By TIOL News Service

CHENNAI, OCT 19, 2015: THE appellants are manufacturers of holograms and clearing the same to the State Excise and Prohibition Department, Govt of Tamil Nadu classifying the product under 4901 of the Central Excise Tariff and clearing the same without payment of duty. The department issued SCN classifying the goods under chapter 3919 of CET and chargeable to appropriate rate of duty and demanded duty of Rs.22,01,01,514/- under proviso to Section 11A(1) and also proposed for penalty under Section 11AC. Adjudicating authority in his impugned order by relying Tribunals order in the appellants own case i.e. Holostick India Ltd. Vs CCE Meerut-II - 2004 (167) ELT 301 (Tri.-Del.) classified the goods under 3919 of CET along with interest and confirmed the demand and also imposed equal penalty.

The appellant contended inter alia that against the Tribunals order of Noida unit relied on by the Adjudicating Authority, they preferred appeal before the Supreme Court and the Supreme Court in their order 2015-TIOL-60-SC-CX set aside the Tribunal's order. The Supreme Court has settled the issue finally and also set aside the Boards circular dt. 21.6.96. The Supreme Court categorically held that the primary use of the product (hologram) is security and not the quality of being adhesive and classified under 4901.

After hearing both sides, the Tribunal held:

++  The Hon'ble Apex Court clearly held that as per HSN Note (2) of Chapter 49 the security holograms the product in question where the primary use is of security and self-adhesive is only incidental and therefore rightly falls under chapter 49 as a product of 'printing industry'. By respectfully following both the Hon'ble Apex Court decisions, (later decision is of appellant's own case) it is held that appellant's "Polyester Hologram Excise Label" produced out of stamping foil (transfer foil) is rightly classifiable under chapter 49 of CETA and find that hologram produced by the appellants are not covered under any of the excluded items i.e. Ch.39.18, 48.14 or 48.21 of HSN of Chapter 49.

++  Excise duty demand confirmed on the Hologram classified under 39199090 is liable to be set aside. Consequently penalties imposed on the main appellant as well as on the other appellants are also liable to be set aside. Accordingly, the impugned order is set aside and all the appeals are allowed with consequential relief.

(See 2015-TIOL-2236-CESTAT-MAD)