1997 (9) TMI 171 - AT - Central Excise

Summary

Issues: Classification of biris under Tariff sub-headings 2404.31 or 2404.39, Processes involving machines in the manufacture of biris, Application of limitation period for demand of duty.

Classification of biris under Tariff sub-headings 2404.31 or 2404.39:
The dispute revolves around whether the biris manufactured by the appellant fall under Tariff sub-heading 2404.31, attracting a higher rate of duty if machines are used, or under sub-heading 2404.39 with a lower duty rate if no machines are involved. The appellant contends that the processes of cutting tissue paper and printing labels with machines are for raw material preparation and not part of biri manufacturing. The Tribunal agrees, stating that these processes do not create new commodities but prepare raw materials, which are known market products. The actual biri rolling and labeling are done manually without machines, supporting the classification under sub-heading 2404.39.

Processes involving machines in the manufacture of biris:
The appellant argues that the use of machines in cutting paper and printing labels is not integral to biri manufacturing, as these processes are preparatory and not directly involved in biri production. The Tribunal concurs, emphasizing that the description of sub-heading 2404.31 does not encompass processes "in relation to" biri manufacture. The Tribunal distinguishes the present case from Standard Fire Works, Sivakasi, where machine processes were deemed essential for firework production. Here, the Tribunal finds that the use of machines for raw material components does not impact biri manufacturing carried out manually.

Application of limitation period for demand of duty:
Regarding the limitation period for duty demand, the appellant asserts a bona fide belief that machine processes for raw materials are irrelevant to biri production. The appellant argues that the normal time limit of six months should apply, not the extended five-year period. The Tribunal agrees with the appellant, stating that the demand of duty should adhere to the six-month limit, as the processes involving machines were not integral to biri production and were carried out by third parties.

Conclusion:
The Tribunal rules in favor of the appellant, classifying the biris under sub-heading 2404.39 due to manual biri manufacturing without machine involvement. As a result, no demand for differential duty is applicable, and the appeal is allowed with consequential relief to the appellant. The Tribunal does not delve into the limitation issue further, as the classification decision resolves the appeal conclusively.