2011 (8) TMI 641 - AT - Central Excise

Manufacture - products which emerge after printing on paper, polyethylene coated paper and on PVC films could be treated as arising out of manufacture or not - FACTS Printing is of a sophisticated nature and the printed materials contain details which are required statutorily and information related to manufacture i.e brand name, logo etc. which are sought to be conveyed to the consumers. They are used for wrapping cigarette packets and they serve definite purpose different from mere wrapping. Classifiable under 4901.90 OR 4823.19 - Held That - Activities undertaken in the present cases would amount to manufacture, we also accept the alternative submissions on behalf of the assessees that the products should be treated as products of printing industry and classifiable under Chapter 49 instead of 39. On merits demand is set aside. Tribunal has distinguished the decisions of Rolla Tainers Ltd. Vs. UOI (1994 -TMI - 43802 - SUPREME COURT OF INDIA) and ITC Ltd. Vs. CCE, Madras (1997 -TMI - 44801 - SUPREME COURT OF INDIA) stating that, in The Hon ble Supreme Court was not considering such a situation while determining whether the printed cartons would fall under the category of products of printing industry. In the said case, the issue was whether the printed cartons should be treated as products of printing industry or products of packaging industry. Hon ble Supreme Court after noting that the printing industry by itself could not bring cartons into existence, held that such printed cartons could not be considered as products of printing industry. The ratio of the said decision cannot be applied to the facts of the present case which involve determination of classification of the printed products which could fall either under chapter 48 or 49 depending upon the nature and scope of printing on the products.

Issues Involved:
1. Classification of Printed Products
2. Determination of Manufacture
3. Applicability of Extended Period of Limitation

Issue-wise Detailed Analysis:

1. Classification of Printed Products:
The core issue was whether the products emerging after printing on paper, polyethylene coated paper, and PVC films should be classified under Chapter 48 or Chapter 49 of the Central Excise Tariff. The assessees argued that the printed products should be classified under Chapter Heading 4901.90 as products of the printing industry, while the Department contended that they should fall under Chapter Heading 4823.19.

The Tribunal noted that the printing undertaken was sophisticated and served dual purposes of marketing and statutory compliance. The printed products acquired new characteristics and names, serving purposes beyond mere wrapping. The Tribunal concluded that the printed products should be classified under Chapter Heading 4901.90 as products of the printing industry.

2. Determination of Manufacture:
The Tribunal examined whether the printing activities amounted to "manufacture." The assessees argued that the processes did not constitute manufacture as the raw materials and final products were substantially the same. However, the Department maintained that the sophisticated printing activities resulted in new products with distinct names and uses.

The Tribunal agreed with the Department, stating that the printing imparted new characteristics and purposes to the products, thus meeting the criteria for manufacture. The Tribunal distinguished the facts from previous cases cited by the assessees, where the primary use of the materials remained unchanged after printing.

3. Applicability of Extended Period of Limitation:
In some cases, the Department invoked the extended period of limitation, alleging suppression of relevant information by the assessees. The Tribunal, however, set aside the demands on merits and observed that the nature of the dispute involved in-depth interpretation of competing tariff entries. Therefore, the invocation of the extended period of limitation was not justified.

Conclusion:
The Tribunal upheld the Department's contention that the activities amounted to manufacture but accepted the assessees' alternative submission that the products should be classified as products of the printing industry under Chapter Heading 4901.90. Consequently, the Tribunal set aside the demands of duty, interest, and penalties. The appeals of the assessees were allowed with consequential relief, and the appeals by the Department were rejected.

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