Manufacture - Cutting and slitting of duty-paid imported jumbo rolls for X-ray films, industrial as well as medical, graphic art films & sensitized photo graphic paper whether amount to manufacture - Central Excise - 33/89

Manufacture - Cutting and slitting of duty-paid imported jumbo rolls for X-ray films, industrial as well as medical, graphic art films sensitized photo graphic paper whether amount to manufacture Circular No. 33/89 Dated 12-5-1989 [From F. No. 119/1/89-CX.3] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Central Excise - Whether the processes of cutting and slitting of duty-paid imported jumbo rolls for X-ray films, industrial as well as medical, graphic art films sensitized photographic paper would amount to 'manufacture' or not. Attention is invited to the instructions contained in this office letter F.No. 119/1/88-CX.3, dated 24-2-1989 and to say that doubts had been raised as to whether processes of cutting and slitting of imported duty-paid jumbo rolls for x-ray films, industrial as well as medical, graphic art films and sensitised photographic paper would amount to 'manufacture' or not. The matter has been examined. 2. The Board considered the issue in respect of each type of films individually in view of the different entries for the said products in the Schedule to the CETA, 1985, and the decision of the Supreme Court in the case of Empire Industries Ltd. as well, which inter alia, has held that whatever may be the operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitutes such a process which will be part of manufacture [1985 (2) E.L.T. 179 (S.C.)]. X-ray films (Industrial as well as Medical) The Board took note of the description of the Heading No.37.01 and 37.02 of the Schedule to the Central Excise Tariff Act, 1985 and observed that x-ray films in jumbo-rolls, sensitised, unexposed, of any material other than paper, paper board or textile, would appear to fall within sub-heading No.3702.10. The said jumbo rolls when converted into smaller rolls by the process of cutting and slitting would merit classification within the same sub-heading i.e. 3702.10. Since no new product distinct from x-ray film rolls emerged as a result of the cutting and slitting of jumbo rolls for said x-ray films and tariff entry also did not get changed, a mere cutting and slitting into smaller rolls could not be said as amounting to a manufacturing process. However, if the said jumbo-rolls for x-ray films were converted into plates and film in flat form as a result of the process of cutting and slitting, the appropriate classification of the said resultant products would be under sub-heading No. 3701.10. Under these circumstances, the Board felt that since the products obtained as a result of cutting and slitting would fall under a different entry of the tariff, the process would amount to 'manufacture' (specifically so intended by the Parliament by provision of separate tariff entries) and the products would again be liable to duty, under the new tariff entry in which they would fall. Modvat benefit, if applicable, would be granted. Graphic Art films: The Board observed that the same ratio as for x-ray films would apply here. Accordingly, jumbo rolls of graphic art films, sensitised, unexposed, of any material other than paper, paper board or textile, would merit classification under sub-heading No.3702.90 of the Schedule to the Central Excise Tariff Act, 1985. On cutting and slitting into smaller rolls, the said film would fall within the same sub-heading i.e. 3702.90. The Board felt that since no distinct product emerged as a result of cutting and slitting of the said graphic art films into smaller rolls, mere cutting and slitting in this case could not be treated as a process amounting to 'manufacture'. However, when the said graphic art films in jumbo rolls were converted into plates and film in the flat form then the appropriate classification of the said products would be under sub-heading No.3701.90 and in view of the changed entry in the tariff, the process would amount to 'manufacture' and duty will again be leviable on the said resultant goods. Modvat benefit, if applicable, would be granted. Sensitised photographic paper: Sensitised photographic paper, unlike x-ray films graphic art films discussed above, has got only one entry available in the tariff, that is, 3703.10, irrespective of the form or shape of such paper. The Board felt, therefore that cutting and slitting of jumbo-rolls of sensitised photographic paper would not amount to a manufacturing process calling for a fresh levy in view of the fact that jumbo rolls as well as smaller rolls or flats would continue to remain photographic paper only and also classifiable in the same sub-heading No. 3703.10. 3. The instructions contained in Ministry's letter F. No. 119/1/88-CX.3, dated 24-2-1989 may be treated to have been modified to the extent mentioned above. 4. The above guidelines may be brought to the notice of the lower field formations and the trade interests may also be suitably advised. 5. All pending assessments may be finalised on the above basis.