Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *   CBIC issues draft rules for Customs valuation *  Top Headlines: Threshold for Benami deals, green bond investors, and more *  Govt aims 1-hour clearance for goods at all ports *  Exporters Allowed To Use RoDTEP, RoSCTL Scrips To Pay Customs Duty, Transfer Them; Rules Amended *  Millions of labourers to be affected by brick producers’ strike over hike in GST, coal rates *  Inauguration of ‘kendriya GST parisar’ *  Transporter can seek Release of Conveyance alone, not Goods under GST Act: Madras HC *  GST: Quoting of DIN Mandatory for Responding to Notice, Govt Modifies Portal *  Firms can soon file claims for GST credits of ?400 cr *  CBIC issues modalities for filing transitional credit under GST. *  Mumbai: Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr *  Report to restructure Commerce Ministry under study; idea is to set up trade promotion body: Goyal *  Firms can soon file claims for GST credits of ?400 cr *  Gambling Alert! Govt May Levy Up To 28% GST; UP, Bengal Back Move *  EPFO backs raising retirement age to ease pressure on pension funds *  India Moving Up Power Scale, Set to Become Third Largest Economy By 2030 *  Airfares Get Expensive: What Changes for Flyers From Today? *  IRCTC Latest News: Passengers to Pay More For Cancelling Confirmed Rail Tickets Soon. *  IBC prevails over Customs Act, says Supreme Court. *  As GST enters sixth year, a time for evaluation and reassessment *  There’s GST on daily essentials as Centre needs money to buy MLAs: Arvind Kejriwal *  Now, GST on cancellation of confirmed train tickets, hotel bookings *  GST kitty for top States could rise 20% in FY23, says Crisil *  French customs officials seize another cargo vessel over Russia sanctions *  TradeLens builds on Asia momentum with Pakistan Customs deal *  Hike tax on tobacco, reduce affordability & increase revenue: Civil society organizations to GST council *  Bihar: ?10 crore tax evasion on tobacco products detected in raids *  Centre failed on GST, COVID; would it be anti-national? Rajan on Infosys row *  Service Tax not Chargeable on Income Tax TDS portion paid by recipient: CESTAT grants relief to TVS *  Foreign portfolio investors make net investment of Rs 7575cr in Sep so far
Subject News *  Run-up to Budget: Monetary threshold for GST offences may rise to Rs 25 cr *   GST (Tax) E-invoice Must For Businesses With Over Rs 5 Crore Annual Turnover *   Both Central GST and excise duty can be imposed on tobacco, rules Karnataka high court *   CBIC Issues Clarification On Extended Timelines For GST Compliance *   CBIC Issues Clarification On Extended Timelines For GST Compliance *  Budget 2023- 9.6 crore gas connections *  GST: Tamil Nadu Issues Instructions for Assessment and Adjudication Proceedings *  GST: CBIC Extends Last Date for filing of ITC *  GST collection in September surpasses Rs 1.4 lakh crore for straight seventh time *  Dollar smuggling case: Customs chargesheet names M Sivasankar as key conspirator. *  Hike in GST rates fuels inflation *  Assam: CBI arrests GST commissioner in Guwahati *  GST fraud worth ?824cr by 15 insurance Cos detected *  India proposes 15% customs duties on 22 items imported from UK *  Decriminalising certain offences under GST on cards *  Surge in GST collections more due to higher inflation: India Ratings *  MNRE Notifies BCD and Hike in GST Rates as ‘Change in Law’ Events But With a Condition | Mercom India *   Solar projects awarded before customs duty change allowed cost pass-through *  Rajasthan High Court Dismisses Writ Petitions Challenging Levy Of GST On Royalty *   GST revenue in September likely at Rs 1.45 lakh crore *  Govt working on decriminalising certain offences under GST, lower compounding charge *  Building an institution like GST Council takes time, trashing is easy: Sitharaman *  GST collections in Sept may touch ?1.5 lakh crore *  KTR asks Centre to withdraw GST on handlooms *  After Gameskraft, More Online Gaming Startups To Receive GST Tax Claims *  Madras HC: AAR Application Filed Under VAT Does Not Survive After GST Enactment *  Threshold for criminal offences under GST law may be raised *  Bengaluru: Gaming company faces biggest GST notice of Rs 21,000 crore *  CBIC clarifies Classification of Cranes for GST, Customs Duty *  Customs seize gold hidden in bicycle in Kerala airport  

Comments

Print   |    |  Comment

PJ/Case Laws/2011-12/1119

Whether the classification list is necessary where the embossing and cutting to shape of Aluminium foil is not a manufacturing process? Whether the process of embossing on aluminium paper back foil and cutting it to shape for the purpose of packing of the

Prepared By:
CA. Rajani Thanvi & 
Bharat Rathore

 


Case:
Commissioner of C. Ex., Mumbai-V Vs  GTC Industries Ltd.
 
Citation:2011(266) E.L.T. 160 (Bom.)

Issue:

  1. Whether the classification list is necessary where the embossing and cutting to shape of Aluminium foil is not a manufacturing process?
  2. Whether the process of embossing on aluminium paper back foil and cutting it to shape for the purpose of packing of the cigarettes does not amount to manufacture?

Brief Facts:  This appeal is filed by the Commissioner of Central Excise, Mumbai-V challenging the order passed by the CESTAT. The respondent is the manufacturer of cigarettes. As per notification dated 13/5/1988 the duty paid aluminium foil when cut and embossed, The resultant product was exempted from payment of excise duty. However, the government withdrew the said notification by a notification no.44/94 dated 1/3/1994. Thereupon, the respondent filed Classification List 9/94 /Aluminium foil dated 26/4/1994, under protest classifying the products as aluminium foil cut to shape under tariff 7607.30 and aluminium foil embossed under CSH 7607.20. During the pendency of the approval of the classification list the assessee paid excise duty on cut to shape/embossed aluminium foil @ 20%as per tariff heading 7607.30 and 7607.20. The Assistant Commissioner vide order held that the aluminium foil cut to CEXA139.06. Shape/embossed which is used for packing cigarettes does not amount of manufacture and accordingly returned the classification list submitted by the assessee. Being aggrieved by order the appellant preferred an appeal before the Commissioner of Central Excise (Appeals) who dismissed the said appeal. Being aggrieved by the said order of the Commissioner of Central Excise the appellant filed appeal before the CESTAT and the said appeal was also dismissed by the CESTAT. Hence the appellant is in appeal before High Court.

Appellant’s contention:- The appellant submit that  the process of embossing itself is manufacturing and the product that emerges on embossing is a new product. Secondly aluminium foil brought in bulk by the assessee on payment of excise duty is also subjected to the process of cutting it into small pieces which changes the form and nature of the foil and hence the said process amounts to manufacturing. Accordingly counsel for the revenue submitted that the order passed by the CESTAT is liable to be set aside.

Respondent’s Contention:  Respondent submit that that the assessee purchases a roll of aluminium foil with backing of white paper and the roll is cut in pieces and on one side of each piece word 'PULL' is embossed in which the cigarettes are filled in with the help of machine and Aluminium paper back foil holding cigarettes is directly placed in cigarette packing machine. The cigarettes are filled in aluminium foil in such a way that word 'PULL' comes on the upper side of the packet. The learned counsel submitted that the aluminium foil backed with a white paper purchased by the assessee is itself an excisable commodity. When the paper foil is cut to the size it does not change its nature and form and embossing word 'PULL' also does not add any different character or value to the said aluminium foil therefore, aluminium foil used in the cigarettes packet is not dutiable commodity. He further submitted that a foil is a barrier for moisture and so it is used to protect the cigarettes from moisture.

The Respondent in support of his submissions relied on the judgment of the Apex Court in Commissioner of Central Excise New Delhi Vs.S.R.Tissues Pvt.Ltd.2005(186) E.L.T.385 (S.C.). However, the learned counsel for the appellant Department controverted and submitted that the ratio of the Apex Court in respect of aluminium foil is not applicable to the present set of facts. In that case the tissue paper was cut and slit into various shapes and sizes from a jumbo roll of tissue paper. In the present case the aluminium foil and paper backing is not only cut to pieces but the word 'PULL' is also embossed on it and further the said piece of aluminium foil is used as a shell for cigarettes . Thus, its nature, form and purpose is changed and therefore, the said ruling is distinguishable .

The Respondent also submit that Use of aluminium foil which is cut to the size and embossed is in a continuous process of packing the cigarettes in the packets. Manufacturing as defined in section 2(f) of the Central Excise and Salt Act, 1944 includes any process enumerated therein. However, all the processes would not amount to manufacturing under the Act. Process is not defined under the Act . So it is understood in a common parlance. The process may be a flow, progress, movement, transformation, change continuation, a link, an action, happening, etc. Any process which produces distinct and identifiable commodity and renders marketable value the can be called manufacture. A commodity whether manufactured or not necessarily depends on the context and the factors of the production/process of that commodity. In the present case a roll of aluminium foil backed with white thin paper is purchased by the respondent for the purpose of packing their product i.e. cigarettes. In the roll there is a continuous foil, therefore, it is cut to the size as per requirement of the capacity of the packet in which the cigarettes are to be packed. Thus, the cuts are given horizontally and separate pieces of the foil are made. As soon as the separate piece of the foil is made, a word 'PULL' is embossed on it. Thereafter fixed number of 10 or 20 cigarettes is wrapped in the foil and the said wrapped cigarettes are inserted in the cigarettes packet. An aluminium foil being a resistant to moisture is used as a protector for the cigarettes and to keep them dry. The word 'PULL' is embossed with a view to make it convenient for the user and to know from which side a cigarette can be taken out. Thus, it shows that cutting and embossing do not transform aluminium foil into a distinct and identifiable commodity. That does not change the nature and substance of the aluminium foil. It does not render any marketable value to that piece of paper. Cutting to the size and embossing is only for making it usable for the purpose of packing.

The respondent also relying upon the case of Mafatlal Industries Limited Vs. Nadiad Nagar Palika,2000(117) ELT 290 the Apex Court has observed that cutting of 100 mtrs. cloth into small pieces does not bring any different commercial commodity and in case of Collector of Central Excise Vs. Technoweld Industries,2003 (155) ELT 2009 (S.C.)the Supreme Court has dealt with the issue that drawing wires from wire rods is manufacture or not and it is held that both the products being wires are not considered excisable merely because they are covered by two separate entries in the tariff. In Parle Products Pvt. Ltd. Vs. Union of India , 1991 (56) E.L.T.52(Bom.) the Division Bench of this Court has dealt with a issue of use of aluminium foil with printed paper for packing whether amounts to manufacturing. In the said case the Division Bench of this Court held that the Department was clearly in error in recovering the duty from the company. Backing of aluminium foil with printed paper only to make it more attractive for packing and not resulting in any distinct and different articles does not amount to manufacture.

The Respondent also relying upon the present case in fact is covered by the ratio Court in Commissioner of Central Excise New Delhi I Vs. S.R. Tissues Pvt.Ltd.2005(186) E.L.T.(S.C.) in which the Apex Court has observed that slitting/cutting of jumbo rolls of plain tissue paper/aluminium foil is not treated as a manufacture. Hence section 2(f) of the Act is not applicable. In the said case jumbo rolls of toilet tissue papers or a aluminium foils were cut in various shapes and sizes. However, it was held that mere mention of the product in tariff heading does not necessarily implies that the said product was obtained by process of manufacture.

Reasoning of Judgment: - The Hon’ble High Court has relied on the view taken by the Asstt. Collector of Central Excise as also the CESTAT that embossing on foil and cutting to shape and size during the process of packing of cigarettes cannot be faulted. Aluminium foil is cut to size in a continuous process and it does emerge as a new commodity and hence it is not excisable.

Judgment: Decision in favour of assessee and against the Revenue.

--------------

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com