Collector of Central Excise Vs. G. Agarwala and Co.

1. The facts of the case are that the appellants filed one classification list effective from 24-1-1987. At Serial No. 4 of the classification list they mentioned "printing of paper board sheets as per customers size & specifications". They sought classification under Tariff Heading 4901.90 of the Central Excise Tariff Act, 1985 as product of printing industry at nil rate of duty. A show cause notice was issued to them on 27-4-1987 proposing to classify the product under Tariff Heading 4818.90 at the rate of 12% ad valorem or under Heading 4818.13 at the rate of 15% ad valorem depending upon from which paper they were manufactured. In reply to the show cause notice, the appellants contended that the said product had to undergo two more operations, viz., cutting and creasing and pasting before it was used as packing cartons. At the time of personal hearing the factory Manager of the appellants stated before the Assistant Collector of Central Excise, as it appears from the Assistant Collector's order that the craft paper was supplied by M/s. G.T.C. and the appellants' company only did the work of printing and thereafter return back the same. It was also contended by the appellants before the Assistant Collector that printing was done on Duplex Board on job work basis. They claimed that these products were the products of printing industry falling under Tariff Heading 4901.90. The Assistant Collector held that the product mentioned at Serial No. 4 of the classification list did not come under the purview of Chapter 49 of the Tariff as printing was not done on paper, but it was done on craft paper or pulp paper like duplex board. According to him the exemption as product of printing industry was available only to paper and in the present case as the printing was done on duplex board and craft paper, it fell under the category of printed carton or boxes. The Assistant Collector approved the classification list after classifying the products mentioned at Serial No. 4 of the list under Heading 4818.90 at the rate of 12% ad valorem.

On an appeal filed by the appellants, the Collector of Central Excise (Appeals), Bombay set aside the Assistant Collector's order and held that the products would merit classification under Heading 4901.00. He has held that the appellants' products which were printed sheets of duplex board and craft paper and which were not subjected to further processes, viz., cutting, creasing and pasting for being converted into flattened or folded cigarette sheets, slides or cartons and boxes cannot be classified under Heading 4818.90. He has observed that Heading 4901.00 relates to products of paper printing industry which should include the printed duplex board. Being agrieved by the decision of the Collector (Appeals), the Revenue has filed the present appeal before us.

2. We have heard Shri Chandrasekharan for the appellant and Shri Swaminathan for the respondents. During the hearing before us, both the learned SDR and the learned consultant have claimed the classification of the impugned products under Heading 4811.90. The learned consultant has also claimed the benefit of Notification No. 49/87-C.E., dated 1-3-1987 which relates to converted type of paper. In support of his contention that the respondents' printed duplex board and craft paper are converted types of board/paper, he has relied on the Tribunal's decision contained in Order No. 828/89-C, dated 21-9-1989 in the case of Systems Packaging Ltd., Bangalore v. Collector of Central Excise, Bangalore -1990 (45) ELT 165 (Tri.). The learned consultant has further stated that the respondents got duplex board of sizes 110 cm/91cm and they cut it into four pieces of 55 cm x 45.5 cm. He has also raised another new point that printing is not manufacture and slitting is also not manufacture, but conversion. In support of this point, he has cited the judgments of Gujarat High Court in the case of Novo Gujarat Paper Industries v. Superintendent of Central Excise and Ors., reported in 1977 (1) ELT (J 67) (Paragraph 17) and in the case of Swastic Products, Baroda v. Superintendent of Central Excise, reported in 1980 (6) ELT 164 (Guj.). In reply to this argument of the learned consultant, Shri Chandrasekharan has cited the judgment of Bombay High Court, reported in 1982 (10) ELT 253 (Bom.) in the case of Kores (India) Limited v.Union of India and Ors., in which it was held that the process of cutting large rolls of paper into specific sizes and dimensions and to roll them into teleprinter rolls, with the aid of power driven machines amounts to manufacture under Section 2(f) of the Central Excises Act.

3. We have gone through the records of the case and the arguments of both sides. The classification decided by the Assistant Collector in respect of the appellants' printed craft paper and duplex board is under Tariff Heading 4818.90. For proper appreciation of this Heading, we reproduce below the main Tariff Heading 48.18 alongwith its sub-headings during the relevant period as under :-"48.18 OTHER ARTICLES OF PAPER PULP, PAPER, PAPERBOARD, CELLULOSE (including flattened or folded boxes and flat- tened or folded cartons), whether in 4818.12 - - Printed cartons, boxes, containers and cases, made wholly out of kraft liner or 4818.20 - Toilet tissues, handkerchiefs and cleans- ing tissues of paper The Heading 48.18 is meant for classification of "other articles of paper pulp, paper, paperboard, cellulose wadding or webs of cellulose fibres". The various sub-headings under Heading 48.18 has accommodated a number of articles of paper and paperboard etc., i.e. Cartons, Boxes, containers and so on as mentioned against sub-headings 4818.11 to 4818.20. The other articles of paper, paperboard etc. which are not covered specifically under the above-mentioned sub-headings are to be classified under sub-heading "4818.90 - Other". Therefore, in order to classify a product under this sub-heading '4818.90 - Other', the product has necessarily to be an article of paper pulp, paper, paper-board, cellulose wadding or webs of cellulose fibres. Before the lower authorities, the appellants have contended that they printed craft paper and duplex paperboard, but they did not subject those printed paperboard and craft paper to further processes of cutting, creasing and pasting for being converted into flattend or folded cigarette sheets, slides, or cartons and boxes. During the hearing before us, the learned counsel for the respondents has stated that they cut into duplex board of 110 cm x 91 cm into four pieces of 55 cm x 45.5 cm. During the hearing, he has filed one sample of the printed material before us which is in the form of a sheet and is not converted into flattened or folded cigarette slides, boxes or cartons. We, therefore, are of the view that these printed sheets are not classifiable under Tariff Heading 4818.90 4. The Collector (Appeals) has classified these printed sheets under Tariff Heading 4901.00. During the relevant period this Tariff Heading read as follows :-"49.01 PRINTED BOOKS, NEWSPAPERS, PICTURES AND OTHER PRODUCTS OF 4901.20 - Maps and hydrographic or similar charts of all kinds including atlases, wall maps, The respondents herein claimed classification of this printed sheets under sub-heading '4901.90 - Other' at nil rate of duty as the product of printing industry. Chapter Note 8 to Chapter 48 of the Central Excise Tariff Act, 1985 as it then existed read as follows :- "Except for the articles of Heading No. 48.14 or paper labels of Heading No. 48.18, paper, paperboard, cellulose wadding and articles thereof, printed with motifs, characters or pictorial representations, which are not merely incidental to the primary use of the articles fall in Chapter 49." The respondents have not produced any material before us to show that the printing done to the duplex paperboard and craft paper was not merely incidental to the primary use of the articles. On the other hand it seems to us that the printing done to the duplex paperboard and craft paper sheets is incidental to primary use of these sheets. We are given to understand during the hearing that these sheets are meant for manufacturing cigarette boxes. From the sample of printed sheet filed before us, we observe that the brand name of the cigarettes, the number of cigarettes, length of cigarettes and the short name of the cigarette manufacturer, 'Golden' etc. are printed on the sheet. Therefore, in view of the Chapter Note 8 to Chapter 48 and the description of the Tariff Heading 49.01 and the sub-headings thereunder, we are of the view that these printed sheets of duplex paperboard and craft paper are not classifiable under Tariff Heading 4901.00.

5. During the hearing before us, the learned DR and the learned consultant for the appellant and respondents respectively have pleaded that the correct classification of these printed sheets should be under Tariff Heading 4811.90. Heading 48.11 and the sub-headings thereunder, as they existed during the relevant period were as under:-"48.11 PAPER, PAPERBOARD, CEL- LULOSE WADDING AND WEBS OF 4811.10 - Tarred, bituminised or asphalted paper and paperboard 4811.20 - Gummed or adhesive paper and paper- board 4811.31 - - Electrical grade insulating paper or paperboard 4811.40 - Paper and paperboard coated, impreg- -nated or covered with wax, paraffin wax, Heading No. 48.11 specifically covers printed paper and paperboard whether in rolls or sheets other than the goods falling under Heading Nos. 48.03, 48.09, 48.10 or 48.18. We have already over-ruled the classification of these products under Heading 48.18. It is nobody's case that the impugned products fall under Heading Nos. 48.03, 48.09 or 48.10. The sub-classifications 4811.10 to 4811.40 under the Tariff Heading 48.11 classify various specific articles appearing against each. Printed paper and paperboard do not specifically figure against any of these sub-classifications. Accordingly, printed sheets of craft paper and duplex paperboard are correctly classifiable under Tariff Heading '4811.90 -Other', which is also the pleadings of both the parties before us. In the light of the above discussions, we agree with the pleadings of the parties before us that the correct classification of the printed sheets of craft paper and duplex paperboard is under Heading '4811.90 - Other' of the Central Excise Tariff Act as it existed during the relevant period.

6. The learned consultant for the respondents has raised two new points, viz., that the appellants' products are converted type of paper fully exempted under Notification No. 49/87-C.E., dated 1-3-1987 and that the process of printing and cutting undertaken by the respondents did not amount to manufacture. These new points were not raised before the lower authorities and they have been raised for the first time during the hearing before us. The lower authorities did not have any occasion to examine these two points. In the circumstances, we set aside the impugned order and remand the matter to the jurisdictional Assistant Collector of Central Excise to examine these two points after considering the materials and previous decisions which they want to rely upon and also after giving reasonable opportunity of personal hearing, according to the provisions of law. For this limited purpose, the matter is remanded for de novo examination.