CX - Cutting & slitting of jumbo rolls of self-adhesive rolls does not amount to manufacture - if legislature wanted to connote this activity as manufacture it would have included CETH 4811 and 8546 in Third Schedule or added chapter note - Revenue appeal dismissed: CESTAT
By TIOL News Service
MUMBAI, MAY 23, 2014: THE CCE, Belapur dropped a jumbo duty demand by holding that cutting and slitting of jumbo rolls or log rolls of self-adhesive rolls of Chapter 48 and 85 would not amount to ‘manufacture'.
Aggrieved of this jumbo largesse, the Committee of Chief Commissioners directed filing of appeal before the CESTAT.
In the appeal memorandum it is mentioned that by undertaking the process of cutting and slitting there are changes in the dimensions of the product both in terms of width and length so as to make it suitable for use as adhesive tapes by the users. Therefore, a new commodity has emerged which has a distinctive name, character and use and, therefore, the process amounts to ‘manufacture'. Reliance is placed on the decision of the apex Court in the case of Kores India Ltd. 2004-TIOL-92-SC-CX and it is also submitted that there is substantial value addition in the final product and the respondent had also made substantial investment in capital goods for conducting the operations in his factory.
The respondent submitted that earlier they were treating the process as “manufacture” but vide an order dated 30/06/2005, the department held that the process undertaken by the respondent did not amount to ‘manufacture' and accordingly sought to deny CENVAT credit taken on the various inputs/capital goods used in or in relation to the manufacture. The said decision was appealed before the Tribunal and it was observed that inasmuch as the respondent has paid more amount by way of duty than the amount of credit taken, question of confirmation of any demand in this regard or denial CENVAT credit would not arise. Thereafter, in the respondent decided not to make any payment of duty by construing that the process undertaken by them did not amount to ‘manufacture' and also stopped taking any CENVAT credit.
Reliance is also placed on the apex court decision in S.R. Tissues Pvt. Ltd. 2004-TIOL-313-CESTAT-MUM wherein it was held that the process of slitting/cutting of jumbo rolls of plain tissue paper/aluminium foils into various sizes would not amount to manufacture. The decisions in Anil Dang 2007-TIOL-775-CESTAT-MUM-LB, Printo India Graphics (P) Ltd. 2012-TIOL-46-SC-CX, Win Enterprises vs. Commissioner of Central Excise 2013-TIOL-1777-CESTAT-MAD-LB wherein a similar view is taken is relied upon in support and it is submitted that the Revenue appeal merits to be rejected.
The Bench observed that in view of the cited decisions the activity of cutting and slitting of a product from jumbo rolls into smaller sizes would not amount to manufacture and that value addition cannot be a criterion for concluding whether a new product has emerged or not with a distinct character, name or use.
It was further mentioned -
"5.1 We also note that there is a third schedule to the Central Excise Tariff Act, wherein a large number of items have been listed and in respect of these items, the activity of labeling, relabeling, packing or re-packing or adoption of any other treatment to render them marketable are deemed as ‘manufacture' under Section 2(f) of the Act. CETH 4811 and 8546 have not been specified in the said Schedule even though similar products falling under CETH 4816, 4818, 8536, 8539, etc. figure in the said Schedule. If the legislature intended the process of cutting and slitting to be amounting to manufacture, then CETH 4811 and 8546 should also have been included in the said Schedule. Further, in various Chapter Notes in the Tariff, wherever the legislature intended cutting and slitting to be amounting to ‘manufacture', specific notes were provided. In the present case, in respect of CETH 4811 and 8546, no such Chapter Note exists. All these points to the fact that the legislature did not intend to treat cutting and slitting of jumbo rolls of products falling under 4811 and 8546, to smaller sizes so as to make them useable by the user as amounting to ‘manufacture'."
Holding that there is no merit in the Revenue appeal, the same was dismissed.
In passing: Also see 2008-TIOL-243-CESTAT-MUM.
(See 2014-TIOL-842-CESTAT-MUM)
