Case: C.C.E. Mumbai - Iv Vs. M/S. Fitrite Packers, Mumbai

The dispute between the parties arose on two issues,Whether the goods in question, i.e., printed GI paper are classifiable under Chapter heading 4811.90, as claimed by the Revenue or they were to be classified under Chapter heading 4901.90 as the product of printing industry, as per the stand taken by the respondent/assessee?(ii) Whether printing on duty paid GI paper would amount toThe Tribunal vide impugned judgment dated March 27, 2006 has decided the first issue in favour of the Revenue classifying the goods under Chapter heading 4811.90 thereby holding that the goods fall within the description of printing in rolls or sheets. The assessee has not challenged the aforesaid classification as accorded by the Tribunal and, therefore, the issue of classification has attained finality.3) Insofar as other question is concerned, the Tribunal has decided that the process of printing of GI paper does not amount to manufacture. Aggrieved by such a conclusion on the second issue, the Revenue is in appeal before us. Therefore, this is the only issue that needs to be determined in the instant appeal which has arisen under the following circumstances: The respondent/assessee herein purchased GI paper from the market which is already duty paid base paper. On this paper, the process of printing is carried out by the assessee according to the design and specifications of the customers depending on their requirements. This printing is done in jumbo rolls of GIP twist wrappers. Bulk orders are received from Parle, which needs the said paper as a wrapping/packing paper for packing of their goods. On the paper, logo and name of the product is printed in colorful form. After carrying out the printing as per the requirement of the customers, the same is delivered to the customers in jumbo rolls without slitting. The issue is as to whether this printing process amounts to manufacture or not?4) Various show cause notices were issued and orders were passed by the adjudicating authority thereupon holding that the aforesaid process would be treated as manufacture and, thus, the respondent/assessee was liable to pay excise duty thereon.5) The Tribunal while upsetting the aforesaid decision of the Commissioner has arrived at a conclusion that printing is only incidental and primary use of GI printing paper roll is for wrapping which is not changed by the process of printing. While coming to this conclusion, the Tribunal has primarily relied upon the judgment of this Court in Union of India v. J.G. Glass Industries Ltd. (1998 (97) ELT 5 (SC)).

Court's reasoning:
10) On the facts of the present case, it is to be determined as to whether the case would fall under category (2) or category (4). We have already taken note of printing process. A cursory look into the same may suggest, as held by the Tribunal, that GI paper is meant for wrapping and the use thereof did not undergo any change even after printing as the end use was still the same, namely, wrapping/packaging. However, a little deeper scrutiny into the facts would bring out a significant distinguishing feature; a slender one but which makes all the difference to the outcome of the present case. No doubt, the paperwas meant for wrapping and this end use remained the same even after printing. However, whereas blank paper could be used as wrapper for any kind of product, after the printing of logo and name of the specific product of Parle thereupon, the end use was now confined to only that particular and specific product of the said particular company/customer. The printing, therefore, is not merely a value addition but has now been transformed from general wrapping paper to special wrapping paper. In that sense, end use has positively been changed as a result of printing process undertaken by the assessee. We are, therefore, of the opinion that the process of aforesaid particular kind of printing has resulted into a product, i.e., paper with distinct character and use of its own which it did not bear earlier. Thus, the test of no commercial user without further process would be applied as explained in paragraph 20 ofIndustries (supra). The aforesaid paragraph is extracted hereunder.In Brakes India Ltd. v. Superintendent of Central Excise (1997) 10 SCC 717 , the commodity in question was brake lining blanks. It was held on facts that such blanks could not be used as brake linings by themselves without the processes of drilling, trimming and chamfering. It was in this situation that the test laid down was that if by adopting a particular process a transformation takes place which makes the product have a character and use of its own which it did not bear earlier, then such process would amount to manufacture irrespective of whether there was a single process or severalThe ratio thereof is explained in paragraph 24 in the followingIt is important to understand the correct ratio of the judgment in the J.G. Glass case. This judgment does not hold that merely by application of the second test without more manufacture comes into being. The Court was at pains to point out that a twofold test had emerged for deciding whether the process is that of manufacture. The first test is extremely important – that by a process, a different commercial commodity must come into existence as a result of the identity of the original commodity ceasing to exist. The second test, namely that the commodity which was already in existence will serve no purpose but for a certain process must be understood in its true perspective. It is only when a different and/or finished product comes into existence as a result of a process which makes the said product commercially usable that the second test laid down in the judgment leads toThis Court emphasised that there has first to be a transformation in the original article and this transformation should bring out a distinctive or different use in the article, in order to cover the process under the definition of manufacture. These tests are satisfied in the present case.