2019 (6) TMI 1019 - AT - Central Excise

Classification of goods - clearances of printed base papers/printed decorative paper in rolls - to be classified under CETH 4811 9099 or not? - Department is of the view that after receipt of base paper, since the appellant prints the same and returns to the principals, the said goods may be classified under CETH 4811 9099 and not under CETH 4911 9990 - HELD THAT - The department has demanded duty with a view that the appellant have manufactured printed paper, however appellant have not manufactured paper, they have only carried out the process of printing. We find that the nature of printing carried out by the appellant does not alter the identity of the product as the paper remains as a paper only and mere printing does not amount to manufacture. In the present case also applying the ratio of Hon ble Supreme Court judgment in M/S. SERVO-MED INDUSTRIES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI 2015 (5) TMI 292 - SUPREME COURT , the paper remained as paper, the printing process carried out only for use in the decorative laminate sheets/MDF Boards etc. However, after process of printing, the first product i.e. paper continue to be same as paper only, therefore, no manufacturing has taken place in the present case. Even if there is change in tariff heading, but there is significant change in the process and the said process does not amount to manufacture, merely change of tariff heading does not make product dutiable once again. This issue has been considered in the various judgments. Any printed paper if amount to manufacture, the same is correctly classifiable under chapter note 49 and the most appropriate Central Excise Tariff Heading shall be 49119990 which attracts nil rate of duty. On this plea of the appellant also, the demand is not sustainable. Thus whether the product is classifiable under chapter 48119099 or under 49119990 appellant is not liable to pay duty - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is liable to pay duty on clearances of printed base papers/printed decorative paper in rolls by classifying them under CETH 4811 9099 or not.

Analysis:
The issue in this case revolves around the classification of printed base papers/printed decorative paper by the appellant under CETH 4811 9099. The appellant contends that the printing activity carried out on the base paper gives the product its distinct character, falling under Chapter 49, not Chapter 48. The appellant argues that the printing is not merely incidental to the primary use of the goods, as it changes the paper's intended use for decorative laminate sheets/MDF boards. Various judgments, including Gopsons Papers Ltd and Kayen Print Process (P) Ltd, support this contention. The department, however, asserts that printing is insignificant and incidental, maintaining that the paper's primary use remains unchanged. The appellant further argues that even if unprinted and printed paper fall under the same or different tariff headings, mere printing does not amount to manufacture, citing relevant case law.

Regarding the manufacturing aspect, the department claims that the printing process does not fulfill the criteria for manufacture under the Central Excise Act, as the base paper can be used for decorative laminate sheets/MDF boards with or without printing. Citing judgments like Pan pipes Resplendents Ltd and Servo-Med Industries (P) Ltd, the appellant argues that mere decoration does not constitute manufacture. The appellant emphasizes that the nature of printing undertaken does not alter the paper's identity, relying on case law such as Metlex (I) P. Ltd and Paper Products Ltd. The tribunal concurs that the printing process does not transform the paper into a new product, as observed in the judgments cited.

In considering the alternative argument regarding duty exemption for job work carried out for SSI units, the tribunal finds that the appellant is not liable to pay duty under either circumstance of classification under Chapter 48119099 or 49119990. The tribunal concludes that the printed base paper should be classified under Chapter 49, attracting nil rate of duty, thus setting aside the impugned order and allowing the appeal.

The tribunal's detailed analysis of the facts, legal provisions, and precedents establishes that the appellant is not liable to pay duty on the printed base papers/printed decorative paper in rolls, as the printing process does not amount to manufacture and the classification under Chapter 49 warrants nil duty payment. The decision provides clarity on the classification and duty implications of the printing activity undertaken by the appellant, aligning with the legal principles and precedents cited during the proceedings.