Cexa 139.05 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CENTRAL EXCISE APPEAL NO.139/2005 The Commissioner of Central Excise, Mumbai-V, 5th Floor,Utpad Shulk Bhavan, Plot no.C-24, Sector-E, Bandra-Kurla Complex, Bandra (E), Mumbai-400 051 Appellant Vs. M/s GTC Industries Ltd., Tobacco House, Vile Parle, Mumbai-400 056 Respondent Mr.A.S.Rao a/w Mr.S.D.Bhosale for applellant Mr.V.Sridharan a/w Mr.Prakash Shah i/b P.D.S.Legal for respondent CORAM-J.P.DEVADHAR AND MRS.MRIDULA BHATKAR ,JJ RESERVED ON - 13TH JANUARY,2011. PRONOUNCED ON -2nd FEBRUARY,2011. J U D G M E N T (Per Mrs.Mridula Bhatkar,J.) . This appeal was admitted on the following questions of law. Cexa 139.05 2 1 Whether in the facts and circumstances of the case and in law, the Tribunal is right in holding that no classification list is necessary as the embossing and cutting to shape of Aluminium foil is not a manufacturing process ? 2 Whether in the facts and circumstances of the case and in law, the Tribunal is right in holding that 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 ? 2 This appeal is filed by the Commissioner of Central Excise, Mumbai-V challenging the order dated 19/4/2005 passed by the CESTAT. The respondent (‘assessee’ for short) is the manufacturer of cigarettes and falling under CH.S.H.2403.11 scheduled to CETA 1985. The assessee used Cexa 139.05 3 duty paid paper back aluminium foil in the roll form for the purpose of packing cigarettes. In the process the cigarette roll is cut to size and got embossed with word ‘PULL’ and is wrapped in the cigarette. 3 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 pendencyof 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 dated 1/7/1994 held that the aluminium foil cut to Cexa 139.05 4 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 dated 1/7/1994 the appellant preferred an appeal before the Commissioner of Central Excise (Appeals) who dismissed the said appeal by order dated 9/3/1999. 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 order dated 19/5/2005 by the CESTAT. Hence the appellant has filed this appeal under section 35(G) of the Act . 4 Learned counsel Mr.Rao appearing for the appellant made two fold submissions. He argued 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 Cexa 139.05 5 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. 5 Mr.Sridharan,learned counsel appearing for the assessee in reply submitted 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 a 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 Cexa 139.05 6 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. 6 The learned counsel 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, Cexa 139.05 7 its nature , form and purpose is changed and therefore, the said ruling is distinguishable . 7 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. Cexa 139.05 8 8 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 are 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 Cexa 139.05 9 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. 9 In 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. In 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 delt with a issue of use of aluminium foil with printed paper Cexa 139.05 10 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 . 10 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 Cexa 139.05 11 obtained by process of manufacture. The submissions of Mr.Rao that the present case is distinguishable from this case (S.R.Tissues) is not correct and cannot be accepted. There is nothing on record to suggest that the cut to shape/embossed aluminium foils used for packing cigarettes is a distinct marketable commodity . Neither the appellant nor any one else is said to have been marketing cut to shape/embossed aluminium foils. 11 Hence 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. 12 In these circumstances, the questions raised by the revenue are answered in the affirmative, that is, in favour of Cexa 139.05 12 the assessee and against the revenue. The appeal is disposed of with no order as to costs. (MRS.MRIDULA BHATKAR,J.) (J.P.DEVADHAR,J.)