The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that excise duty is not leviable on printing Activity as it does not amount to ‘manufacture’.
Show cause notice was issued to the said appellant demanding Excise Duty of Rs.24,66,681/- along with interest and also for imposing penalties. The other appellants were issued show cause notices proposing to impose penalty being the parties who had supplied raw materials to the appellant. After due process of law, the original authority held that the activity undertaken by appellant is manufacture, and therefore confirmed the duty along with interest and imposed penalties.
The issue to be decided is whether the activity of printing undertaken by the appellant amounts to ‘manufacture’ or not. The case of the department is that the appellant is a job worker who received raw material from the customers and do the activity of printing which amounts to manufacture of finished products. However, in the show cause notice or in the Order-in-Original it is not explained by department as to which is the provision which renders the activity of printing undertaken by the appellant excisable so as to be ‘manufacture’.
K. Shankaranarayanan appeared and argued for the appellants. It was submitted that the department has not alleged in the show cause notice or stated in the order passed by the adjudicating authority as to how the activity of printing undertaken by the appellant would amount to ‘manufacture’. The Counsel adverted to Chapter 48 and 49 of the Central Excise Tariff Act, 1985 (CETA) and submitted that the Chapter notes therein do not say that the activity of printing on paper / paperboard amounts to ‘manufacture’.
M. Selvakumar appeared and argued for the Department. It was submitted that the appellant is a job worker and is only printing on the paper / boards / corrugated boxes etc. supplied by their customers. After such process, the goods have attained character of finished goods as entire activity of manufacturing is carried out by the appellant viz; M/s.Chromaprint (India) Pvt. Ltd. As per Rule 2 (a) of the General Rules of Interpretation of Central Excise Tariff the printing carried out by the appellant amounts to ‘manufacture’.
In the case of HBD Packaging (P) Ltd, similar issue was considered wherein it was held that the activity of printing and plastic / varnish coating of plain paperboard as per customer’s specification either purchased by assessee or received for job work does not amount to manufacture. It was held that the basic character of paper board has not changed.
A Two-Member Bench of Vasa Seshagiri Rao, Technical Member and CS Sulekha Beevi, Judicial Member observed that “We are of the view that the activity of printing done by the appellant does not amount to ‘manufacture’. The demand of Excise duty, interest and the penalties imposed cannot sustain. The demand, interest and penalties are set aside. The impugned order is set aside.”
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