Customs, Excise and Gold Tribunal - Delhi
Studio Printall (New Delhi) Pvt. Ltd. vs Commissioner Of C. Ex. on 2 July, 2004
Equivalent citations: 2004(172)ELT402(TRI-DEL)
ORDER C.N.B. Nair, Member (T)
1. Both the appeals are directed against the same adjudication order. Cause of Action is also the same. Accordingly, they were taken up together for consideration and are disposed of under this common order.
2. Under the impugned order, a duty demand of over Rs. 85 lakhs along with penalties has been confirmed on the first appellant, who has been held to be a manufacturer. Second appellant is the Director of the first appellant and a penalty of Rs. 10 lakhs has been imposed on him. The period of duty demand is 1996-97 to 1999-2000 and the duty demand has been confirmed by taking resort to the extended period provided under proviso to Section 11A of the Central Excise Act.
3. The duty demand is in respect of stickers, dispensers, leather tags, banners and illuminating sign boards produced by the appellants during the course of their work as an advertisement material producer.
4. With regard to the stickers the submission of the appellants is that the only activity carried out by them is printing. Printing is done by way of offset printing or screen-printing on various base materials like plastic, cloth, leather, acrylic sheets etc. With regard to leather tags also, the activity carried out by the appellant is that of printing labels on leather sheets and then cutting the leather sheets into required shapes so that each label can be fixed on a piece of apparel (cardigans etc.). It is the contention of the appellant that they were eligible for exemption in respect of these items as products of printing industry. It is also being pointed out that the eligibility for the exemption remains settled by the decision of the Apex Court in the case of Metagraphs Pvt. Ltd. v. CCE reported in 1996 (88) E.L.T. 630 (S.C.). The appellant submits that the medium/material on which printing is done is altogether irrelevant for the purpose of determination of whether an item is a product of printing industry. The only relevant question is whether it is the printing that has brought the item into existence. As against this, Revenue has contended that not all printed items would be eligible to exemption and that this is clear from the position that tags, labels etc. have been specifically mentioned in Chapter 58.
5. With regard to the classification of dispensers the submission of the appellant is that this item also is not a machine or any such item specifically designed for dispensing products. They are merely arrangements for proper display of materials in retail shops. It is further stated that it is the printed material in the background, which gives an attractive and striking display to the products sought to be advertised. It is the appellant's contention that the case of the dispenser is more in the nature of a framed picture or photograph and thus, would merit classification as a printed product. On the contrary, Revenue submits that the item's essential character is as a display platform. It is being contended that for this reason the item cannot be treated as having been brought into existences by printing. It is also being pointed out that even in the absence of printing, the product would be a display arrangement.
6. With regard to the banners, the contention of the appellant is that only those banners, flags etc. which are manufactured in the textile industry by the process of textile printing would be classifiable under 63.07, while if the printing is undertaken on any textile materials it would again be classifiable under chapter heading 49. Reference in this connection is made to HSN Explanatory Note to Chapter 49. As against this, Revenue has contended that it would fall under other made up articles including dress patterns. Reliance is placed by the Revenue on the Explanatory Notes to the Heading which states that the heading includes flags, pennants and banners, including bunting for entertainments, galas or "other purposes".
7. The signboards in question, have been classified in the order under Chapter Heading 9405 90. The submission of the appellant is that 9405 is to be read along with its Explanatory Note which states that the heading excludes "signs, name plates and the like, not illuminated or illuminated by a light source not permanently fixed" the appellant has explained with the help of samples that the sign boards in question have no light source of their own. They are dependent on external power-supply for the purpose of illumination. It is the appellant's contention that sign boards which do not have their own permanently fixed light source do not qualify for classification under this heading. The Revenue, on the other hand has submitted that there is provision in the box like item to put a source of light, like a bulb, and therefore, it should be treated as an item with a permanently fixed light source.
7.1 Part of the demand under this heading is in regard to charts etc. printed and supplied to UNICEF etc. In respect of these items, the appellant has submitted that such supplies are eligible for exemption as UN supplies.
8. We have perused the records and considered the submissions made by both sides. The stickers in question assume their identity as stickers only upon printing. The appellant procures various materials and produces stickers by printing on them. In these facts, it is clear that the stickers in question satisfy the criterion laid down by the Apex Court in Metagraphs Pvt. Ltd. case. Just as the label covered by that decision "was brought into existence" by the printing industry stickers in the present case are brought into existence by printing. Therefore, we are of the opinion that the stickers were clearly eligible for the exemption. The position is very similar in the case of leather tags also. The appellant receives leather sheets, prints logos like "Montecarlo" and cuts the leather sheets into several pieces as logos. In this case also, it is the printing that has converted a leather sheet into several logos. Thus, clearly it is a product of the printing industry. The Revenue's contention that there is provision under Chapter 58 etc. for labels does not affect the situation, inasmuch as the Apex Court has held in the case of Johnson & Johnson v. CCE, [2003 (156) E.L.T. 166 (S.C.)] that cloth printed labels, aluminium foil printed labels, film printed labels and paper printed labels are eligible for exemption as products of printing industry. In any case there is no specific provision in Chapter Heading 63 07 for labels etc.
9. Coming to the classification of dispensers, we find that these are display arrangement for the attractive display of consumer goods like cigarettes. The printing may provide an attractive background; but it is not the printing which brings the dispenser into existence. The dispenser can exist even without any printing. It is a display platform as correctly contended by the Revenue. We are of the opinion that the classification ordered in the impugned order has to be accepted and the assessees claim for classification as product of printing industry rejected.
10. Coming to the banners, it is seen that HSN Explanatory Notes specifically mentions banners as falling under 6307. Thus, there is a specific entry for banners. The Notes also refer to flags, pennants, banners for ........... "other purposes". Therefore, Revenue is right in classifying them under 6307 90.
11. The Explanatory Notes to Heading 9405 makes it clear that the heading excludes signs, name plates and the like, not illuminated or illuminated by a light source not permanently fixed. In the present case, it is not in dispute that the items made by the appellant do not contain a permanently fixed light source. It has only a provision for fixing electric bulb and the power source is the power supply at the place where the signboard is installed. Heading 94 05 excludes such a product. Therefore, we are of the opinion that this item is not classifiable under 9405 as ordered in the impugned order.
12. Now coming to the other claims of the appellant. It is being submitted that the appellant was eligible for exemption in the case of UN supplies under Notification No. 108/95-C.E., dated 28-8-95. Similarly, they also claim exemption under small scale Notification and some other Notifications. These claims have not been considered in the adjudication. It goes without saying that duty demand are to be made at effective rates i.e. after considering the claims to exemption. The appellant has also a further claim for Modvat credit in respect of inputs. Clearly, the correct duty demand can emerge only after these claims are gone into and decided.
13. The appellant has also contended that there was no intention on its parts to evade Central Excise Duty, It was under the bona fide impression that its products are exempt as products of printing Industry. It is, therefore, being submitted that proviso to Section 11A has been improperly invoked in the present case. And but for this the duty demands would be barred by limitation. We are not able to accept this contention. The appellant had not informed the local Central Excise Authorities about their activities. As we have held, clearly some of the items could not come under the category of products of printing industry. Therefore, we are not in a position to accept the appellant's claim that it was under a bona fide impression that no duty was payable on these products. Therefore, we reject this claim.
14. As already pointed out, correct duty demand has to be worked out in the present case in accordance with the classification approved by us. That too after considering the various claims of the appellant towards the exemption and Modvat credit. The quantum of penalty also depends upon the duty amount. Accordingly, the appeal No. E/541/2003-NB-A filed by M/s. Studio Printers is disposed of by way of remand for a fresh adjudication.
15. Coming to the appeal No. E/540/2003-NB-A filed by Mr. Jayanto Ghosh, we find that penalty has been imposed on him under Rule 209A merely for the reason that he is a Director of the Company and was looking after the day-to-day work of the Co. A limited company carries out its work through its officers. In the present case, there is no special reason to hold that the appellant Shri Jayanto Ghosh was personally guilty of any misconduct connected with the duty evasion. Therefore, a penalty under Rule 209A is not attracted. Accordingly, his appeal is allowed.