2023 (12) TMI 305 - AT - Central Excise

Classification of finished goods - printed plastic sheets - to be classified under sub heading 3920 39 as printed PVC sheets or as products of printing industry corresponding to sub heading 4901 90 in Schedule to Central Excise Tariff Act, 1985? - HELD THAT - The facts do not appear to be straightforward inasmuch as the submission of both sides appear to be at cross purposes. On the one hand, it is claimed by the appellant that they manufacture plain plastic sheets which, upon clearance on payment of duty, are transferred to a group entity at the same premises for printing and, thereafter, sought to be cleared on payment of nil duty applicable to goods corresponding to sub-heading 4901 90 of Schedule to Central Excise Tariff Act, 1985. On the other hand, this fine distinction remains unattended in the orders of lower authorities who have proceeded merely to hold that the finished goods are in conformity to the description corresponding to sub-heading 3920.39 of Schedule to Central Excise Tariff Act, 1985 with applicable rate of duty - In either situation of the last activity being undertaken by separate unit, or even by the same unit, legitimizing of clearance, as manufacture of plastic sheets with attendant duty liability at the earlier stage, is implicit owing to submission of the appellant not having been challenged by the respondent-Commissioner herein. It is proceeded on the assumption that the duty had been discharged on plain plastic sheets which are, thereafter, subject to further processing. The decision of the Hon ble Supreme Court in re Caprihans India Ltd, 2015 (11) TMI 1170 - SUPREME COURT for the earlier period, has held that the activity of printing does not amount to manufacture and, if such activity was sought to be charged to duty at the last stage, the proceedings would fail on that score. If, on the other hand, the appellant had not discharged duty liability on plain plastic sheets , then such liability will arise notwithstanding further processing into a non-dutiable item, owing to the decision rendered by the Hon ble Supreme Court. The impugned order set aside - matter remanded back to the original authority - appeal disposed off.

Summary

Issues:
The judgment pertains to the demand of duty on clearance of 'printed plastic sheets' between September 1997 and July 1998. The main issue involves the classification of the finished goods under subheading 3920 39 as 'printed PVC sheets' instead of 'nil rate' of duty chargeable on 'products of printing industry' corresponding to subheading 4901 90 in the Schedule to Central Excise Tariff Act, 1985.

Summary:

Issue 1: Classification of Finished Goods
The appellant's appeal relates to the demand of duty on clearance of 'printed plastic sheets' and the classification of the finished goods under subheading 3920 39. The order of the original authority was confirmed based on an earlier order classifying the goods as 'printed PVC sheets' instead of 'nil rate' of duty chargeable on products of the printing industry. The Tribunal set aside the impugned order and remanded the matter back to the original authority to determine if duty liability had been discharged on plain 'plastic sheets' prior to printing.

Issue 2: Interpretation of Previous Supreme Court Order
The appellant referred to a previous Supreme Court order which held that the activity of 'printing' does not amount to 'manufacture'. The Tribunal emphasized that if duty liability had not been discharged on plain 'plastic sheets', such liability would arise even after further processing into a non-dutiable item. The Tribunal clarified that duty liability would only arise on plain 'plastic sheets' if it had not been discharged, restricting any recovery to unpaid duties on goods manufactured before printing.

Conclusion:
The Tribunal found that the facts were not straightforward, as the appellant claimed to manufacture plain 'plastic sheets' which were later printed. The Tribunal remanded the matter back to the original authority to ascertain if duty liability had been discharged on plain 'plastic sheets' before printing. The decision highlighted the importance of determining duty liability on the initial manufactured goods before any further processing.