Decided on January 14,2015

Navneet Publications (I) Ltd. Respondents


- (1.)Ramesh Nair, Member (J)
(2.)THE appeal is directed against Order -in -Appeal Nos. BR/129 and 130/TH -II/2004, dated September 14, 2004 passed by the Commissioner of Central Excise (Appeals), Mumbai I, wherein the respondent's appeals were allowed. The fact of the case is that the respondent is engaged in the activity of cutting and slitting of various sizes of paper from paper roll purchased from paper manufacturing unit. The paper roll which is purchased by the respondent, falls under Chapter Heading 4802. However, the cut paper was classified by the respondent under Heading 4820 of the First Schedule to the Central Excise Tariff Act, 1985 and availed of the benefit of exemption under Notification No. , dated March 1, 2002. A show -cause notice dated April 5, 2004 was issued wherein it was contended that the product merits classification under sub -heading 4802 90 whereas the asses -see wrongly classified under Chapter sub -heading 4820 00, which is not eligible for exemption under Notification No. , dated March 1, 2002. Accordingly, the show -cause notice proposed to demand excise duty of Rs. 4,58,883 and interest under section 11AB of the Central Excise Act, 1944 and penalty under rule 25 of the Central Excise Rules, 2002. The adjudicating authority while adjudicating the show -cause notice vide Orders -in -Original No. 169/2004, dated May 30, 2004 and No. 1370/2004, dated August 13, 2004 and, confirmed the demand and also imposed equal amount of penalty. The demand was confirmed under the finding that the product in question is classifiable under Chapter sub -heading 4802 90 and accordingly chargeable to Central excise duty at 16 per cent. Aggrieved by the said order, the respondent filed an appeal before the Commissioner (Appeals) who vide the impugned order allowed the appeal of the respondent, mainly holding that the cutting of paper from bulk roll into sheets does not amount to manufacture. While holding the same, the learned Commissioner (Appeals) relied upon various judgments of the hon'ble Supreme Court in the case of Union of India v. J.G. Glass Industries Ltd. reported in : [1998] 97 ELT 5 (SC), Collector of Customs and Central Excise v. Paper Products Ltd. reported in : [2000] 119 STC 552 (SC) : [2000] 115 ELT 277 (SC), Kores India Ltd. v. CCE reported in : [2004] 3 RC 613 : [2004] 174 ELT 7 (SC) and the Tribunal's decisions in the case of S.R. Tissues P. Ltd. v. CCE reported in : [2001] 136 ELT 367 (Trib. -Delhi) and CCE v. True Graph Charts P. Ltd. reported in : [1999] 105 ELT 341 (Trib. -Delhi). Aggrieved by the said order of the Commissioner (Appeals), the Revenue is before us.
Shri V.K. Agrawal, the learned Additional Commissioner (authorised representative) appearing for the Revenue, submits that the respondent had classified the product, viz., paper under Chapter sub -heading 4820 00 and claimed exemption under Notification No. , dated March 1, 2002. Since the product of Chapter sub -heading 4820 00 is not covered by the said exemption notification, the respondent was liable to pay duty. Accordingly, the original adjudicating authority had correctly confirmed the demand and imposed penalty. Therefore, the impugned order is not sustainable and deserves to be set aside.

(3.)ON the other hand, Shri V.S. Sejpal, the learned counsel appearing for the respondent/assessee, submits that though the respondent has classified the goods under Chapter sub -heading 4820 00 which is not correct as the respondent's activity was confined to slitting and cutting of paper from paper roll to sheet form in foolscap size paper and similar paper, it is his submission that first of all this activity does not amount to manufacture in terms of section 2(f) of the Central Excise Act, 1944. In such case, irrespective of any wrong declaration of classification when the activity itself does not amount to manufacture, there is no question of demand of any excise duty. The learned counsel submits that the Commissioner (Appeals), by careful application of mind relying on various judgments of the hon'ble Supreme Court and of the Tribunal wherein the subject issue has been settled, allowed the appeal of the respondent. Therefore, the order being absolutely legal and correct does not require any interference and he prays for upholding the order of the Commissioner (Appeals).

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