Printing Activity Does Not Amount To 'Manufacture', Excise Duty Demand Unsustainable: CESTAT

The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the activity of printing done by the appellant does not amount to 'manufacture', so the demand for excise duty, interest, and the penalties imposed cannot be sustained.

The bench of Sulekha Beevi. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that the activity of printing labels and printed cartons for corrugated boxes does not amount to manufacture. It was held that the basic character of goods has not changed.

The appellants are engaged in the work of printing labels and cartons for corrugated boxes falling under Tariff Headings 48211020 and 48191010 of the Central Excise Tariff Act, 1985. According to the department, the activity of printing amounted to manufacturing. The appellant cleared the goods without payment of duty.

The department was of the view that the appellant contravened the provisions of Rules 4, 6, 8, 10, 11, and 12 of the Central Excise Rules, 2002, inasmuch as they manufactured and cleared printed labels without assessing the duty involved thereon, without payment of duty, and without issuing proper invoices for clearances of such goods during the period January 2007 to March 2011.

A show cause notice was issued to the appellant, demanding excise duty of Rs. 24,66,681/- along with interest and also imposing penalties. The other appellants were issued show cause notices proposing to impose penalties on the parties who had supplied raw materials to the appellant.

After due process of law, the original authority held that the activity undertaken by the appellant is manufacture and therefore confirmed the duty along with interest and imposed penalties. A separate penalty was imposed on the other appellants. Aggrieved by an order, they filed appeals before the Commissioner (Appeals), who upheld the same.

The appellant contended 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'. Merely because the products are classifiable under Tariff Heading 48191010, the department cannot hold that the activity of 'printing' done by the appellant amounts to 'manufacture'. It is explained by the Ld. counsel that the customers who are co-noticees supplied the raw materials, such as paper boards of different varieties, to the appellant, on which the appellant did the job of printing. The appellant is not a job worker for the parties who have supplied paper boards to the appellant. If at all, the activity would only amount to a 'service' under Business Auxiliary Service. The activity of 'printing' is exempt from the levy of service tax as per Notification No. 14/2004, dt. 10.09.2004.

The department contended that the appellant is a job worker and is only printing on the paper, boards, corrugated boxes, etc. supplied by their customers. After such a process, the goods have attained the character of finished goods, as the entire activity of manufacturing is carried out by the appellant. As per Rule 2(a) of the General Rules of Interpretation of the Central Excise Tariff, the printing carried out by the appellant amounts to 'manufacture'.

The CESTAT held that merely because the goods are classifiable under a particular tariff heading, it cannot be said that the activity undertaken by the appellant in the nature of printing images on paper would amount to 'manufacture'.

Counsel For Appellant: K. Shankaranarayanan

Counsel For Respondent: M. Selvakumar

Case Title: M/s.Chromaprint (India) Pvt. Ltd. Versus The Commissioner of GST & Central Excise

Case No.: EXCISE APPEAL No.41994 OF 2014

Click Here To Read The Order