2005 (9) TMI 133 - AT - Central Excise

Summary

Issues:
Classification of "Shrink Sleeves" under Central Excise Act, 1944

Analysis:
The dispute in the present appeal revolves around the correct classification of "Shrink Sleeves" manufactured by the appellants. While the appellants were clearing the shrink sleeves under sub-heading 3920.19, the Commissioner classified them under Heading 4901.90 as products of the printing industry. This classification led to implications such as treating the duty paid as a deposit, denying Modvat credit, imposing personal penalties, and confirming interest.

The appellants argued that the primary purpose of the shrink sleeves is tamper protection, not printing. They contended that the printing on the sleeves is incidental, and plain sleeves are also used for packing. They emphasized that the main use of the product is pilfer-proof packing, falling under Chapter 39, not as goods of the printing industry under Heading 4901.90. Reference was made to Board's Circular No. 6/89-CX to support their argument.

The Tribunal observed that the sleeves provide tamper protection and enhance the packaging's resistance properties. It noted that plain plastic shrink sleeves are also used for packing, indicating that printing is not the primary purpose. The Tribunal held that the printing on the sleeves is incidental to their main use of providing tamper-proof packing, leading to the classification under Chapter 39.

The Tribunal highlighted the Commissioner's heavy reliance on previous Supreme Court decisions involving printed labels of aluminum, emphasizing that in those cases, printing was primary for communication purposes. However, in the case of shrink sleeves, even without printing, they serve their intended purpose of packing containers. The Tribunal concluded that the shrink sleeves are properly classifiable under Chapter 39, and the duty burden was correctly discharged after availing Modvat credit on inputs.

In conclusion, the Tribunal set aside the impugned order, confirming the demand of duty, imposing personal penalties, and allowed all the appeals in favor of the appellants, providing consequential relief. The judgment clarified the classification of "Shrink Sleeves" under the Central Excise Act, 1944, emphasizing the main purpose of the product for tamper protection and pilfer-proof packing, leading to the classification under Chapter 39.