2015 (1) TMI 940 - AT - Central Excise

Determination of the fact whether there is short payment of duty on account of mis-classification of Super Kishan Biri No. 51 , chargeable to specific rate of duty - packing of biris the aid packing machine - classification under sub-heading No. 2403 10 39 or otherwise - Held that - The show cause notice was issued to the Applicant alleging short payment of duty because of incorrect classification of biris. It is alleged that since the machines running with the aid of power, had been used in packing biris known as Super Kishan Biri No. 51 , therefore, it would be classifiable under sub-heading No. 2403 10 39 instead of sub-heading No. 2403 10 31. It has not been an issue for determination whether labelling, re-labelling, re-packing from bulk pack, etc. resulted into manufacture under Chapter Note 3 of Chapter 24 of CETA, 1985. On the contrary, we find that the circumstances involved in the present case are squarely covered by the judgment of this Tribunal in the case of Hindustan Biri Manufacturing Company s case (2007 (3) TMI 106 - CESTAT, KOLKATA), wherein it has been categorically held that the biri is not manufactured with the aid of power by use of machine for the sole purpose of packing of biris in pre-printed plastic wrapper brought from outside. In the result, there is no merit in the Orders-in-Appeal. Consequently, the same are set aside - Decided in favour of assessee.

Summary

Issues:
Classification of handmade biris under different sub-headings for excise duty calculation; Mis-classification leading to short payment of duty; Interpretation of Chapter Note 3 of Chapter 24 of CETA, 1985 in relation to packing of goods with the aid of machines; Applicability of previous judgments in similar cases.

Analysis:

1. Classification Dispute:
The case involved a dispute over the classification of handmade biris under different sub-headings for excise duty calculation. The Appellants manufactured biris without the aid of machines and cleared them at a lower duty rate. However, a higher duty rate was applicable for branded biris packed using power-operated machines. The Revenue alleged mis-classification, leading to short payment of duty. The Adjudicating Authority initially dropped the demand, but the Revenue filed a Review Application, which was partly allowed by the ld. Commissioner (Appeals). The Appellant challenged this decision, arguing for classification under a lower duty rate sub-heading.

2. Interpretation of Chapter Note 3:
The ld. Consultant for the Appellants contended that the use of machines for packing biris did not fall under Chapter Note 3 of Chapter 24 of CETA, 1985. He argued that the ld. Commissioner (Appeals) erroneously relied on Chapter Note 3 in the decision. The Appellant's representative also cited previous Tribunal judgments and a Supreme Court case to support their argument that the packing process did not constitute manufacturing under the Central Excise Act, 1944.

3. Applicability of Previous Judgments:
The ld. Consultant further relied on previous Tribunal judgments and a Supreme Court case to establish that the use of machines for packing biris did not change the classification under a higher duty rate sub-heading. The Appellant's argument was supported by the findings in the case of Hindustan Biri Manufacturing Company, where it was held that the use of machines for packing did not alter the classification of the product. The Tribunal found merit in the Appellant's contentions and set aside the Orders-in-Appeal, allowing the appeals.

In conclusion, the judgment resolved the classification dispute regarding handmade biris, emphasizing that the use of machines for packing did not warrant a higher duty rate classification. The Tribunal's decision was based on the interpretation of relevant legal provisions and previous judgments in similar cases, ultimately ruling in favor of the Appellant.