2016 (1) TMI 558 - AT - Central Excise

Classification of printed labels - articles of paper and paper board - classification under 4821.00 or 4823.90 of CETA - Undisputedly the activities carried out by the Munger factory was limited to cutting of big size labels manufactured in their other unit at Tiruvottiyur. Also, it is not in controversy that further processes were carried out on the said cut/sized labels at the factory of M/s.Surya Tobacco Co.Ltd., Nepal so as to convert into packing material. The authorities below, considering the processes carried out at Munger Unit as well as at the Nepal unit arrived at the conclusion that the resultant product is dutiable under Sub-Heading 4823.00 of CETA, 1985 Held that - on similar issue, for the subsequent period, the ld. Commissioner(Appeals) has accepted their stand and decided the issue in their favour after taking into consideration the meaning of labels as per the HSN. - Technically, it is also noted that the goods continue to conform to the description of paper board labels of all kinds within the meaning of Sub-Heading 4821.00 of the Central Excise Tariff Act - Revenue has accepted the aforesaid Order-in-Appeal and consequential refund was sanctioned/allowed to the appellant. - Demand set aside - Decided against the assessee.

Summary

Issues:
Classification of printed labels under Chapter Sub-Heading 4821.00 or 4823.90 of CETA, 1985; Manufacturing activity at Munger factory; Discrepancy in findings of different orders by the Commissioner(Appeals).

Classification Issue:
The appellant claimed printed labels under Chapter Sub-Heading 4821.00, while the department proposed classification under 4823.90. The appellant argued that no further printing was done at Munger factory, only cutting, and that the labels were exported to Nepal without further processing. The Commissioner(Appeals) upheld the duty demand, considering activities at both factories. However, a subsequent order by the Commissioner(Appeals) favored the appellant, acknowledging no manufacturing activity at the Munger factory. The Tribunal noted that the goods conformed to 4821.00 classification, approved by authorities, and no duty was chargeable due to no manufacturing activity.

Manufacturing Activity Issue:
The appellant contended that only cutting to size was done at the Munger factory, not amounting to manufacturing under Section 2(f) of the Central Excise Act. The Tribunal agreed, citing Supreme Court decisions that cutting larger sheets does not constitute manufacturing unless a new commercial commodity emerges. The Tribunal found no new product emerged at the Munger factory, supporting the appellant's claim.

Discrepancy in Commissioner(Appeals) Findings:
The Tribunal compared findings of two orders by the Commissioner(Appeals) for different periods. The subsequent order favored the appellant, leading to a refund. The Tribunal found no discrepancies in the subsequent order's findings, which were accepted by the Revenue. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant, with any consequential relief as per law.