2015 (9) TMI 252 - SC - Central Excise

Classification - printing biri wrappers cut to size - Classification under Chapter sub-heading 4821.00 or under Chapter Heading 4823.19 - Held that - Printing of biri wrappers would not and can never fit under the description transfer decalcomanias inasmuch as in the present case on plain paper simple printing is done on the wrappers which are cut to size for the purpose of wrapping the biris and there is no use of sheet of plastics. In fact it is not printed on any absorbent, lightweight papers and there is no coating of starch and gum. The conclusion would be that the goods in question would fall under Item No. 4901.90 which attracts nil duty. - Decided in favour of assessee.

Summary

Issues:
Classification of goods under Central Excise Act - Whether the process amounts to 'manufacture' - Appropriate chapter heading for classification - Appeal against Order-in-Original.

Analysis:
The case involved the classification of goods under the Central Excise Act, specifically whether the process undertaken by the appellant constituted 'manufacture' and the correct chapter heading for classification. The appellant printed biri wrappers cut to size, clearing them under Chapter sub-heading 4821.00, while the Department argued for classification under Chapter Heading 4823.19 with a 20% excise duty rate. The appellant contended that no duty was payable as the goods fell under Chapter Heading 4821.00, with nil duty.

A show cause notice was issued proposing a levy of excise duty of Rs. 27 lakhs for a specific period, which was confirmed in the Order-in-Original, along with interest. The appellant's defense was that the process did not amount to 'manufacture,' and the goods belonged under Chapter Heading 4821.00, but these contentions were rejected. The appellant appealed this decision, leading to a disagreement among Tribunal members on the 'manufacture' issue, subsequently referred to a third member who deemed the process as 'manufacture.'

The Tribunal did not address the classification issue, prompting the Supreme Court to take up both 'manufacture' and classification matters. The Revenue accepted that the goods did not fall under Chapter Heading 48.23 but under Chapter 49 based on Note 11, with the appellant agreeing. The dispute arose whether the goods should be classified under Entry 4901.10 or 4901.90, with differing arguments presented.

Entry 4901.10 pertained to 'transfers (decalcomanias),' as per the HSN explanatory note, detailing the characteristics and usage of such transfers. However, the Court found that the printing of biri wrappers did not align with the description of transfers, concluding that the goods fell under Item No. 4901.90, attracting nil duty. Given this classification, the question of whether the process amounted to 'manufacture' became irrelevant, as no duty was payable. The Court directed the Tribunal to dispose of the appeal in line with its judgment, granting any necessary refund of duty/deposits.