Customs, Excise and Gold Tribunal - Delhi
Pioneer International vs Collector Of Customs on 10 August, 2000
Equivalent citations: 2000(72)ECC136, 2000(122)ELT430(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this appeal filed by M/s. Pioneer International is whether the Risograph Printers 5600D, imported by them, is classifiable as Printing Machine, under subheading 8443.19 of the First Schedule to the Customs Tariff Act, as claimed by them, or under sub-heading No. 8472.90 as office Machine as confirmed by the Collector of Customs, under the impugned Order No. 22/93 dated 06.05.1993.
2. Shri G.L. Rawal, Id Advocate, submitted that the Appellants had imported 30 pieces of Risograph Printers after making extensive enquiries that these Printers were capital goods falling under the category offset Printing Machine. He referred to letter dated 31.08.1989 of M/s. H.C.L. Ltd. addressed to Director General of Technical Development seeking clarification whether Risograph Printers were importable under OGL or Non OGL Capital goods import; that Dy. Chief Controller of Import and Export, under letter dated 04.10.1989 informed M/s. HCL Ltd. that the Risograph Printer was covered by the entry at Sl. No. 2(8) of Appendix-I Part B of the Import-Export Policy, 1988-91; that said Sl. No. 2(8) reads as "Four Colour and above form colour sheet fed offset printing machine" and Appendix-I Part-B contained the list of Capital Goods allowed under OGL that the opinion rendered by DGTD through the final authority CCI and E is binding on the Customs Authorities. Reliance was placed on the decision in the case of Maya Enterprises v. CCE, Kandla, 1994 (71) E.L.T. 817 (T) and M.J. Export Ltd. v. CEGAT, 1962 (60) E.L.T. 161 (S.C.) wherein reference has been made to the binding effect of the opinion of the Chief Controller of Imports and Exports derived from Para 24(1) of the Import Policy (1988-91). He also referred to the decision in the case of GEM Electro Mechanical Pvt. Ltd v. C.C., Calcutta, 1997 (93) E.L.T. 141 (T) wherein it was held that certificate given by the competent authorities cannot be ignored and are binding and these cannot be rejected on the ground that they were issued under mistake or mis-presentation. The ld. Advocate also mentioned that the Appellants also came to know that various port authorities had been clearing the impugned printer as Printing machine under Heading 84.43; that Customs Authorities are bound by the past practice of clearing the impugned goods.
3. The ld. Counsel further submitted that the principal function of the impugned machine being Printing, it has to be classified under the heading where other printing machinery finds its place-84.43; that the Duplicator as defined in Webster Dictionary is "One who or that which duplicates; especially a machine for producing copies"; that according to Shorter Oxford English Dictionary, Duplicator means "A machine for producing copies". He mentioned that Risograph is a more sophisticated machine with previously unheard print quality; that the machine uses a method of scanning at 400 DPI resolution as used in Scanners in Printing Industry; that instead of optical system (Lens and Mirror) as used in a photocopier, impugned printer uses a charged couple device, as used in the scanners in printing industry; that the method is digital only; that just like in offset Printing which uses a lithographic plate made of aluminium or Zinc coated with photo sensitive material, the Risograph uses similar materials which are heat sensitive called master; that a number of masters are required in the Risograph for multicolour printing; that inversion of image is carried out during scanning and Master making process itself; that all the facilities available in printing are available in Risograph such as registering errors, adjustment of margin on four sides of paper, margin for binding, and fine turning of the print. He also mentioned that the process of scanning and master making are ancillary to printing and are inbuilt in the machines; that simply because certain processes are separately done in offset printing does not mean that where these processes are inbuilt the same is precluded from the term "printing machinery". He also said that assuming, though not admitting, that impugned machine is not offset printing machine, it would fall under 8443.50 where other printing machinery are classified; that Heading 84.72 includes only particular type of stencil duplicating machine; that the process of Master making is not covered within the description of stencil duplicator. He further mentioned that demostration was made on the machine itself and even a print of the picture of Lord Ganesha was taken; that impugned machine is only floor model and it is recommended not to be put on a table or a desk because of its high speed, heavy duty (weight 94 kg) and sturdy printing machines.
4. The ld. Advocate specially referred to para 5 of the show-cause-notice wherein it was mentioned that Printing being the principal function of Risograph, it is covered under Heading 8472.10 as office duplicating machine as it uses stencil and ink for printing and in view of Note 3 to Section XVI of the Customs Tariff; that reliance was also placed on HSN Explanatory Notes according to which machines for cutting stencils or embossing sheets of metal, plastics, etc.; for use on duplicators are covered under Heading 84.72. The ld Advocate contended that once the Revenue holds that the principal function is 'printing' impugned machine is to be treated as printing machine and classified as such; that further Note 3 in no manner enumerates the process involved in the function; it categorically deals with the principal function and if process or media was relevant to achieve the principal function, Statute would have incorporated such a condition in Note 3; that as such process and media have no relevance in Note 3 to Section XVI. He further contended that Notes below Heading 84.43 in H.S.N. clearly mentions that stencil can be used even in machines falling under the said Heading and accordingly the conclusion reached in Para 5 of the notice is wrong. He also placed reliance on the decision in Ac-cumax v. C. C., Bombay -1983 (14) E.L.T. 2029 wherein it was held that when the appellant has adduced technical evidence and the DGTD had confirmed this, it cannot be said that the goods were not eligible to benefit under Notification No. 49/78-Cus. the ld. Advocate also mentioned that the opening words of Heading 84.72 are "Other office machines" and accordingly for the purpose of attracting Heading 84.72, it has to be established that the impugned machine cannot be classified anywhere else. Reliance was placed on the decision in the case of Bajaj Plastic Ltd. v. C.C., Bombay, 1997 (90) E.L.T. 119 (T). He also mentioned that the item in question has crossed the Customs barriers of Japan and was declared as Printing Machines under Heading 84.43; that both Japan and India are parties to H.S.N. and the Japanese classification binds the Revenue Authority in India or in alternative it has to be respected. The ld. Counsel further submitted that they have produced various letters from the Government Organisation, using these printing machines, from which it is established that the machines is a printing machine; that thus in common parlance the machine in question is known as a printing machine; that the burden of proof is on the taxing authorities to show that a particular item is taxable in the manner claimed by them and mere assertion in that regard is of no avail as held by the Supreme Court in U.O.I. v. Garware Nylons Ltd., 1996 (87) E.L.T. 12 (S.C.); that the Department did not have any evidence nor any expert opinion about Risograph Printing machine. He also mentioned that the Collector has relied upon a letter from M/s. HCL (in para 22 of Adjudication Order) of which no copy was supplied to them nor anything has been relied upon in the show-cause notice; that even if the machine in question is used in the office it cannot be said that it has lost its function of printing; that the allegation in notice was that the principal function of the machine in question was 'duplicating' whereas in the impugned order it is concluded that main function is 'printing' which is beyond the show-cause-notice; that again it was proposed to classify the machine under sub-heading 8472.90 in show-cause notice but the Collector decides it as a duplicating machine under sub-heading 8472.10. Finally, he submitted that if there are two views possible, assessee should be given benefit of doubt and the opinion favourable to it should be given effect to as held in Foul-son And Mathen v. CCE, 1997 (90) E.L.T. 264 (S.C.); that penalty of Rs. 26 lakhs, in a case where value of goods involved is only Rs. 38 lakhs, is very harsh, particularly when the Department itself had been clearing such goods as printing machine; that redemption fine of Rs. 5 lakhs is also very high and there is no material on record that margin of profit is to that extent.
5. Countering the arguments, Shri A.K. Jain, ld D.R., submitted that the impugned goods are not at all printing machines; that according to the 'Operation Guide', "the Risograph's many feature can help make it easier to reproduce a wide range of documents"; that it is apparent from this itself that the impugned machine only reproduces and does not print; that the picture of the machine also strengthens the view that it is nothing but a duplicating machine; that as per "Operation Guide" the function of the Risograph is that it "feeds the Original into the scanner" which also goes to suggest mat the machine performs 'duplication' works; that the impugned machine does not have any printing screen. He also referred to page 37 of the 'Operation Guides' dealing with 'Originals'; that the Guides provides that paper being used for original should range from A6 to A3 size and weigh from 50 g/m2 to 127 g/m2 and in case Original is less than 50g/m2, it may be used with a carrier sheet; the Manual also talked of 'Difficult Originals' for which a carrier sheet is to be used (such as Pached or worn originals, coated originals, Art Work, Transparent originals, etc.); and 'Unsuitable Originals' (e.g. stapled or paper clipped originals, thick originals more that 127g/m2. Thermal paper, carbon or chemically treated originals) and contended that if Risograph is a Printing machinery and print on its own, there is no need to specify about the Originals: that the Operation Guide sets the entire submissions of the Appellants to zero. He further mentioned that the Appellants cannot explain a new invention in roundabout manner and cannot claim that the word 'duplication' was used from the point of view of making identical look alike of the Originals. Referring to the letter dated 04.10.1989 of CCI and E, on which ld. Advocate has placed heavy reliance, the ld. DR submitted that there is no mention of Model No. at all; that similarly M/s. HCL Ltd. had also not indicated any model number in their reference to DGTD and as such no reliance can be placed upon such a letter for determining the classification of Risograph Printer Model 5600 D imported in the present matter; that moreover these documents do not pertain to the import made by the Appellants and as such will not stand the test of Judicial scrutiny; that CCI and E had also not given any reason to differ from the catalogue of the product; that the Appellants should have themselves taken up the matter with DGTD at the time of import; that further the period of Import-Export Policy is different in the case of imports made by HCL Ltd; that the Customs Authorities have to consider all the aspects and arrive at their own conclusion.
6. Regarding the certificates produced by the Appellants, the ld. DR mentioned that they have not brought on record the question referred to by them to these Organisations for soliciting their certificates; that further the reference has been made to the offices which supports the case of the Department that the impugned product is an office Equipment. He also contended that if the impugned machine is capable of doing printing originally, there should be some such machanism available in the machine; that no such machanism has been pointed out by the Appellants; that the "Ganesha" picture might have been reproduced from the memory. The ld. DR mentioned that the Collector has given his specific findings as to why the impugned product is to be classified under Heading 84.72 CTA and he reiteriates them. He also submitted that the classification adopted by Exporter is not binding on Indian Customs.
7. In reply, the ld. Advocate submitted that the CCI and E had given reasons by giving criterion in its letter; that the classification issued by them was well reasoned classification and the same was followed by the Customs Authorities.
8. We have considered the submissions of both the sides. The rival Headings read as under :
84.43 - Printing machinery; machines for uses ancillary to print-
ing.
- Offset printing machinery :
8443.11 - Reel fed
8443.12 - Sheet fed, office type (sheet size not exceeding 22 x 36 cm)
8443.19 - Other
- Letter press printing machinery, excluding flexographic printing.
8443.21 - Reel Fed
8443.29 - Other
8443.30 - Flexographic printing machinery
8443.40 - Gravure printing machinery
8443.50 - Other printing machinery
8443.36 - Machines for uses ancillary to printing.
8443.90 - Parts.
84.72 Other office machines (for example, hectograph or stencil
duplicating machines, addressing machines, automatic
bank note dispensers, coin-sorting machines, coin-
counting or wrapping machines, pencil-sharpening ma-
chines, perforating or stapling machines).
9. HSN Explanatory Notes provide that Heading 84.43 covers all machines used for printing by means of the type, printing blocks, plates or cylinders and excludes stencil duplicating machines. As submitted by the ld. D.R., the impugned machine is used only to reproduce copies from the originals and it does not have any machanisum to print any original matter. The Product features as shown in Operation Guide do not indicate any such mechanism. The features have been explained in the Operation Guide as under :
FEATURE FUNCTION
1. ADF Feeds the original into the scanner.
2. Original Scroll Clip Positions Originals for the editing
board
3. Original Guides Holds and guides originals in original
feed
4. Pointing Pen (Stylus) Selects an area for editing
5. Original Feed Table Holds Originals
6. Original Table Release Used for opening original feed table
7. Editing Board Edits image together with the pointing
Pen.
10. It is also observed from Operation Panel that this Panel prevents light copies after long periods of infrequent use, reduces dark background or enhances light image, displays the input print quantity and the number remaining to be printed during printing, ADF Button is for non-stop operation from master making to printing on multiple originals. It is apparant from the Operation Guide that the impugned machine makes a Master copy from the Originals and then reproduces the same. offset printing, according to the World Book Dictionary, is a process in which the inked impression is first made on a rubber roller and then on the paper, instead of directly on the papers. The Risograph Printer thus cannot be treated as offset printing machinery so as to be classifiable under sub-heading 8443.19 CTA. The ld. DR has submitted that the clarification issued by the CCI and E was not in respect of the machine imported by the Appellants and as such cannot be binding on Customs Authorities while dealing with the imports effected by the Appellant and particularly when no model Number has been mentioned either in the reference or in the clarification. The certificates given by various Organisations do not indicate that it is a Printing machine which is covered by Heading 84.43. A duplicating machine is a machine for making many exact copies of anything written, typed or drawn. According to HSN Explanatory Notes stencil duplicating machine operates with waxed paper stencils previously cut by a stylers or on a typewriter. In the impugned machine the Master making is done inside the machine itself. The Collector has given his findings in the impugned Order that "Risograph uses stencil and ink (which pierces through the micropores of the stencils) which principles is analogus to duplicating machine classifiable under Heading 8472.10." The Collector has therefore, classified the impugned machines under sub-heading 8472.90 of CTA which we uphold. As the impugned goods are office machines, they are liable to confiscation. However taking into consideration all facts and circumstances of the case and the Collector finding that there is no clandestine act or wilful manipulation, we reduce the redemption fine from Rs. 5 lakhs to Rs. 2 lakhs and penalty from Rs. 26 lakhs to Rs. 8 lakhs.
The above appeal is disposed of in the above terms.