2014 (3) TMI 1039 - AT - Central Excise

Pre-deposit of duty - interest and addition penalty of identical amount stands imposed - invoking the longer period of limitation - whether printing and lamination on plastic film amounts to manufacture? - Held that - The activity of printing and plastic coating does not amount to manufacture. During the course of arguments, it is asked from the learned D.R. regarding the use of plain poly films rolls. The query was answered that the same can be used as packing material. In this case, as per the learned AR there is no change in the use of goods after printing and lamination. Therefore, the issue whether the activity of printing and lamination amounts to manufacture or not is to be considered at the time of final hearing as there was contrary decisions. I do agree with the contention of the learned Advocate that when there are contrary decisions on the issue, whether the activity of printing/lamination amounts to manufacture or not, relying on the decision of this Tribunal in the case of Maharashtra Seamless stay is to be granted. Therefore, the applicant has made out a case of waiver of pre-deposit but as learned Counsel for the applicant at the time of hearing their stay application before the referral Bench has offered for making further deposit of ₹ 20 lakhs in addition to ₹ 40 lakhs already deposited, therefore, I agree with the view of learned Member (Judicial) directing the applicant to make pre-deposit of ₹ 20 lakhs

Issues Involved:
1. Whether the activity of printing and lamination amounts to manufacture.
2. Classification of the final product under Chapter 49.
3. Applicability of the extended period of limitation.
4. Requirement of pre-deposit for hearing the appeal.

Detailed Analysis:

1. Whether the activity of printing and lamination amounts to manufacture:
The appellants are engaged in printing and laminating poly films, which the Revenue contends amounts to manufacture, thereby necessitating the payment of duty. The appellant argued that the process of printing does not constitute manufacture, citing various decisions including the Supreme Court's ruling in CCE v. Paper Products Ltd. [2000 (115) E.L.T. 277 (S.C.)]. However, the Revenue referred to a recent Tribunal decision in Markwell Paper Plast Pvt. Ltd. v. CCE, Noida [2012 (285) E.L.T. 76 (Tri.-Del.)], which held that printing and lamination of poly/metal film amounts to manufacture. The Tribunal, considering these arguments, noted that even if printing is considered manufacture, the final product would fall under Chapter 49, attracting a nil rate of duty.

2. Classification of the final product under Chapter 49:
The appellant contended that the final product, being a product of the printing industry, should be classified under Chapter 49, which attracts a nil rate of duty. The Tribunal found prima facie favor with this argument, referencing the case of Metagraphs Pvt. Ltd. [1996 (88) E.L.T. 630 (S.C.)] and Johnson and Johnson Ltd. v. CCE [1997 (94) E.L.T. 286 (S.C.)]. However, the Tribunal also noted that the classification issue was not raised before the adjudicating authority and should be addressed based on the character of the goods at the time of clearance.

3. Applicability of the extended period of limitation:
The Tribunal found prima facie favor with the appellant's contention that the extended period of limitation would not be available to the Revenue. This was based on the argument that there were conflicting decisions regarding whether the process of printing and lamination amounts to manufacture, which could provide a bona fide belief to the appellant.

4. Requirement of pre-deposit for hearing the appeal:
The Tribunal considered the appellant's financial condition and the fact that the factory was closed. The appellant had already deposited Rs. 40 lakhs and offered to deposit an additional Rs. 20 lakhs. The Tribunal directed the appellant to deposit Rs. 20 lakhs within 8 weeks, after which the pre-deposit of the balance amount of duty and the entire amount of interest and penalty would be waived, and its recovery stayed during the pendency of the appeal.

Separate Judgments:
One member disagreed with the order for further deposit of Rs. 20 lakhs, instead suggesting a pre-deposit of Rs. 1 crore, considering the findings of the adjudicating authority and the nature of the manufacturing activities involved. This difference of opinion was resolved by a third member, who agreed with the view that a pre-deposit of Rs. 20 lakhs was sufficient, considering the appellant's financial condition and the conflicting decisions on the issue of manufacture.

Final Order:
The majority order directed the appellant to make a pre-deposit of Rs. 20 lakhs within 8 weeks for the hearing of their appeal, with the matter to come up for compliance on 26-5-2014.

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