Customs, Excise and Gold Tribunal - Tamil Nadu
Lakshmi Packaging (P) Ltd. vs Commissioner Of C. Ex. on 6 December, 1999
Equivalent citations: 2000(117)ELT333(TRI-CHENNAI)
ORDER V.K. Ashtana, Member (T)
1. In this appeal against Orders-in-Appeal No. 161/98(CBE), dated 30-10-1998, the simple issue agitated before us is whether printing of uniform continuous design on other paper purchased on payment of duty from the primary manufacturer of that paper after payment of duty under sub-heading 48.05, when subjected to such printing, would amount to manufacture and whether such printed paper would fall under sub-heading 48.13 as cigarette paper. While the order impugned has upheld the Order-in-Original No. 105/96, dated 22-04-1996, wherein it was held that the activity of printing amounted to manufacture and that since the said printed paper was used as tipping paper for the cigarette corks, therefore, it would fall under heading 48.13, the appellant on the other hand, submits that mere printing on boughtout duty paid paper cannot be said to amount to manufacture as nothing new emerges after printing. The appellant further contended that if the said paper was to be regarded as cigarette paper, then it should have been classified under heading 48.13, when the said paper was removed from the factory premises of the primary manufacturer itself.
2. The learned Advocate for the appellants submits that as far as the issue of whether merely printing on paper amounts to manufacture is concerned, the same has already been considered by this Tribunal vide Final Order No. 1689/97, dated 8-7-1997 in the appellants own case, wherein the Tribunal had held that printing on base paper would not amount to any manufacturing activity and had allowed the appeal. He submits that the Tribunal had relied on the decision of the Hon'ble Bombay High Court in the case of J.G. Glass Ltd. v. CCE as reported in 1992 (62) E.L.T. 291. The learned Advocate submits that this decision of Hon'ble Bombay High Court was later confirmed by the Hon'ble Supreme Court as reported in U.O.I, v. J.G. Glass Ltd. as reported in 1998 (97) E.L.T. 5 (S.C). The learned advocate submits that even if the HSN treats the cigarette tipping paper in the same category as cigarette paper, the present appellants have not manufactured, the paper at all, as it was manufactured by some other assessee and cleared, on payment of duty as 'other paper' under heading 48.05. Therefore, if that assessment was wrong, then the demand on that score should have been raised on the said primary manufacturer and not on the present appellants. Therefore, he concludes that on both counts the order impugned is liable to be set aside.
3. The learned D.R. refers to page 680 of the Explanatory Notes of HSN, wherein it has been explained that the sub-heading 48.13 covers all types of the cigarette paper including plug wrap and tipping paper used for wrapping the filter mass and for assembling the filter tip and the cigarette respectively, regardless of its size or presentation. He submits that the product in question is used exactly for the purpose of wrapping the filter mass of the cigarette in this case and this pack is not disputed by the appellants. Therefore, in view of the well laid down law now that the HSN notes, cannot be ignored in classification matters, it is clear that the said paper would fall under heading 48.13. He submits that it is only after printing that the said paper becomes fit for being used as tipping paper and therefore, there was no need to issue any notice to the primary manufacturer and the notice has been rightly issued to the present appellants.
4. We have carefully considered the rival submissions and records of the case. We find that the following facts in this case are not disputed :-
(a) The appellant receives duty paid base paper which had been classified by the primary manufacturer thereof under heading 48.05 in rolls.
(b) The appellant subjects the said paper to motley process (printing of dots on one side of the paper) and the said printed paper is eventually used by the buyer thereof in wrapping filter mass of cigarettes.
We find that this very issue was considered by the Tribunal in the case of C.T.C. Industries Ltd. as reported in 1995 (75) E.L.T. 627, wherein though the matter was remanded for de novo consideration as to whether the said printing would constitute an act of manufacture, however, on the classification issue the Tribunal had held in paras 23 and 26 as follows :-
"23. Therefore, in my view if the department considered that the tipping paper was classifiable under 48.13 then it should have issued the show cause notice to the manufacturer of that paper and not to the appellants who were admittedly responsible only for converting it into a decorative paper. In any case the manufacturer should have also been impleaded along with the appellants if it was proposed to raise the issue of characteristics and classification of the plain cigarette mouth paper in these proceedings.
26. Hence, even if HSN notes are taken into account and on that basis tipping paper was considered as a type of cigarette paper still the show cause notice would be addressable to the initial manufacturer of the item and not to the one who has merely subjected the base tipping paper to a further process of conversion as aforesaid. To my mind therefore, the proceedings have been started against a wrong party and deserve to be quashed. "
5. We have also perused the Tribunal's Final Order No. 1689/97, dated 8-7-1997 in the appellants own case, wherein the Division Bench had held that mere printing on duty paid paper does not bring into existence any new article with distinct identity and therefore, the said process has not increased the value of the article and such printing would not amount to manufacture.
6. On a careful consideration of these facts as well as these two decisions, we find that we are required to decide on the following two issues :-
(i) Whether printing of dots on the said paper would amount to manufacture? and
(ii) Whether the Revenue was required to raise the demands on the said paper on the primary manufacturer instead of the present appellant, if the same was to be treated as tipping paper falling under heading 48.13 because the said paper had been cleared on payment of duty under sub-heading 48.05, particularly in terms of the decision of the Tribunal extracted above in the case of G.T.C. Industries Ltd. (supra).
7. On a careful consideration of the facts and the decisions cited, we are of the considered opinion that the issue of whether mere printing on duty paid paper amounts to manufacture has already been decided by this Tribunal in the Final Order No. 1689/97 (supra) in the appellants own case. The learned Commissioner (Appeals) has tried to distinguish this situation by referring to Note 11 of Chanter 48, which reads as under :-
"Except for the goods of Heading 48.14 or 48.21, paper, paper-board, cellulose wadding and articles thereof, printed with motifs, characters or pictorial representations, which are not merely incidental to the primary use of the goods, fall in Chapter 49."
On a careful reading of the same, we find that the said note would not be applicable in this case because there is no legend or any other specific information which is printed on the said paper which would indicate that it is primary to the use of the said paper. The nature of the printing will not convey any special meaning to the buyer of the said paper as to what is the product which would ultimately be attached thereto. Therefore, we find that in this case the pictorial representations would be incidental to the primary use of the goods and hence their classification under heading 49 would be ruled out. The finding of the learned Commissioner (Appeals) that the final order No. 1689/97 (supra) would not apply to this case because it was passed with respect to old Tariff Item No. 17, is also not logically correct in as much as that there has been no change in the concept of manufacture under the new Tariff and particularly under Note 11 to Chapter 48 to state explicitly that the process of printing in such goods would amount to manufacture. In these circumstances, we find that the printing of such pictorial representations on duty paid paper would not amount to manufacture. Coming to the second question, we find that the issue has been clearly considered in the case of G.T.C. Industries Ltd. (supra). We are in agreement with the said decision because once we have held that printing on duty paid paper does not amount to manufacture, then if the said printed paper is more appropriately classifiable under sub-heading 48.13 in terms of the Explanatory Notes noted above, then such a classification ought to have been done when the base paper was cleared from the primary manufacturer on payment of duty. It is nobody's case here that any such notice was issued to the said original manufacturer it would not be legally correct to burden the present appellants who are merely printing with the burden of such duties.
8. In view of the aforesaid analysis and findings, we set aside the Order-in-Appeal impugned along with the attendant Order-in-Original and allow the appeal with consequential relief, if any, as per law.