2014 (9) TMI 862 - AT - Central Excise

Manufacture - Jumbo rolls of paper are cut to size in slitting in machine - further process of printing, punching and inserting of carbons papers in the said small rolls/rims by changing the very nature of main jumbo rolls - Held that - Mere cutting/slitting of jumbo rolls into small sizes does not amount to manufacture inasmuch as the paper remains the paper. The said decision of the Hon ble Supreme Court was taken note of by the Tribunal in the case of 2006 (3) TMI 13 - CESTAT, NEW DELHI . The goods involved in the said decision of the Tribunal were tele-printer rolls, telegraphic rolls, adding machine rolls, fax rolls, typewriting paper, duplicating paper, tissue paper, toilet paper and napkin paper, etc. - by cutting/slitting the jumbo rolls of paper and by placing the carbon paper in between two layers of the paper with the side punching would not amount to manufacture inasmuch as paper remain paper. Following decision of Anil Dang v. CCE, Vapi 2007 (5) TMI 7 - CESTAT, MUMBAI - Decided in favour of assessee.

Summary

Issues:
Whether the cutting/slitting and inserting of carbon paper in jumbo paper rolls amount to manufacture for the purpose of Central Excise duty.

Detailed Analysis:

1. Manufacture for Central Excise Duty:
The main issue in the judgment is whether the processes of cutting/slitting jumbo paper rolls and inserting carbon paper between two layers of paper amount to manufacture, thereby attracting Central Excise duty. The lower authorities had held that these processes transform the jumbo rolls into computer stationery, subject to duty and penalties.

2. Processes Undertaken by the Appellant:
The processes undertaken by the appellant involve receiving jumbo paper rolls, cutting them to size, punching both sides with carbon paper layer, and potentially printing on the paper rolls. The final product is termed as computer stationery, as per the order of the Commissioner (Appeals).

3. Decision of Commissioner (Appeals):
The Commissioner (Appeals) rejected the appeal, stating that the appellant's processes change the nature of the main jumbo rolls by adding printing, punching, and carbon paper insertion. This results in the creation of a new commodity known as "Computer Stationery," attracting duty under a separate CE Tariff heading.

4. Precedent and Legal Interpretation:
The judgment references a Supreme Court decision and a Tribunal ruling, emphasizing that mere cutting/slitting of jumbo rolls into smaller sizes does not constitute manufacture, as the fundamental character of the paper remains unchanged. The Tribunal's decision in a similar case involving various paper products further supports the non-manufacture argument.

5. Comparison with Previous Cases:
The judgment distinguishes the facts of a Supreme Court case involving typewriter/telex rolls from the present scenario, highlighting that the transformation in the former case was different. Additionally, a Tribunal decision regarding slitting plastic laminated film reaffirms that such processes do not amount to manufacture.

6. Final Decision and Relief Granted:
Based on the settled legal principles and precedents, the Tribunal concludes that the processes undertaken by the appellant do not amount to manufacture for Central Excise duty purposes. Consequently, the impugned orders are set aside, and the appeals are allowed, providing consequential relief to the appellants.

In summary, the judgment clarifies that the cutting/slitting and carbon paper insertion processes do not constitute manufacture under Central Excise duty laws, as the fundamental character of the paper remains unchanged. The decision is based on established legal principles, precedents, and a thorough analysis of the processes involved, ultimately providing relief to the appellants based on the non-manufacture interpretation.