FITRITE PACKERS Vs. COLLECTOR OF CEN. EX.

JUDGEMENT

(1.) THESE are three appeals filed by the above appellants against the order -in -original passed by the Collector of Central Excise, Bombay dated 31 -1 -1992 confirming a duty demand of Rs. 1,78,38,348 and imposing a penalty of Rs. 10,000 on M/s. Fitrite Packers and Rs. 25,000 each on Shri Sunil Dalai and Ms. Usha Mehta under Rule 209A of the Central Excise Rules.

(2.) BY SCN dated 27 -6 -1991 appellants M/s. Fitrite Packers were called upon to show cause why duty should not be demanded on the manufacture of printed plastic films in roll form ready to be used in the manufacture of articles of conveyance and packaging for the period between 1 -7 -1986 and 19 -11 -1990. They were also called upon to explain why penalty should not be imposed for contravention of the provisions of Section 6 of the Central Excise Act, 1944 read with Rules 173B, 173C and 173F, 174G(1) read with Rules 9(1), 173G(2), read with Rule 52A and Rule 173G(4) read with Rules 53 and 226 and Rule 173G(3) read with Rule 54 of the Central Excise Rules in the manufacture of clearance of printed plastic films in roll form ready for use in manufacture of articles for conveyance or packaging without obtaining Central Excise L -4 Licence, without filing classification list and price list and without determining the proper Central Excise Duty. They were also called upon to show cause why action should not be taken for not accounting production, clearance and stock in the prescribed statutory records, such as RG -1 Register, Monthly Returns under RT -12 Returns, etc. Ms. Usha N. Mehta, Manager of Fitrite and Shri Sunil N. Dalai, Partner of M/s. Fitrite were also called upon to show cause why penalty should not be imposed on them under Rule 209A for deliberate suppression of the fact of manufacturing activity and thereby causing evasion of Central Excise duty.

(3.) ON behalf of the appellants it was contended that what was printed were the designs, logos, etc. and the said designs, printed motifs, colour, etc. are supplied to the customers and this involve the use of copyright, trade mark, designs etc. This was being done to identify the product with a particular manufacturer and it was not incidental to the use of Cellophone, HMHD and BOPP films/sheets of papers. The said goods fell under Chapter 49 and were chargeable to nil rate of duty. Their contention was that the goods were not excisable goods and, therefore, Rule 174 did not apply to their case. They also claimed that they had applied for licence on their own on 20 -11 -1990 since they felt that the goods fell under Chapter 39. Thereafter they had also filed classification list and price list under Heading 39.20 and paid duty under protest as they felt that the classification of the goods was not correct. According to the appellants the impugned goods would correctly fall under Chapter 49 in view of the fact that the material printed on the said product was vital for identifying the product and its primary use. The printing of the said material could not be said to be merely incidental to the primary use of the goods. The said printed products which were used for wrapping articles of confectionery cannot be considered to be merely a product of packaging industry. The main purposes of the said printed wrappers was to establish the identity of the goods and to relate it to the brand name of the manufacturer and to give other necessary details customers would require. The said printing carried out by the manufacturer on the said plastic sheets/films was essential to the primary use to. which the said printed sheets/films were put, namely, wrappers and confectionery. It was further pleaded that even if the goods were classifiable under Chapter 39, by virtue of Modvat credit scheme no duty become payable and consequentially there was no loss of revenue.