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TMI Blog2018 (6) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... ted boxes and sold. 3. Show Cause Notice dated 8.4.1016 was issued, alleging that out of the various products of the Appellant, paper napkins, facial tissues and C- fold & M-fold towels are classified under Tariff Item 4818 2000 of the Central Excise Tariff, and, in terms of Entry 55 of the Third Schedule to the Excise Act and Notification No. 49/2007 CE(NT) dated 24-12-2008, are liable to MRP based Central Excise duty, as the process of conversion of the disputed products from jumbo rolls of paper amounts to manufacture under Section 2 (f)(iii) of the Excise Act. 4. Appellant filed detailed reply rebutting the allegations in the SCN , and after considering the same, the Ld. Commissioner, by the impugned order date 01.03.2017, confirmed the demand of Rs. 1,84,58,189/- on the disputed items, along with interest and equal penalty, holding that the process undertaken by the Appellant amounts to manufacture as per the provisions of Section 2(f)(iii) of the Excise Act. However, the Ld. Commissioner has extended the benefit of cum-duty price, and Cenvat Credit, in respect of the inputs used in alleged manufacture of final products. 5. Being aggrieved with the aforesaid Order-in-Origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 5.3 In para 4.4 and 4.5 of the impugned order, the Ld. Commissioner has relied upon the judgment of Hon'ble Supreme Court in the case of CCE, Mumbai-IV v. Fitrite Packers, 2015 (342) ELT 635(S.C.). It is submitted that reliance on the said judgment is totally misplaced as the issue involved in that case was different and was whether printing on FI wrapping paper would amount to manufacture. 5.4 By the impugned order, the Ld. Commissioner has confirmed the demand of Central Excise duty by holding that the processes undertaken by the appellant amounts to manufacture in terms of Section 2(f)(iii) of the Excise Act. The relevant provision is reproduced below: Section 2(f)(iii) of the Excise Act, defines the term "manufacture" as: "SECTION 2. Definition.-In this act, unless there is anything repugnant in the subject or context.- (f) "manufacture "includes any process.-......... (i)................. (ii)................. (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , for a process to fall within the scope of the said expression, the same must confer upon the product attributes of marketability which it did not possess earlier. 5.8. It is submitted that the treatment adopted on the subject goods does not render the goods marketable as the goods are already marketable, and as the goods are not for the 'consumer'{as defined under the Consumer Protection Act} or for retail sale, the treatment does not amount to manufacture as per the last part of the sub-clause (iii) of Section 2(f) of the Excise Act,. 5.9 The products i.e. napkins, face tissues, M-fold tissue & C-fold tissue, are not classifiable under tariff item 48818 2000 and under Entry 55 of the Third Schedule to the Excise Act and Notification No.49/2008-CE*(NT), dated 24-12-2008. The relevant entries in dispute are reproduced below: Third Schedule of Excise Act: Entry 55 of Third Schedule to Central Excise Act, 1944 4818-Cleansing or facial tissues, handkerchiefs and towels of paper pulp, paper, cellulose wadding or webs of cellulose fibres Central Excise Tariff Entry: TARRIF ITEM DESCRIPTION OF GOODS 4818 Toilet paper and similar paper, cellulose wadding or webs of ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for absorption nor are these perfumed. Cleaning tissues are not wet tissues and they are in dry state, in contrast to cleansing or facial tissues. Therefore, cleaning tissues and cleansing tissues are two different products but the same have been misconstrued as same, leading to the present proceedings. It is submitted that the goods in question are not covered under Entry 55 of the Third Schedule to the Excise Act, hence, not subject to the concept of deemed manufacture, in terms of Section2(f)(iii) of the Excise Act 6. The Revenue's case was argued by the Ld. DR, Shri R.K Mishra. 6.1 He referred to para 4.2 of the impugned order in which the Commissioner has analysed the relevance of Section 2(f) as well as Sl. No 55 of the Third Schedule. He argued that the appellant's manufacturing process satisfies the Clause "adoption of any other treatment on the goods to render the product marketable to consumer" and hence, the activity of slitting undertaken by the appellant will amount to manufacture. He justified the reliance placed by the adjudicating authority on the ratio laid down by the Hon'ble Supreme Court in the Fit Rite Packers case (supra). He referred to para 8 of the Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question are covered by the Entry 55 of the Third Schedule of the Excise Act. 9. The thrust of the arguments raised by the assessee is that the Hon'ble Supreme Court in the case of S.R. Tissue Pvt. Ltd. (supra) have already held that the activity of cutting/slitting of jumbo rolls of plain tissue paper will not amount to manufacture. In this decision the Hon'ble Supreme Court has held that the characteristics of tissue paper in the jumbo rolls as well as in the form of napkin, toilet roll and facial issue remain the same. Since, the characteristics are not different, no new product has emerged. They have sought to differentiate the decision relied by the Adjudicating Authority i.e. Fit Rite Packers claiming that the latter decision has been delivered in the context of whether printing on wrapping paper would amount to manufacture. They have also made elaborate submissions as to why the deemed definition of manufacture in terms of Section 2 (F) (iii) will not be applicable. 10. We have carefully considered the facts involved in the decisions by the Hon'ble Supreme Court. In the later decision in the case of Fit Rite, the Hon'ble Supreme Court has referred to their judgment in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c which are further packed into big corrugated boxes. The jumbo rolls which are raw materials for the appellant are completely transformed into the form in which it can be conveniently used and are marketed. There is no doubt that the final products of the appellant are perceived in the market place as different from the jumbo rolls which are raw materials. No doubt both the jumbo rolls and final products such as napkins are made of the same tissue paper. But we have no doubt that the transformation of jumbo rolls into either toilet rolls/ kitchen rolls or in the form paper napkins bring out a distinctive and different use in the article. Evidently, the resultant products are perceived differently in the market. Consequently, the test No. 4 formulated by the Hon'ble Supreme Court is satisfied in the present case and hence the process undertaken by the appellant is to be considered as a process of manufacture. The liability for payment of excise duty is, therefore, incurred by the appellant. 13. It has been submitted that the Hon'ble Supreme Court in S.R. Tissue case has held that the process of slitting/cutting of jumbo rolls of plain tissue paper into similar size does not amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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