Order Date: 10 August 2022

Facts-

• The Appellant, Nemlaxmi Books India Pvt Ltd involved in the activity of slitting of duty paid Jumbo paper Rolls and cutting to small size of sheets of paper and clearing the same from their factory by issuing a sales invoice, on which, they have declared the “Jumbo Rolls converted into small rolls and small Rolls to Sheet, does not amount to Manufacture as per Section 2(f) of Central Excise Act, 1944 hence, no duty is leviable”.
• The department contended that the appellant had converted Jumbo Rolls of paper into small sheet of paper, which are sold as copier paper and other paper. According to the department, activity is amount to manufacture.
• The show cause notice was issued proposing demand of excise duty on such paper sheet. The adjudicating authority has confirmed the proposal on the show cause notice and also imposed the personal penalty on the director of the company.
• Being Aggrieved the appellant filed the present appeals.

Issue-

• Whether the conversion of jumbo paper rolls into smaller sheet by the activity of slitting, cutting would amount to manufacture of distinct product and the demand raised by the adjudicating authority is sustainable?

Order-

• The Tribunal observed that the adjudicating authority has contended that the use of the paper sheet converted from jumbo rolls is different from the paper in the paper jumbo rolls. Further the finding is based on that chapter heading of jumbo paper rolls and smaller sheet are different. Irrespective of activity of slitting, cutting of jumbo paper rolls to smaller sheets, the paper remains the same product as there is no change in the product. It is only the size of the paper which changes. Moreover, there is no chapter note in chapter 48 that such activity is amount to manufacture.
• It is clear from the chapter note that the process of slitting and cutting of thermal paper is amount to manufacture. However, the similar chapter note is not provided in respect of paper, which is the product in question. Therefore, in absence of the similar chapter note the slitting, cutting and conversion from bulk jumbo roll to sheet form of paper cannot be termed as manufacturing activity in terms of section 2(f) of Central Excise Act, 1944.
• The Tribunal relied on the M/S. HINDUSTAN PHOTO FILM MFG. CO. VS. CCE, COIMBATORE-2001 (136) ELT 619 and held that “Jumbo Rolls converted into small rolls and small Rolls to Sheet, does not amount to Manufacture as per Section 2(f) of Central Excise Act, 1944 hence, no duty is leviable”.
• Accordingly, the impugned order is set aside and the Appeals are allowed.