2018 (5) TMI 385 - AT - Central Excise

Manufacture/deemed manufacture - printing of name of customers - benefit of N/N. 8/2003 - Held that - the respondents were not merely printing the names of the customers on the bags but were also undertaking the packing of the sacks. The activity fully falls under deemed manufacture and therefore the respondents have rightly availed the SSI exemption benefit under Notification No. 8/2003. The Hon ble Supreme Court in the case of Fitrite Packers 2015 (10) TMI 1047 - SUPREME COURT has held that The printing, therefore, is not merely a value addition but has now been transformed from general wrapping paper to special wrapping paper. In that sense, end use has positively been changed as a result of printing process undertaken by the assessee. The order passed by the Commissioner (Appeals) requires no interference - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of Notification No. 214/1986-CE and Notification No. 83/1994-CE regarding exemption from central excise duty.
2. Determination of whether the activity of printing names on PP bags and packing them constitutes manufacturing for SSI exemption under Notification No. 8/2003-CE.

Analysis:

Issue 1: Interpretation of Notifications
The case involved the supply of raw materials for conversion into PP packs/sacks under Notification No. 214/1986-CE and exemption under Notification No. 83/1994-CE. The department contended that the printing activity did not amount to manufacturing, challenging the SSI exemption. The original authority upheld the demand, but the Commissioner (Appeals) set it aside. The Tribunal analyzed the notifications and relevant provisions to determine the applicability of the exemptions.

Issue 2: Manufacturing Activity for SSI Exemption
The main dispute revolved around whether the activity of printing names on PP bags and packing them constituted manufacturing for SSI exemption under Notification No. 8/2003-CE. The department argued that no manufacturing activity was carried out by the respondent, relying on a previous decision. However, the respondent contended that the activity fell under deemed manufacture, citing the packing of sacks in addition to printing. The Tribunal examined the nature of the activity, comparing it to a Supreme Court case involving a similar issue.

The Tribunal found that the respondents were not merely printing names but also packing the sacks, qualifying as manufacturing for SSI exemption. Citing the Supreme Court decision in Fitrite Packers, the Tribunal concluded that the printing process resulted in a product with distinct character and use, satisfying the test of manufacture. Therefore, the Commissioner (Appeals) decision was upheld, and the department's appeals were dismissed. The withdrawal of cross-objections by the respondent was also noted, with the Tribunal dismissing them as withdrawn.