G. Sankaran, President

1. By the impugned order No. 70/89 dated 29-12-1989, the Collector of Central Excise, New Delhi -

(a) demanded from M/s Rexor India Ltd., Faridabad, duty amounting to Rs. 73,64,0707/- leviable on printed metallised/lacquered polyester film cleared by them during the period from 1-3-1986 to 28-9-1987, invoking the provisions of Rule 9(2) of the Central Excise Rules, 1944 (the "Rules", for short) and the extended time limit provided in Section 11A of the Central Excises and Salt Act, 1944 (the "Act", for short),

(b) imposed a penalty of Rupees ten lakhs on the company.

Aggrieved by this order, Rexor India Ltd. (the "appellants", for short) have filed the present appeal.

2. The facts of the case, briefly stated, are that the appellants are engaged in the business of metallising and lacquering inter alia of polyester films. The present dispute concerns the appellants' activity of metallising printed polyester films supplied to them by other parties. These parties print the polyester films with pictures, motifs etc., as per customers' requirements and send them to the appellants who then metallise and return them on job work basis. It is stated that the printed polyester films are laminated to LDPE/HDPE films by those parties - printers/laminators - and pouches are made therefrom. In pursuance of enquiries made by the Department on or about 28-9-1987, a show cause notice dated 7-6-1988 was issued by the Collector to the appellants which ultimately culminated in the impugned order.

3. We have heard Shri V. Lakshmi Kumaran, Advocate, for the appellants and Shri L. Narasimha Murthy, DR, for the respondent-Collector.

4. The submissions of the learned counsel for the appellants were six-fold:-

(a) The activity of metallising printed polyester film on job-work basis does not amount to "manufacture" for the purpose of excise levy.

(b) In any event, printed metallised polyester film is classifiable under Heading 49.01 and not 39.20, as held by the Collector.

(c) If at all the proper classification of the goods is under Heading 39.20, duty could be demanded from the appellants only from the date of the show cause notice i.e. 7-6-1988.

(d) The demand by the show cause notice dated 7-6-1988 for the period from 1-3-1986 to 26-9-1987 is barred by limitation. And, so, penalty is not imposable.

(e) In any case, the quantum of duty demanded is incorrect.

(f) Collector has passed the impugned order in a hurry without applying his mind to the appellants' written submissions.

5. As regards (a) above - our attention was drawn to Heading No. 49.01 of the CET as in force during 1986-87. It read:-

"49.01 - Printed books, newspapers, pictures and other products of the paper printing industry; manuscripts, typescripts and plans"

In 1987-88, the word "Paper" before the words "Printing industry" was deleted and so the relevant portion read:-

"... other products of the printing industry... ."

Because of Note 2 to Section VII of the CET (Chapter 39 falls in this section) which reads as follows:-

"Except for the goods of Heading 39.18 or 39.19, plastics, rubber, and articles there of, printed with motifs, characters or pictorial representations, which are not merely incidental to the primary use of the goods, fall in Chapter 49".

printed polyester films cannot fall under Chapter 39. It may also not have fallen under Chapter 49 till the amendment of Heading 49.01, since it covered only products of the paper printing industry provided, of course, the conditions in Section Note 2 to Chapter 39 (extracted earlier) were satisfied. In this context, the learned counsel referred to the Board's Telex dated 7-8-1987 (page 42 of the Appellants' Paper Book) and Tariff Advices dated 16-1-1989 and 6-5-1989 (page 43 and page 45 respectively). The Telex gives the Board's view that plastic films printed with motifs, characters or pictorial representation would be appropriately classifiable under Chapter 49 in view of and subject to section note 2 to Section VII and Rule