By TIOL News Service

MUMBAI, FEB 13, 2014: THIS is a Revenue appeal.

The respondents are manufacturers of various excisable goods on which they pay CE duty. They also manufacture printed ATM Rolls, printed lottery ticket rolls and printed bus ticket rolls which were classified by them under CETH 49019900 of CET attracting nil rate of duty, as being the product as "products of the printing industry".

The assessee availed CENVAT Credit on inputs used in the manufacture of both dutiable and exempted products but did not maintain separate accounts and, therefore, at the time of clearance of the said products, the appellant paid an amount of @10%/8% of the value of the exempted goods.

The department harboured a view that the impugned goods merit classification under heading 48234000 as "rolls, sheets and dials, printed for self-recording apparatus" and are chargeable to appropriate rate of duty. Accordingly, a SCN dated January 2010 was issued demanding excise duty of Rs. 14,12,26,755/- for the clearances made during December 2005 to October 2010.

The CCE, Belapur relied on the decisions in the case of Gopsons Papers Ltd Vs. CCE, Noida - (2006-TIOL-868-CESTAT-DEL), Sai Security Printers Ltd., Vs. CCE, Faridabad - (2006-TIOL-398-CESTAT-DEL) and Metagraphs Pvt. Ltd. Vs. CCE, Bombay and dropped the proceedings.

So, the department is aggrieved and is before the CESTAT.

The Revenue representative tried to distinguish the case laws and the Circular No.11/91-CX dated 15/10/1991 relied upon by the adjudicating authority and adverted to the decision in Surya Offset Vs. CCE, Ahmedabad - (2011-TIOL-1632-CESTAT-AHM) wherein it was held that the bank slip books with bank's name, account holder's name and number and amount to be deposited, BSNL forms not in manifold form or interleave carbon set, form and receipt of educational institutions with details of pupils, homework to be filed, admission forms and school leaving certificates and receipt book with name, address, sales tax registration, etc. are pre-printed stationery for which printing was incidental to their primary use and therefore, they are classifiable under Heading 48.20 of the Central Excise Tariff and not under Heading 49.11. Reliance is also placed on the decisions in ITC Ltd. Vs. CCE, Madras, ITC Ltd. Vs. CCE, Madras - Graphic Charts Ltd. Vs. CCE, Bombay, to submit that in view of the aforesaid decisions the impugned products merit classification under CETH 48234000 as "rolled sheets and dials printed, for self-recording apparatus" and hence the order be set aside and the Revenue appeal allowed.

The respondent assessee supported the order of the adjudicating authority and also submitted that in view of the HSN explanatory notes pertaining to CETH 49.11 which provides "certain printed articles may be intended for completion in manuscript or typescript at the time of use but remain in this heading provided they are essentially printed matter". Thus, printed forms, blanks multi-coupon travel tickets, circular letters, identity documents and cards and other articles printed with messages, notices, etc. requiring only the insertion of particulars are classified in this heading (49.11).

It is further submitted that vide Finance Act, 2012, the Central Excise Tariff was amended to specifically include the articles covered by the impugned order under Chapter 48 by inserting a Chapter Note 14, and which reads as follows -

“Notwithstanding anything contained in Note 12, if paper and paper products of heading 4811, 4816 or 4820 are printed with any character, name, logo, motif or format, they shall remain classified under the respective headings as long as such products are intended to be used for further printing or writing”.

And since this chapter note does not have any retrospective effect, for the period under consideration the classification adopted by them is correct and hence the order of the CCE, Belapur is required to be upheld.

The Bench after extracting the competing tariff entries observed -

"6.1 From the HSN explanatory notes, it is seen that heading 4823 excludes products like lottery tickets, scratch cards, raffle tickets and tombolo tickets. Similarly, HSN explanatory notes to heading 4901 clearly shows that "certain printed articles may be intended for completion in manuscript or typescript at the time of use but remain in this heading provided they are essentially printed matter. Thus, printed forms, travel tickets, circular letters, identity documents and cards printed with messages, notices, etc. requiring only the insertion of particulars, eg. Dates and names are classified in this heading. The said notes further say that tickets for admission to places of entertainment, tickets for travel by public or private transport or other similar tickets are also included in Chapter 49. From the explanatory notes, it is clear that the impugned gods, namely, ATM printed rolls, lottery ticket printed rolls and bus ticket printed rolls would merit classification under Chapter 49 as "products of the printing industry". The decision of this Tribunal in the case of Gopsons Papers Ltd. and Sai Security Printers Ltd. (cited supra) also clearly held that lottery tickets, bus tickets, cheque books, etc. printed on thermal paper rolls and cut to size are classifiable under heading 4901.90 as products of the printing industry. In the case of Metagraphs Pvt. Ltd. the Hon'ble Apex Court held that if printing brings into existence a product, the resultant product would be a "product of printing industry". In the case before us, it is not in dispute that the printing on the thermal sheets/rolls of paper brought into existence, receipts for the ATM, lottery tickets and rolls for bus tickets. Therefore, printing is not merely incidental to the use of the product as such printing imparts a substantial character and quality to the product. It is true that while actually using, certain particulars are required to be entered in these rolls by the ATM or the lottery machine or in the bus ticket vending machine. Nevertheless the product is specifically meant to be used as ATM receipts, lottery tickets and bus ticket. It is the printing done on the thermal paper which has imparted these characteristics and therefore, it has to be held that printing is not merely incidental to the use of the products. Applying the ratio of the decisions cited supra, it becomes evident that the impugned goods prior to enactment of Finance Bills 2012 merit classification as "products of the printing industry”. Further, it is seen that in the Finance Bill 2012 a specific note 14 (supra) was inserted in Chapter 48 to bring within the scope of Chapter 48 certain products of the printing industry. The said amendment introduced by way of Note 14 to Chapter 48, was only prospective and was not given any retrospective effect. This itself indicates that prior to the insertion of Note 14 to Chapter 48, the impugned products merit classification under Chapter 49."

Holding that the order passed by the CCE, Belapur does not suffer from any infirmity, the Revenue appeal was dismissed as being devoid of merits.

In passing: Also see 2012-TIOL-635-CESTAT-MUM & 2013-TIOL-1843-CESTAT-MUM

(See 2014-TIOL-224-CESTAT-MUM)