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TMI Blog2015 (6) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... of value addition of 180% - Held that:- There is no change in the nature or characteristics of the tissue paper in the jumbo roll and the nature and characteristics of the tissue paper in the table napkin, facial tissues etc. Therefore, without such change in the nature or characteristics of the tissue paper, value addition on account of transport charges, sales tax, distribution and selling expenses and trading margin cannot be an indicia to decide what is manufacture. Thus, value addition without any change in the name, character or end-use by mere cutting or slitting of jumbo rolls cannot constitute criteria to decide what is "manufacture". - value addition criteria as applied by the Commissioner is erroneous. The activity undertaken by the appellant will not amount to manufacture. Tthis is not a fit case for confiscation of the goods under Rule 15(1) or imposition of penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Similarly, we are of the view that no penalty is required to be imposed on Shri Shailesh Nema, Director of the respondent-company under Rule 26 of the Central Excise Rules, 2002. - Decided agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Rule 14 of CENVAT CREDIT Rules, 2004 read with proviso to Section 11A(1) of the Central Excise Act, 1944. It was also proposed to confiscate the goods on which the appellant has taken CENVAT credit which included paper, other inputs and capital goods under Rule 15(1) of the CENVAT Credit Rules. Interest was also proposed to be recovered under Rule 14 read with Section 11AB and penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 was also proposed. Similar show cause notice dated 20/04/2012 was also issued for the subsequent period viz. May 2011 to December 2011. A penalty was also proposed on Shri Shailesh Nema, Director of the respondent-assessee. The case was adjudicated by the Commissioner wherein he dropped all the proceedings against the respondents. Revenue is in appeal against the said order passed by the Commissioner. 4. Learned Additional Commissioner (AR) appearing on behalf of the Revenue submitted that, in the process of slitting and cutting no new, distinct or different commodity comes into existence. The use of the goods also do not change. There is no section note or section note or note in the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture. It was also submitted that the Commissioner has taken a view that as per Section 2(f) any process incidental to the completion of the manufacturing process would amount to manufacture but the Commissioner has incorrectly applied the provisions of clause 2(f) read with note 6 to Section XVI of the Central Excise Tariff Act, 1985 as the commodities under dispute in the present case, does not fall under Section XVI of the First Schedule to the Central Excise Tariff Act, 1985. It was submitted that the concept of process incidental to manufacture is with reference to manufacture and cannot be considered in isolation. 6. The learned AR further submitted that the Commissioner's reliance on the hon'ble Supreme Court's decision in Kores India Ltd. vs. Commissioner of Central Excise reported in 2004 (174) ELT 7 (SC) is mis-placed, as in the said case, the appellants were importing jumbo rolls and thereafter converting the same into typewriter ribbons. Typewriter ribbon is a different commodity having a specific width and specific length and is fixed in the typewriter. This is not the case in the present case as the slitting is done as per the requirement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;s decision in the case of Printo India Graphics (P) Ltd. vs. Commissioner of Central Excise reported in 2012 (282) ELT A46 (SC) and similar case of Commissioner of Central Excise vs. Tarpaulin International 2010 (256) ELT 481 (SC) were also referred in support of the department's contention. Hon'ble Supreme Court in the case of Commissioner of Central Excise vs. Osnar Chemical Pvt. Ltd. 2012 (276) ELT 162 (SC) was also referred. 8. It was submitted that keeping in view the catena of decisions, the order passed by the Commissioner is wrong and is required to be set aside. 9. The learned Senior Counsel, on behalf of the respondent-assessee submitted photographs of the process undertaken by them. He submitted that such tapes are received in the size of 1 or 1.5 meter, then the blades on the machines are fitted as per the requirement of the customer. Thereafter the core is cut as per the customers' requirement, labels are scanned, slitted paper is put on core, start up of proten machine, process stage, removal of static electricity, etc. The learned senior counsel submitted that the process is a very elaborate process and involves large number of steps and for tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT A120 (SC). The learned Sr. Counsel also submitted that even the Hon'ble Bombay High Court in the case of Commissioner of Central Excise vs. Ajinkya Enterprises 2013 (294) ELT 203 (Bom.) has taken similar view. It was also submitted that just because the input and final products are falling under the same heading it does not imply that the said activity will not amount to manufacture as held by this Tribunal in the case of Caprihans India Ltd. vs. Collector of Central Excise 1996 (85) ELT 315. In addition to the above mentioned judgments, certain other judgments were also referred to by the learned Sr. Counsel. 10. Another contention of the learned senior counsel was that extended period of limitation cannot be invoked as at the time of taking registration they have submitted the manufacturing process/flow chart. Thus, the Revenue was in the knowledge about their activity and hence extended period cannot be invoked. 11. We have carefully considered the rival submissions. The undisputed facts are that the appellants are importing self-adhesive films and self-adhesive papers in jumbo roll. These are slitted as per the requirement of the customers with the help of slitting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct and the printing industry. If there is a printing machine which can take up the jumbo rolls then such self-adhesive films and self-adhesive tapes can straightway be printed. On the contrary, we are of the considered view that the facts in the present case are almost similar to that of S.R. Tissues Pvt. Ltd. (supra). In the said case the hon'ble Supreme Court has observed as under: 14. Applying the above tests, we hold that no new product had emerged on winding, cutting/slitting and packing. The character and the end-use did not undergo any change on account of the above-mentioned activities and, therefore, there was no manufacture on first principles. 15. Similarly, there was no deemed manufacture under Section 2(f) of the said Act. In order to make Section 2(f) applicable, the process of cutting/slitting is required to be recognized by the legislature as a manufacture under the chapter note or the section note to Chapter 48. For example, the cutting and slitting of thermal paper is deemed to be manufacture under Note 13 to Chapter 48. Similarly, Note 3 to Chapter 37 refers to cutting and slitting as amounting to manufacture in the case of photographic goods. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e excisable as they are mentioned in the schedule, they could not be subjected to duty as they were not goods either because they were not manufactured or having been produced or manufactured, they were not marketed or capable of being marketed. 18. In the case of Union of India v. J.G. Glass Industries Ltd. reported in 1998 (97)ELT 5, this Court has succinctly drawn a distinction between manufacture vis-a-vis process and in the course of the judgment, it has been observed as follows: 16. On an analysis of the aforesaid rulings, a two-fold test emerges for deciding whether the process is that of manufacture . First, whether by the said process a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist; secondly, whether the commodity which was already in existence will serve no purpose but for the said process. In other words, whether the commodity already in existence will be of no commercial use but for the said process. In the present case, the plain bottles are themselves commercial commodities and can be sold and used as such. By the process of printing names or logos on the bottles, the basic character of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition without any change in the name, character or end-use by mere cutting or slitting of jumbo rolls cannot constitute criteria to decide what is manufacture . 22. In the case of Decorative Laminates (India) Pvt. Ltd. v. Collector of Central Excise, Bangalore reported in 1996 (86)ELT 186, this Court held that the process of application of phenol resin on duty paid plywood under 100% heat amounts to manufacture and in that connection observed that value addition and separate use are also relevant factors which the Courts should consider in deciding the applicability of Section 2(f) of the Act. Therefore, value addition based on price difference only without any change in the name, character or end-use is a dangerous criteria to be applied in judging what constitutes manufacture . Lastly, the end-use in both the entries 4803 4818.90 is the same, namely, for sanitary or household purposes. In the circumstances, value addition criteria as applied by the Commissioner is erroneous. 13. In view of the above position, we have no hesitation in holding that the activity undertaken by the appellant will not amount to manufacture. 14. The learned Sr. Counsel has also submitte ..... 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