Printing On Government-Supplied Watermarked Paper Does Not Attract Excise Duty: CESAT Bengaluru

The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that printing carried out on government-supplied watermarked paper for issuance of Record of Rights, Tenancy and Crops (RTC) does not attract central excise duty, and is classifiable under a nil-rated tariff entry.

The Bench of Judicial Member Dr. D.M. Misra and Technical Member Pullela Nageswara Rao allowed the appeal filed by Samanthu Business Forms Pvt. Ltd., setting aside a duty demand of Rs. 7.73 lakh, along with interest and penalty, for the period September 2008 to June 2010.

The dispute arose when the department alleged that the appellant had manufactured manifold business forms classifiable under Tariff Heading 48204000, attracting excise duty, and had failed to include the cost of pre-printed stationery supplied by the customer in discharging duty on clearances made to M/s. Bharti Airtel Limited, Bangalore.

The appellant contended that it was merely engaged in printing on watermarked paper supplied by the Government of Karnataka on a job-work basis, and did not manufacture the forms. The supplied papers bore the logo of the Government of Karnataka and were used for issuing RTCs.

The Tribunal relied on Circular No. 1052/1/2017-CX dated 23 February 2017, and observed that the appellant's activity amounted only to printing on supplied paper. It held: 

"Applying the said circular to the facts of the present case where the appellant is required to print on the supplied paper with water mark logo of Government of Karnataka, which are used for the purpose of issuance of RTC, in our opinion, would attract classification under Chapter heading 4901 of the CETA, 1985, chargeable to 'NIL' rate of duty during the relevant period."

The Bench concluded that printing alone does not constitute manufacture, and that the impugned duty demand was unsustainable.

Accordingly, the Tribunal set aside the impugned order, quashed the duty demand, and allowed the appeal.

For Appellant: Ganesh S.

For Respondent: Assistant Commissioner, Maneesh Akhoury