VST INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants who are the manufacturers of Cigarettes of various brands use "Printed Gay Wrappers" in the packing of cigarettes packets. They procured the Printed Gay Wrappers from other suppliers and also got the same from job workers after supplying the plain paper and polycoated paper to them. On the basis of information gathered by officers of Anti -evasion, Hyderabad -III, Commissionerate, the department conducted investigation and came to the conclusion that the appellants were manufacturing and clearing Printed Gay Wrappers classifiable under sub -heading No. 4823.90 as other Article s of paper without payment of duty and without following the central excise procedures. Therefore three show cause notices covering the period from 23 -4 -01 to 12 -6 -02 were issued to the appellants. The Commissioner in his OIO 22/02 dated 30 -8 -02 decided that the appellants are the manufacturers of gay printed wrappers which are classifiable under chapter sub -heading 4823.90. Duty of Rs. 1,29,13,866/ - was confirmed under proviso to Sub -section (1) of Section 11A of the Central Excise Act, 1944. A penalty of Rs. 1,07,50,285/ - was imposed on the appellants under Section 11AC of the Act. Interest was also demanded under Section 11AB. Penalties under Rule 209G of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2001 were imposed on the following persons.

(2.) THE first question raised above is very decisive in this appeal. In other words, if the classification of the impugned goods is decided, all the other questions can be answered on the basis of the correct classification. The appellants claim classification of the product under chapter 4901 as products of printing Industry. If the appellants' claim is accepted, then the products carry nil rate of duty and no duty can be demanded. The penalties imposed also will not be sustained. On the other hand, if the department's position is upheld, the appellants would be liable to pay duty under Chapter heading 48.23 and also will be liable for interest and penalties, etc.

(3.) THE departmental representative argued that the impugned products known as gay wrappers are products of packing industry and printing on them is merely incidental. In this connection she relied on the decision of the Hon'ble Supreme Court of India in Rollatainers Ltd. v. UOI [ : 1994 (72) E.L.T. 793 (S.C.)]. Further it was contended that the Larger Bench of the CEGAT in Smit Enterprises v. Collector of Central Excise, Cochin [ : 2000 (118) E.L.T. 69 ] has held that wrapping paper cut to size and shape will be classifiable under sub -heading 4823.19 of the CETA, 1985 and not under sub -heading 4823.90. Further reliance was placed on Tribunal's decision in the case of Commissioner of Central Excise, Mumbai v. New Jack Printing Works Pvt. Ltd. [ : 1997 (93) E.L.T. 78 (T)] wherein it was held that printed wrapping papers for wrapping Cadbury chocolates bars shall be classifiable under sub -heading 4818.90 and not as other products of the paper industry.