1988 (4) TMI 185 - AT - Central Excise

Issues Involved:

1. Classification of Cinema Wall Posters under Central Excise Tariff.
2. Inclusion of the value of clearances of Cinema Wall Posters in the aggregate value of clearances for exemption under Notifications No. 71/78-C.E. and No. 80/80-C.E.
3. Whether printing constitutes manufacture.
4. Reopening of approved classification lists by the Assistant Collector.
5. Time-barred demand for duty.

Issue-wise Detailed Analysis:

1. Classification of Cinema Wall Posters under Central Excise Tariff:

The primary issue was whether Cinema Wall Posters should be classified under Item 68 or Item 17(2) of the Central Excise Tariff. The Assistant Collector of Central Excise classified Cinema Wall Posters under Item 68, arguing that they were products of the printing industry and not converted paper. Conversely, the Collector of Central Excise (Appeals) classified them under Item 17(2), stating that the production did not involve manufacture. The Tribunal upheld the Assistant Collector's classification under Item 68, reasoning that Cinema Wall Posters, after printing, become a new commodity commercially known as such, thus constituting a product of the printing industry.

2. Inclusion of the Value of Clearances of Cinema Wall Posters:

The Tribunal examined whether the value of clearances of Cinema Wall Posters should be included in the aggregate value of clearances for exemption purposes under Notifications No. 71/78-C.E. and No. 80/80-C.E. It was held that since Cinema Wall Posters fall under Tariff Item 68, their value should be included in the aggregate value of clearances. As a result, the aggregate value of clearances exceeded Rs. 20 lakhs, thereby denying the benefit of exemption in respect of playing cards.

3. Whether Printing Constitutes Manufacture:

The Tribunal referred to the Supreme Court judgment in Empire Industries Ltd., which established that "manufacture" occurs when a new commodity with distinct character, use, and name emerges. It concluded that Cinema Wall Posters, after printing, transform into a new product distinct from paper, thus constituting manufacture. Consequently, the printed Cinema Wall Posters were classified under Item 68 as products of the printing industry.

4. Reopening of Approved Classification Lists by the Assistant Collector:

The Tribunal addressed whether the Assistant Collector could reopen approved classification lists. It referred to the Karnataka High Court judgment in Shyam Sunder U. Nichani, which allowed reopening under Section 11A of the Central Excises and Salt Act, 1944. The Tribunal preferred this view over earlier Delhi High Court decisions, holding that reopening and reassessment under Section 11A were permissible, thereby validating the Assistant Collector's actions.

5. Time-barred Demand for Duty:

The Tribunal considered the argument that the demand for duty in one case was time-barred. It examined the relevant orders and show cause notices, concluding that while some demands were within the six-month limitation period, others exceeded it. Specifically, in Appeal No. ED/SB/18/84-C, the Tribunal directed that the demand for duty be recalculated for a period of six months only, and any excess recovery should be refunded.

Conclusion:

The Tribunal set aside the orders of the Collector of Central Excise (Appeals) and upheld the Assistant Collector's original orders, subject to the recalculation of the time-barred demand for duty. The classification of Cinema Wall Posters under Item 68 was affirmed, and their value was included in the aggregate value of clearances, denying the exemption benefits for playing cards. The Tribunal also validated the reopening of approved classification lists under Section 11A of the Act.

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