2024 (3) TMI 493 - AT - Central Excise

Activity amounting to manufacture or not - work of printed labels and printed cartons for corrugated boxes falling under Tariff Heading 48211020 and 48191010 of Central Excise Tariff Act, 1985 - manufacture and clearance of printed labels without assessing the duty involved thereon, without payment of duty and without issuing proper invoices for clearances of such goods during the period January 2007 to March 2011 - contravention of provisions of Rules, 4, 6, 8, 10, 11 and 12 of Central Excise Rules, 2002 - vague SCN - HELD THAT - The case of the department is that the appellant is a job worker who received raw material from the customers and do the activity of printing which amounts to manufacture of finished products. However, in the show cause notice or in the Order-in-Original it is not explained by department as to which is the provision which renders the activity of printing undertaken by the appellant excisable so as to be manufacture . The Department has construed the activity of printing to be manufacture, merely because the goods fall under tariff heading 482110. The classification of the goods or its excisability cannot be a ground for holding that the activity amounts to manufacture . The department has to establish that the activity undertaken by the appellant as per the chapter notes of Section 48 to be that of manufacture. In the present case, there is nothing brought out on record to hold that the activity of printing is manufacture by chapter notes. In the case of M/S MATCHWELL VERSUS C.C.E. -AHMEDABAD-I 2019 (6) TMI 1019 - CESTAT AHMEDABAD , the Tribunal had occasion to consider similar issue. It was held that merely because the goods are classifiable under a particular tariff heading, it cannot be said that the activity undertaken by the appellant in the nature of printing of images on paper would amount to manufacture . In the case of HBD PACKAGING (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA 2013 (5) TMI 33 - CESTAT, NEW DELHI , similar issue was considered wherein it was held that the activity of printing and plastic / varnish coating of plain paperboard as per customer s specification either purchased by assessee or received for job work does not amount to manufacture. It was held that the basic character of paper board has not changed. Thus, the activity of printing done by the appellant does not amount to manufacture . The demand of Excise duty, interest and the penalties imposed cannot sustain. The demand, interest and penalties are set aside. The impugned order is set aside. Appeal allowed.

Summary

Issues Involved:
1. Whether the activity of printing undertaken by the appellant amounts to 'manufacture'.
2. The legality of the penalties imposed on the appellants.

Summary:

Issue 1: Whether the activity of printing undertaken by the appellant amounts to 'manufacture'.

The appellant, engaged in printing labels and cartons, was accused by the department of manufacturing without paying duty, contravening Central Excise Rules. The department argued that the printing activity constituted 'manufacture' under Rule 2(a) of the General Rules of Interpretation of Central Excise Tariff, as the printed goods attained the character of finished goods. However, the appellant contended that the department failed to specify how printing equated to 'manufacture' and relied on Chapter 48 and 49 of CETA 1985, which did not classify printing on paper/paperboard as 'manufacture'.

The Tribunal noted that the department's argument was based solely on the classification of goods under tariff heading 482110, without establishing that the printing activity was 'manufacture' per the chapter notes of Section 48. Citing previous judgments, including Matchwell Vs CCE Ahmedabad and ITC Ltd. Vs CCE Chennai, it was held that printing does not alter the basic character of the paper and thus does not amount to 'manufacture'. The Tribunal emphasized that mere change in tariff heading does not imply manufacture unless a new commercial commodity emerges.

Issue 2: The legality of the penalties imposed on the appellants.

Given the conclusion that the printing activity did not amount to 'manufacture', the Tribunal found that the demand for excise duty, interest, and penalties imposed on the appellants could not be sustained. The penalties were deemed improper as the foundational premise of manufacturing was not established.

Conclusion:

The Tribunal set aside the demand for excise duty, interest, and penalties, allowing the appeals with consequential reliefs, if any. The activity of printing undertaken by the appellant was ruled not to constitute 'manufacture'.