2000 (11) TMI 787 - AT - Central Excise

Summary

Issues Involved:
1. Whether the process carried out by the appellants amounted to 'manufacture' under Section 2(f) of the Act.
2. Whether M/s. S.R. Tissues were eligible for SSI exemption in respect of the products affixed with the brand name 'S.R.' with the logo of the bird-in-club.
3. Whether the extended period of limitation was invocable to demand duty on the clearances of the said period.

Summary:

1. Manufacture under Section 2(f):
The Tribunal examined whether the process of converting jumbo rolls of tissue paper to facial tissues, napkins, and rolls by cutting and slitting amounted to 'manufacture' u/s 2(f) of the Central Excise Act. The appellants argued that the activity did not alter the name, character, or end-use of the material, and thus did not amount to manufacture. They cited several precedents, including *Computer Graphics Pvt Ltd. v. Union of India* and *Prabhat Sound Studios v. A.C.C.E.*, to support their contention. The Tribunal found that the process did not result in a distinct and commercially new product and thus did not amount to manufacture. The Tribunal's decision in *Foils India Laminates Pvt. Ltd. v. C.C.E.* was not followed as it did not consider relevant precedents.

2. SSI Exemption:
The Tribunal considered whether M/s. S.R. Tissues were eligible for SSI exemption for products affixed with the brand name/logo 'S.R.' with the bird-in-club. The appellants argued that the logo was a house mark and not owned by M/s. S.R. Foils. The Commissioner had found that the logo belonged to M/s. S.R. Foils based on prior use. The Tribunal, having already decided that the activity did not amount to manufacture, did not delve further into this issue.

3. Extended Period of Limitation:
The Tribunal evaluated whether the extended period of limitation u/s 11-A was applicable. The appellants contended that they were under a bona fide belief that their activity did not amount to manufacture, supported by departmental clarifications. The Tribunal, having concluded that the activity did not amount to manufacture, did not find it necessary to address the limitation issue.

Conclusion:
The Tribunal set aside the Commissioner's order, confirming the demand of duty, confiscation of goods, and imposition of penalties, and allowed the appeals, holding that the activity in question did not amount to 'manufacture' and thus the products were not excisable.