2015 (11) TMI 1170 - SC - Central Excise

Classification - printed PVC sheets - Classification under Chapter 39 or chapter 49 - Order beyond the scope of SCN - Held that - Even the Assistant Commissioner in his order dated November 19, 1997 correctly proceeds on the footing that by mere printing, the fabric does not lose its original identity. However, despite this finding of the Assistant Commissioner, the Assistant Commissioner went on to levy excise duty twice over in respect of the same product, both times under Chapter 39 Heading No. 39.20. - findings in these paragraphs by the Tribunal have to be set aside on the simple ground that they are beyond the show cause notice of the Revenue, which accepts the fact that at least in the present case, no new product emerges after printing and consequently, therefore, that cannot be said to be any manufacture. On this ground alone, we set aside the Tribunal s judgment and restore that of the Commissioner, making it clear that the classification of the product remains under Chapter 39 Heading No. 39.20 - Decided in favour of assessee.

Summary

Issues: Classification of printed PVC sheets under excise duty for Assessment Years 1995-96 and 1996-97

In this judgment, the Supreme Court addressed the issue of the classification of printed PVC sheets for excise duty purposes under Chapter 39 Heading 39.20. The dispute arose from the Department's contention that the printed PVC sheets should be classified under Chapter 39 as plastic sheets with a duty of 25%, rather than under Chapter 49 as printed material with a nil rate of duty. The show cause notice highlighted that the printed design on the plastic sheet did not change the product's essential nature as a plastic sheet and should be classified accordingly. The Assistant Commissioner acknowledged that printing did not alter the original identity of the product but still levied excise duty twice under Chapter 39 Heading No. 39.20. However, the Commissioner (Appeals) overturned this decision, emphasizing that no new product emerged after printing, and therefore, no additional duty should be imposed as no manufacturing process occurred.

The Tribunal's decision, which considered printing as a manufacturing process leading to the emergence of a new product with a different commercial identity, was challenged. The Tribunal held that printed and plain sheets were not the same goods, leading to the rejection of the assessee's plea. The Tribunal also addressed the issue of duty payment on printed sheets, allowing the adjustment of duty paid on plain PVC sheets through MODVAT credit. However, the Supreme Court set aside the Tribunal's decision, emphasizing that no new product emerged after printing in this specific case, and manufacturing did not occur. Therefore, the classification of the product under Chapter 39 Heading No. 39.20 was upheld, and the appeal was disposed of accordingly.