ORDER
S.L Peeran, Member (J)
1. There are two Revenue appeals. Appeal No. E/136/03 is numbered wrongly and is a duplicate of Appeal E/89. Hence the Appeal E/136/2003 is dismissed as infructuous.
2. Both the party and the Revenue are aggrieved with OIA No. 623/2002-C.E., dated 17-10-2002 with regard to the excisability and classification of the product described by the lower Authority as “Scrotch Brite, Scouring Pad, Scrub Pad”. The Commissioner (Appeals) has classified the product under CSH 9603.00 against the original classification adopted by the original authority under CSH 6802.00, which the Department says is not a correct heading and contend that the item is required to be classified under CSH 6802.00 on the plea that it is more specific and satisfies all the requirements of the Heading including the description under the HSN Note. The Heading 6802.00 covers natural or artificial abrasive powder or grain on a base of textile material of paper or paperboard or on other materials, whether or not cut to size or sewn or otherwise made up. The appellant’s contention in this appeal against the impugned order is that the rejection of their plea that mere cutting of the jumbo rolls of Scrotch Brite does not result into a process of manufacture is not correct and legal. There is no change in its character and the Scrotch Brite remains the same even when it is cut into pads of equal size. The Revenue has not discharged their function that such process of slitting amounts to a process of manufacture and the item is required to be classified under different Heading 9603.00. It is their contention that the mere fact that they had accepted the earlier order of the original authority holding the process to be a process of manufacture does not prevent them from seeking re-adjudication on the issue. They had re-agitated the issue before the authorities by filing the classification list under protest. There contention is that the order rejecting their plea by the authority is not justified. However, they had accepted the classification adopted by the Commissioner (Appeals) under 9603.00, which carries Nil rate of duty, which is also challenged in this appeal.
2. We have heard the learned Counsel Shri K.S. Ravi Shankar and the learned SDR Shri L. Narasimha Murthy in detail.
3. Both sides have filed case laws in support of their contention. The learned Counsel submits that there is no change in the character of the product and no activity is carried on in respect of imported item, which has been classified under 6802.00 under the Customs Act. The mere fact of cutting it into a smaller size of shorter length does not result into a new product and it does not satisfy the trade test of a different product having different character, name and use. Even if it is marketed in the rolls, the household ladies would cut it to a smaller size for the same use. He submits that the reliance by the Revenue on the judgment of the Apex Court in the case of Kores India Ltd. v. CCE, Chennai – is not justified as the Tribunal ruling on the Cutting of Carbon paper not resulting into manufacture was accepted by Revenue, but had challenged only the finding of the Tribunal with regard to the conversion of Jumbo Rolls of Ribbons into spool form which had been held to be a process of manufacture. The Apex Court had upheld the Tribunal’s rulings solely on the ground that the Typewriter/Telex Ribbons in Jumbo Rolls of 210 mtrs. or more length were found fed into cutting and spooling machines wherein ribbons of standard length of 10 mtrs. and 5 mtrs. were brought into existence which were cut and wound/spooled into metal spoons and 10 such spools blister packed and sealed with aluminium foil. The cutting and blistering in a spool was used for specific type of typewriter and acquired different characteristics. Hence, the finding of the Tribunal was upheld by the Apex Court in the reported judgment. He submits that this judgment is distinguishable for the reasons that no such activity was done and brought into a different product having different character. He contended that the Apex Court, in the case of Collector of C. Ex. v. Kiran Spinning Mills – 1998 (34) E.L.T. 5 (S.C.) held that cutting of man-made fibre in running length after manual sorting and straightening to be not a process of manufacture. Likewise, in the case of Bharat Forge & Press Industries (P) Ltd. – , the Apex Court has also held that Mere change in length, size or shape is immaterial and merely because goods after processing become different commercial commodity or have a distinctive name does not change the Excise classification if they continue to be goods of same species. He relied on the judgment of Premier Aryco India Ltd. v. CCE, Bangalore – 2003 (57) RLT 296 (CEGAT-Ban.) which held that Cutting, slitting and re-packing of jumbo rolls of Tissue paper into facial tissues, napkins, etc. has been held to be not a process of manufacture. He relied on Rajpurohit GMP India Ltd. v. CCE, Mumbai – wherein Slitting or cutting of Hot-rolled sheets and plastic sheets has been held to be not a process of manufacture. Likewise in CCE, Bombay v. True Graph Charts Pvt. Ltd. – 1999 (105) E.L.T. 341 (Tribunal), the process of Slitting of jumbo rolls of Thermal paper into smaller rolls have again been held to be not a process of manufacture. He relied on the case of Purolator India Limited v. CCE – 1990 (45) E.L.T. 91 (Tribunal) wherein Slitting, pleating and cutting of impregnated filter paper to form impregnated filter paper pleated pack has been held to be not a process of manufacture. He also relied on several judgments of the Apex Court to buttress his argument that there is no estoppel in taxation Law against classification of goods and merely because they had accepted the earlier order of confiscation, it does not prevent them from raising the issue again. In this regard, he relied on the judgments rendered by the Apex Court in the cases of Elson Machines Pvt. Ltd. v. CCE – ; Plasmac Machine Manufacturing Co. Pvt. Ltd. v. CCE – . He also referred to the Board’s Circular in M.F. (D.R.), C.B.E. & C. Circular No. 811/8/2005-CX., dated 2-3-2005 wherein the Board has clarified that the cutting/slitting of HR/CR Coils does not amount to a process of manufacture.
4. The learned SDR contended that the process amounts to a process of manufacture as a commercial commodity comes into existence, which is recognised in the trade for the purpose of scrubbing and cleaning. There is abrasive attached at the time of importing on the textile material and, therefore, it has to be classified only under specific CSH 6802.00. He referred to the HSN Notes also and distinguished the Heading 9603.00, which is only for ‘Brushes’ and contended that the item is not a Brush. He relied on the ruling rendered by the Apex Court in the case of Empire. Industries Ltd, and Ors. v. UOI and Ors. – wherein it has been held that Transformation of an object into a different commercial commodity is sufficient to constitute manufacture under Section 2(f) of Central Excises & Salt Act. The Apex Court upheld the contention that process of bleaching, mercerising, dyeing, printing, waterproofing, etc. carried out in relation to fabrics would bring into existence a new product. He referred to the judgment of the Apex Court in the case of CCE, Meerut v. Kapri International (P) Ltd. – wherein the Cutting of cotton fabrics from running length into small pieces was held to bring into existence new marketable commodities like bed sheets, bed spreads, table clothes and napkins. He also referred to the Tribunal ruling rendered in the case of CCE, Mumbai-V v. Servo-Med India Pvt. Ltd. – wherein Sterilisation process on syringes and needles and repacking was considered to bring into existence a new product. He also relied on the Apex Court judgment rendered in the case of Gramophone Co. of India Ltd. v. CCE – 1999 (114) E.L.T. 770 (S.C.) wherein the Recording of Audio Cassettes on duplicating music system was held to be a process of manufacture as blank audio cassette is distinct and different from pre-recorded audio cassette and two have different use and name.
5. We have carefully considered the submissions made by both sides. We find that the assessee has taken a view that merely because they had earlier accepted the classification order, it does not estop them from challenging the correctness of the order and taking the plea that the process of cutting and slitting of jumbo rolls of Scrotch Brite does not amount to a process of manufacture as there is no change in the character and the product remains the same. In this regard, they have relied on the judgments already cited above. On a careful consideration, we agree with the Counsel that the appellants have the liberty to raise the question of manufacture at a later stage and, therefore, the view taken by the Commissioner that the appellants had earlier accepted the order and that they cannot raise the issue is not a correct finding. The appellants are at liberty to raise the issue by filing fresh classification list and the authorities are required to have given a finding thereon. We have considered the process of cutting and slitting carried out by the appellants and we find that the appellants are merely cutting the sheets which is already known as ‘Scrotch Brite, Scouring Pad/Scrub pad’ which has got the abrasive. There is no change in the character of the item, when they are cut into smaller sizes. Therefore, the judgment relied by the Counsel which are already cited above would clearly apply to the facts of the case. We further find that in the case of Kores India Ltd. v. CCE, Chennai, the Apex Court had examined the aspect pertaining to cutting of the Typewriter/telex ribbons in Jumbo rolls of 210 mtrs. or more length which were fed into cutting and spooling machines wherein ribbons of standard length of 10 mtrs. and 5 mtrs. were cut and wound/spooled into metal spoons and 10 such spools blister packed and sealed with aluminium foil. It was done for specific use for each typewriter of a special requirement. In the present case, no such activity is done but the appellants are merely slitting and cutting it into smaller sizes. Therefore, the process of manufacture in Kores India Ltd. on typewriter/telex ribbons in jumbo rolls is different than the one, which is done by the appellants in the present case. The activities are akin to the one, which is done in the case of CCE v. Kiran Spinning Mills where the Apex Court has held that cutting in shorter length does not amount to a process of manufacture. The same finding has been recorded in the case of Bharat Forge & Press Industries (P) Ltd., wherein mere change in length, size or shape has been held to be immaterial and has been held to be not a process of manufacture. We have seen the other citations also and find that the same is applicable to the facts of the case as noted in the cited judgments. Further, we find that the Apex Court has confirmed the Tribunal ruling rendered in the case of Hindustan Photo Film Mfg. Co. v. CCE, Coimbatore – 2001 (136) E.L.T. 619 (Tri.-Chennai) wherein the process of Cutting, slitting and perforation of jumbo rolls for cinematographic films has been held to be not a process of manufacture. Likewise, the Tribunal, in the case of R.G.L Converters v. CCE, New Delhi – has held that the process of slitting and printing of ‘Cork tipping paper’ into ‘printed cork tipping paper’ does not bring into existence new goods and it is not a process of manufacture. In the case of Asmaco Industries Ltd. v. CCE, Mumbai – , the Tribunal has held that slitting of Crape paper to obtain masking tapes of smaller sizes does not amount to a process of manufacture. Likewise, in the case of CCE, New Delhi v. Bloom Products (India) Pvt. Ltd. – 2002 (144) E.L.T. 132 (Tri.-Del.), the Tribunal has held that Cutting jumbo paper rolls to smaller shape and size does not amount to a process of manufacture. In the case of S.R. Foils Ltd. v. CCE, New Delhi-I – 2001 (138) E.L.T. 719 (T) = 2001 (45) RLT 625 (CEGAT-Del.), the Tribunal has held that Cutting, rewinding and repacking of aluminium foil from jumbo rolls into smaller length and re-winding and repacking has been held to be not a process of manufacture. The Tribunal, in the case of S.R. Tissues Pvt. Ltd. v. CCE, New Delhi – 2001 (136) E.L.T. 367 (Tri.-Del.) has held that Slitting/cutting of jumbo rolls of tissue paper into small sizes for use as facial tissue, toilet tissue and napkins has been held to be not a process of manufacture. Likewise, the Tribunal, in the case of CCE, Bombay v. True Graph Charts Pvt. Ltd. – 1999 (105) E.L.T. 341 (Tribunal) has held that slitting of jumbo rolls of thermal paper into smaller rolls does not amount to a process of manufacture. The Madras High Court, in the case of Computer Graphics Pvt. Ltd. v. UOI – , has held that the process of cutting of jumbo rolls into smaller sizes of flats does not amount to a process of manufacture. Again the Tribunal in the case of Rajpurohit GMP India Ltd. v. CCE, Mumbai – has held that Slitting or cutting of hot-rolled sheets and plastic sheets does not amount to a process of manufacture.
6. We find that the Apex Court, in the case of Empire Industries Ltd. case, has found the process of bleaching, mercerizing, dyeing, printing, and waterproofing carried out on the fabrics bring into existence a new product known commercially as a different one. This judgment is clearly distinguishable as the item in the present case did not change its character and continued to remain the same. So also in the case of CCE v. Kapri International (P) Ltd., cutting of cotton fabrics from running length into small pieces brought into existence different commodities like bed sheets, bed spreads, table clothes and napkins, which judgment is also distinguishable. In the present case, there is no change in the character and the item continues to remain in the same condition; a housewife can cut it into smaller size for her requirement for use. In the case of CCE v. Servo-med India Pvt. Ltd. the process of sterilisation of syringes and needles and sold with distinct brand name and separate end-use on quality which emerged there found to be necessary for use on humans as syringes and needles are as such not fit for use on humans unless sterilised. They found there was change in nature and commercial understanding and the identity also changed. Hence, the matter was remanded for de novo consideration. In the case of Gramophone Co. of India Ltd., the blank audio cassettes were held to be distinct and different from pre-recorded ones as different product emerged. The situation is different in the present case for the reasons given. We accept the assessee’s contention that no new product arose on mere cutting of the item into small pads. The appellants succeed on this issue alone. The assessee’s appeal is allowed. As the question of classification does not arise in view of the fact that no new product has emerged, the same is not gone into and the Revenue appeal for accepting the original authorities classification does not require consideration and the Revenue appeal is rejected.
(Pronounced in open Court on 18-4-2005)