TMI Blog1990 (9) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... uering inter alia of polyester films. The present dispute concerns the appellants activity of metallising printed polyester films supplied to them by other parties. These parties print the polyester films with pictures, motifs etc., as per customers requirements and send them to the appellants who then metallise and return them on job work basis. It is stated that the printed polyester films are laminated to LDPE/HDPE films by those parties - printers/laminators - and pouches are made therefrom. In pursuance of enquiries made by the Department on or about 28-9-1987, a show cause notice dated 7-6-1988 was issued by the Collector to the appellants which ultimately culminated in the impugned order. 3. We have heard Shri V. Lakshmi Kumaran, Advocate, for the appellants and Shri L. Narasimha Murthy, DR, for the respondent-Collector. 4. The submissions of the learned counsel for the appellants were six-fold :- (a) The activity of metallising printed polyester film on job-work basis does not amount to manufacture for the purpose of excise levy. (b) In any event, printed metallised polyester film is classifiable under Heading 49.01 and not 39.20, as held by the Collector. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... names, trade marks, directions for use and other information about the products to be packed). It further says that, in any case, these goods were not classifiable under Chapter 49 even before 1-3-1987 as this Chapter encompassed within its ambit only products of the paper printing industry and would merit classification under Chapter 39 only as other material is not used at all necessitating examination of their classification under other Chapters. This circular was followed by another one - F. No. 93/22/89-CX. 3 dated 5-5-1989 - which referred to the Telex of 7-8-1987 and instructing the Collectors to give effect to the circular of 16-1-1989 from the date of its issue. This, as the letter explained, was because the classification of such goods under Chapter 49 was an off-shoot of the Telex of 7-8-1987 and representations had been received against demands raised for the past period in respect of the goods covered by the circular of 16-1-1989. 6. Continuing, the counsel submitted that Heading 39.20 covered plastic film whether metallised or not. The process of metallising was not defined as a process of manufacture in Section 2(f) of the Act or in the relevant section or chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld by the Supreme Court by its judgment dated 17-3-1989 in Civil Appeal Nos. 1960-61 of 1988; (c) Rathi Alloys Steel Ltd. v. CCE, Jaipur - 1990 (27) ECR 289 (S.C.); (d) CCE v. Chemphar Drugs Liniments - 1989 (40) E.L.T. 276 (S.C.); and (e) Padmini Products v. CCE - 1989 (43) E.L.T. 195 (S.C.). It was further submitted that, in any event, there was no intent to evade duty because the facility of MODVAT would have been available as packaging material. 9. As regards quantification of duty - see para 4(e) above, it was submitted that from the seized invoices and challans, it was clear that the film was of thickness below 25 mm. and the rate of duty was only 25% (and not 35% as ordered by the Collector) in terms of Notification No. 269/86 dated 24-4-1986. Further, the appellants were eligible for MODVAT credit of the duty already paid on the polyester film but the Collector had erroneously denied it though it was specifically asked for. In this context, reliance was placed on the Tribunal s decision in CCE, Hyderabad v. Shri Balaji Cable Industries -1987 (29) E.L.T. 77. 10. In his reply, the learned DR, submitted that metallising was a process incidental or an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing is on plastic film. Therefore, the subject goods could not have fallen under Heading 49.01 at least up to 1-3-1987. This is recognised in the Board s circular letter of 16-1-1989. However, it goes on to classify printed plastic films/sheets laminated with another plastic sheet under Chapter 39 since, in the Board s view, they are not products of the printing industry (or of the paper printing industry) - both prior to and from 1-3-1987. The Collector has also classified the goods under Heading 39.20, sub-heading 3920.31, during the relevant period. 15. But the submission for the appellants is that the process of metallising printed plastic films is not manufacture for the purpose of excise levy. The relevant parts of the tariff entry, both before and after the amendment of 1-3-1987, reads :- Other plates, sheets, film, foil, and strip, of plastics, non-cellular, whether lacquered or metallised or laminated, supported or similarly combined with other materials or not. On a plain reading of the entry, it is apparent that both non-metallised and metallised films are covered by it. There is little doubt that if an assessee manufactures polyester film and metallises it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try in the present case is analogous ( Films whether or not metallised ). Whether metallised or not, the film in the present case falls under the same description. The entry, as it reads, is not one which leads itself explicitly or implicitly to two sub-classifications viz., films, not metallised and films, metallised. Therefore, in our opinion, if the film has discharged duty at the unmetallised stage, no further duty is attracted. On the other hand, if the unmetallised film has not discharged duty, duty will be leviable on the metallised film. 17. In this context, we may note that there is no dispute as regards the marketability of the metallised film. The learned counsel for the appellants clearly stated before us that the goods were marketable. But that, by itself, is not determinative of the issue. The counsel submitted that the present goods viz., metallised printed film has a use which has already been pre-determined at the printing stage i.e. for making pouches for packing. The Department has not controverted this. And, it appears to be correct looking at the sample of the unmetallised and metallised film on record. In other words, metallisation has not brought about a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was already pre-determined, did not bring about any fundamental change in the printed film except perhaps to give it a decorative effect. 19. The Tribunal held in the Transpower Corporation case (supra) that galvanising steel angles, channels with a view to make them resistant to oxidation did not result in manufacture of new articles falling under Item No. 68, CET as it stood then. 20. In the Indian Hume Pipe Co. case (supra), the Tribunal held that the process of lining and coating with cement mortar of steel pipes did not change the basic character of the goods as steel pipes and no new excisable product emerged. 21. In the face of the authorities discussed above, the submission of the learned DR that because metallising had imparted a decorative shining effect to the printed film, new excisable goods had emerged is not acceptable. He submitted that metallising is a process incidental or ancillary to the completion of the manufacture of the product: metallised printed film. Yes, it is so. In fact, this argument is not even needed to levy duty on metallised printed film cleared, as we said earlier, from an integrated factory manufacturing polyester film and printing a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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