note 3 of Chapter 24 of CETA, 1985, either before its amendment or after its amendment w.e.f. 01.03.2008. Therefore, reference to Chapter Note 3 is irrelevant to the facts in issue. Hence, the ld. Commissioner (Appeals) ought not have relied upon the said Chapter Note 3 in deciding the Appeal. The ld. Consultant, further, submitted that the issue raised by the Department in the present case is covered by the judgements of this Tribunal in the case of CCE, Siliguri Vs. Jalco Enterprises vide Order No.A-156/Kol/08 dated 23.01.2008&CCEx., Bolpur Vs Hindustan Biri Mfg. Co. vide Order No.A-518/Kol./07 dated 28.03.2007 as also by the judgement of the Honble Supreme Court in the case of ITC Ltd. Vs. Collector of Central Excise, Patna : 2003 (151) ELT 246 (SC). Further, he has submitted that that neither in the Review Order nor in the impugned order, the ld. Commissioner (Appeals) has recorded any findings on the observations of the adjudicating authority that the biris being not specified under Third Schedule to CETA, 1985, therefore, the process of packing of biris with the aid of machine, cannot be construed as amounting to manufacture with machine under Section 2(f) of the Central Excise Act, 1944. Further he has submitted that since the packing is not an integral process of manufacture of biris, therefore, use of power is irrelevant. In support, he relied upon a judgement of the Honble Supreme Court in the case of Commr. of Central Excise, Nagpur Vs. Gurukripa Resins Pvt. Ltd. : 2011 (270) ELT 3 (S.C.).
4. The ld. A. R. for the Revenue reiterated the findings of the ld. Commissioner (Appeals). He submits that the ld.Commissioner (Appeals) has rightly held that the judgements of Jalco Enterprises (supra) and HindusthanBiris case (cited supra), were rendered on the basis of pre-amendment period of Chapter Note 3 to Chapter 24 of CETA, 1985 and hence, not applicable to the facts of the present case.
5. Heard both sides and perused the records. We find that the limited issue involved in the present Appeal, relates to determinationof the fact whether there is short payment of duty on account of mis-classification of Super KishanBiri No.51, chargeable to specific rate of duty. The competing entry for classification of the said product is Sub-heading No.24031031 & Sub-heading No.24031039. The Applicant claimed classification under Sub-heading No.24031031 and Revenue proposed its classification under Sub-heading No.24031039. For better appreciation, the said Entries are reproduced below :
Tariff Item Description of goods Unit Rate of duty 24031031 Other than paper rolled biris, manufactured without the aid of machine Tu Rs.12 per thousand 24031039 Other .. Tu Rs.30 per thousand
6. Undisputedly, the processes of manufacturing of biris undertaken by the Applicant, are that the labourers in households roll the biris with hand, then, they send the biris in small bundles of 10 or 20 all placed in an open bamboo basket and then they bake and roast them in their premises. Thereafter, the said biris in the lot of 10 or 20 are packed in pre-labelled plastic strip with help of machines which run with the aid of power. The dispute centresaroundthe fact of use of machine with the aid of power in packing biris. The ld. Commissioner (Appeals) got the fact verified through the Assistant Commissioner before directing its classification. The Assistant Commissioner after verification of the manufacturing process in his report dated 04.09.2008, observed thestep by step manufacturing process as follows :
1. Issue of Biri tobacco, thread etc. to biri roller/contractor ;
2. Received Hand madeBiri from Biri rollers/contractor ;
3. Checking of rolled bundle of twenty (20) biris for toasting ;
4. Toasting of biri bundles over furnace ;
5. Toasted biris kept for cooling ;
6. Packing of toasted biri bundles in pre printed wrappers (purchased from outside) with the aid of machine operated by power to make it as pouch or sachet ;
7. Twenty (20) pouch or sacket placed in a packet and packed manually to make it larger packet ;
8. Finally fourty Eight (48) large packets kept in a cartoon, which is ready for dispatch.
7. He has reported that before making the product marketable and saleable, machine is involved only at stage No.Six (6) mentioned above and opined that as per CESTATs Order No.A-156/Kol/2008 dated 23.01.2008, the product is classifiable under Tariff Sub-Heading No.24031031. On the basis of the said report, the Adjudicating Authority, has classified the product under Sub-heading No.24031031. The ld.Commissioner (Appeals) on the other hand, referring to Chapter Note 3 of Chapter 24, allowed the Review Application of the Revenue. Vehemently arguing the case, the ld. Consultant for the Applicant, submitted that all along the issue involved in the present case, has been, whether the activity of packing of biris the aid packing machine would merit classification under Sub-heading No.24031039 or otherwise ; whereas, the ld. Commissioner (Appeals), has erroneously referred to Chapter Note 3, which was neither raised in the show-cause notice nor relevant to the facts in issue. He has also contended that the ld.Commissioners (Appeals), Order is based on the premise that the Applicant is undertaking re-packing of biris, a fact totally un-true and hence, conclusion arrivedat by the ld. Commissioner (Appeals), is accordingly,erroneous. We find force in the contention of the ld.Consultant for the Applicant. The show-cause notice was issued to the Applicant alleging short payment of duty because of incorrect classification of biris. It is alleged that since the machines running with the aid of power, had been used in packingbirisknown as Super KishanBiri No.51, therefore, it would be classifiable under Sub-heading No.24031039 in stead of Sub-heading No.24031031. It has notbeen an issue for determination whether labelling, re-labelling, re-packing from bulk pack etc. resulted into manufacture under Chapter Note 3 of Chapter 24 of CETA, 1985. On the contrary, we find that the circumstances involved in the present case are squarely covered by the judgement of this Tribunal in the case of Hindustan Biri Manufacturing Companys case (supra), wherein it has been categorically held that the biri is not manufactured with the aid of power by use of machine for the sole purpose of packing of biris in pre-printed plastic wrapper brought from outside. In the result, there is no merit in the Orders-in-Appeal. Consequently, the same are set aside and the Appeals are allowed.
( Pronounced in the open Court 11.09.2014)
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(DR. I. P. LAL) (DR. D. M. MISRA)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
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Ex. Appeal Nos.915-916/2011