Custom, Excise & Service Tax Tribunal
Matchwell vs Ahmedabad-I on 21 June, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
REGIONAL BENCH - COURT NO. 03
Excise Appeal No. 10404 of 2019
[Arising out of OIO-AHM-EXCUS-001-COM-017-18-19 passed by Commissioner
(Appeals) CCE, Customs and Service Tax-AHMEDABAD-I (Appeal)]
M/s Matchwell .....Appellant
Saijpur Gopalpur ,outside Shahwadi Octroi Naka,
Nr. Ashok Industries, Piplej,
Ahmedabad, Gujarat
VERSUS
C.C.E.-Ahmedabad-i .....Respondent
C. Ex Bhavan, Nr. Panjrapole & Polytechnic, Ambavadi, Ahmedabad, Gujarat-380015 APPEARANCE:
Sh. S.R. Dixit, Advocate for the Appellant Sh. A. Mishra, Authorized Representative for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU FINAL ORDER NO.A/ 11011 /2019 DATE OF HEARING: 29.04.2019 DATE OF DECISION: 21.06.2019 PER: RAMESH NAIR The issue involved in the present case is whether the appellant is liable to pay duty on clearances of printed base papers/printed decorative paper in rolls and that too by classifying the same under CETH 4811 9099 or not. The brief facts of the case are that the base paper was received by the appellant in roll form from their principals. The appellant was merely carrying out printing activity thereon, while clearing the same to their principals. Such printed paper is to be used in production of decorative laminate sheets/MDF boards etc. The department is of the view that after receipt of base paper, since the appellant prints the same and returns to the principals, the said goods may be classified under CETH 4811 9099 and not under CETH 4911 9990 and accordingly, duty demand has been raised.
2. Sh. S.R. Dixit Ld. Counsel appearing on behalf of the appellant submits that the appellant does not manufacture paper at all. They
2|Page E/10404/2019-DB simply received paper sent by their principals and print images thereon. That the printing undertaken on the base paper is such, which gives the product its distinct character of being printed product, which is not merely incidental to the primary use of the goods and hence, in terms of Chapter Note 12 to Chapter 48, the said printed paper will fall under chapter 49, which is the claim of the appellant. In fact, as per Chapter Note 14 of the said Chapter, the only exception to this products of Chapter 4811 are intended to be used "for further printing of writing"
only in such case, they will remain classified under same Chapter heading. Without such printing, the said paper is not fit for the intended use, i.e. to make decorative laminate sheets/MDF boards etc. In that sense, printing cannot be said to be merely incidental to primary use of goods, since such case in fact changes after such printing. In fact, base paper is used for printing thereon and no one will use such plain paper for making decorative laminate sheets/MDF boards etc. at all. However, once requisite customer specific printing is carried out, the primary use of paper changes and the printed paper has an altogether to be different for use. He submits that in the similar circumstances, it was held that the printed product was classifiable under Chapter 49 and not under Chapter 48 (in some case Chapter 39). He placed reliance on the following judgments in the support of this contention:
Gopsons Papers Ltd 2015 (324) ELT 5(SC) Kayen Print Process (P) Ltd 2007 (213) ELT 355 (Tri.-Bang.) Holostick India Ltd 2015 (318) ELT 529 (SC) CBEC Circular No. 1052/01/2017-CX dated 23.02.2017 He further submits that in the impugned order at para 36(viii), the adjudicating authority held that "even if the said paper been not printed, it would not have rendered the same unusable for manufacture of decorative laminate sheets/MDF boards etc. I am of the view that for the printing to not be „merely incidental‟ would mean that the essential character of the goods should be imparted by printing. For example: printing on paper for production of magazine/books. Thus, I am of the considered view that in the present case the „printing‟ is merely incidental to the primary use of the said paper."
3. From the above finding, department is of the view that printing is insignificant and merely incidental to primary use of the paper, and
3|Page E/10404/2019-DB paper remain paper and its use also does not change. The base paper could be used for making decorated laminated sheets or MDF boards etc. with or without printing. If that be the case, the twin requirement of proving manufacture has taken place within the meaning of Section 2(f) read with section 3 of the Central Excise Act, 1944 is not fulfilled at all. Therefore, if the contention of the Revenue is accepted than the activity undertaken by the appellant does not amount to manufacture. In the similar circumstances, while dealing with product such as tiles, glass, plastic sheets, etc, it was held that mere decorative does not amount to manufacture. He placed reliance on the following judgments:
Pan pipes Resplendents Ltd 2006 (193) ELT 129 (SC) Servo-Med Industries (P) Ltd 2015 (319) ELT 578 (SC) Metlex (I) P. Ltd 2004 (165) ELT 129 (SC) Paper Products Ltd 2015 (319) ELT 578 (SC) Alembic Glass Industries Ltd 2010 (259) ELT 8 (SC) Caprihans India Ltd 2015 (325) ELT 632 (SC) HBD Packaging (P) Ltd 2012 (284) ELT 727 (Tri.-Del) He submits that even if unprinted paper and printed paper may fall under same Tariff heading or different tariff heading, still, mere printing will not amount to manufacture as held in following judgments:
S.R. Tissues P. Ltd 2005 (186) ELT 385 (SC) Variety Lumbers P. Ltd 2014 (302) ELT 519 (Guj.) Castings (India) Ltd. 2016 (342) ELT 343 (Jhar) Variety Lumbers P. Ltd 2018 (360) ELT 790 (SC)
4. He further submits that the Revenue Authority cannot blow hot and cold in same breath. If the printing is important and gives an essential character to the end product, making it fit for use to make decorative laminate sheets/MDF boards etc., and since such printing is not merely in order to render the product for further printing and/or writing, both under Chapter Notes 12 and 14 to Chapter 48, the said printed base paper will merit classification under Chapter 49 and hence, no duty is payable on end product and in other hand, if the printing is merely incidental primary use of paper, and as per specific findings in the impugned order, paper can be used to make decorative laminate sheets/MDF boards etc. even without such printing as well, then such printing is so insignificant to the product, i.e. printed paper and the
4|Page E/10404/2019-DB process of printing undertaken by the appellant will never amount to manufacture within the meaning of Section 2(f) of Central Excise Act, 1944 and hence, there is no question of paying any duty thereon anyway, therefore, under both circumstances, the duty is not liable.
5. He alternatively submits that the appellant had undertaken the job work for principals who were exempt from duty payment (presumable being SSI units), therefore, in respect of job work for SSI exempted unit, the job work is exempted under Notification No. 83/1994-CE dated 11.04.1994, for their job work carried out on behalf of the units eligible for exemption under Notification No. 8/03-CE (SSI exemption). He further submits that the issue being of complex nature of interpretational issues, neither extended period of limitation can be invoked nor penalty be imposed on the appellant. The cum-duty benefit as well as credit of duty paid on input/input services/capital goods is admissible to the appellant. In the event, if it all duty is found payable.
6. Sh. A. Mishra Ld. Joint Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.
7. Heard both the sides and perused the records. We find that the fact is not under dispute that the appellant have carried out the printing process on the already manufactured papers. The department's contention is that the printed paper is classifiable under CETH 4811 9099 and liable to duty. The Ld. Counsel submitted that the printing of already manufactured paper do not amount to manufacture, therefore, the printed paper is not liable to duty being non manufactured goods in terms of Section 2(F). We find that the department has demanded duty with a view that the appellant have manufactured printed paper, however appellant have not manufactured paper, they have only carried out the process of printing. We find that the nature of printing carried out by the appellant does not alter the identity of the product as the paper remains as a paper only and mere printing does not amount to manufacture. In this regard Ld. Counsel relied upon the various judgments. In the case of Pan pipes Resplendents Ltd (Supra), Hon'ble Supreme Court held that printing / decorating of duty paid glazed ceramic tile did not change their basic character namely, glazed tile and hence not amount to manufacture in terms of Section 2(f) of Central Excise Act, 1944. In case of Metlex (I) P. Ltd (Supra), the Hon'ble
5|Page E/10404/2019-DB Supreme court observed laminating/ metallising of duty paid film does not amount to manufacture. In the case of Servo-Med Industries (P) Ltd (Supra), the Hon'ble Supreme Court held that manufacture is distinct from marketability/ saleability, it takes place on application of one or more processes which may lead to a change in goods to amount the manufacture, there must be a transformation by which new and different article which has distinctive name, character or use, Every change is not manufacture. If finished product cannot conveniently be used in the form in which it happens to be, and is required to be changed into various shapes/sizes, character and end use of first product continue to be same, there is no transformation. In the present case also applying the ratio of Hon'ble Supreme Court judgment, the paper remained as paper, the printing process carried out only for use in the decorative laminate sheets/MDF Boards etc. However, after process of printing, the first product i.e. paper continue to be same as paper only, therefore, no manufacturing has taken place in the present case. The Hon'ble Supreme Court in the case of Paper Product Ltd (supra), held that in the case of printing of name by job worker on film which is then utilized for purpose of packing does not amount to manufacture. As per this judgment, the printing was enabling the product to use as packing material for the purpose of packing. Similarly, in the present case also, the plain paper was printed with design for use in decorative laminate sheets/MDF Boards.
8. We also find that even if there is change in tariff heading, but there is significant change in the process and the said process does not amount to manufacture, merely change of tariff heading does not make product dutiable once again. This issue has been considered in the various judgments:
S.R. Tissues P. Ltd 2005 (186) ELT 385 (SC) Variety Lumbers P. Ltd 2014 (302) ELT 519 (Guj.) Variety Lumbers P. Ltd 2018 (360) ELT 790 (SC) Castings (India) Ltd 2016 (342) ELT 343 (Jhar) The Ld. Counsel has made alternative submission that even if the process is considered to be a process which amount to manufacture, the printed base paper will merit classifiable under chapter 49, hence no
6|Page E/10404/2019-DB duty is payable on end product. In this regard, we find that the relevant chapter note 2 of chapter 49 is reproduced below:
" 2. For the purposes of Chapter 49, the term "printed"
also means reproduced by means of a duplicating machine, produced under the control of an automatic data processing machine, embossed, photographed, photocopied, thermocopied or typewritten."
From the above chapter note, it is clear that any printed paper if amount to manufacture, the same is correctly classifiable under chapter note 49 and the most appropriate Central Excise Tariff Heading shall be 49119990 which attracts nil rate of duty. On this plea of the appellant also, the demand is not sustainable.
9. As per our above discussion, we are of the view that under the facts and circumstances, whether the product is classifiable under chapter 48119099 or under 49119990 appellant is not liable to pay duty. Accordingly, the impugned order is set aside. Appeal is allowed.
(Pronounced in the open court on 21.06.2019) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Seema