Custom, Excise & Service Tax Tribunal
Western Railway Printing Press vs Cce Mumbai - I on 2 November, 2023
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH
EXCISE APPEAL NO: 85149 OF 2013
[Arising out of Order-in-Original No: 02/SK/M-I/2012 dated 5th October 2012
passed by the Commissioner of Central Excise, Mumbai - I.]
Senior Manager (P&S),
Western Railway Printing Press
Shakti Mills Lane, Off: E Moses Road, Mahalaxmi
Mumbai - 400011 ... Appellant
versus
Commissioner of Central Excise
Mumbai - I
New Central Excise Building, 115 Maharshi Karve Marg
Churchgate, Mumbai - 400020 ...Respondent
WITH EXCISE APPEAL NO: 85072 OF 2014 [Arising out of Order-in-Original No: 28/SK/M-I/2013 dated 30th September 2013 passed by the Commissioner of Central Excise, Mumbai - I.] Senior Manager (P&S), Western Railway Printing Press Shakti Mills Lane, Off: E Moses Road, Mahalaxmi Mumbai - 400011 ... Appellant versus Commissioner of Central Excise Mumbai - I New Central Excise Building, 115 Maharshi Karve Marg Churchgate, Mumbai - 400020 ...Respondent APPEARANCE:
Ms Delilah Fernandes, Advocate for the appellant Shri Sunil Kumar Katiyar, Assistant Commissioner (AR) for the respondent E/85149/2013 & E/85072/2014 2 CORAM:
HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE MR AJAY SHARMA, MEMBER (JUDICIAL) FINAL ORDER NO: A / 87080-87081/2023 DATE OF HEARING: 28/08/2023 DATE OF DECISION: 02/11/2023 PER: C J MATHEW These appeals of M/s Western Railway Printing Press lie against order1 of Commissioner of Central Excise, Mumbai - I, confirming demand of duty of ₹ 1,28,51,172/- for the period from 1st January 2012 to 30th November 2012 under section 11A of Central Excise Act, 1944 and imposing penalty of like amount under rule 25 of Central Excise Rules, 2000, and order2 of Commissioner of Central Excise, Mumbai - I, confirming recovery of duty of ₹ 4,32,21,365/-
for the period from 2006-07 to 2010-11 and ₹ 51,49,104/- for the period from 1st April 2011 to 31st December 2011 under section 11A of Central Excise Act, 1944 along with imposition of penalty of like amount under section 11AC of Central Excise Act, 1944 and rule 25 Central Excise Rules, 2002 respectively. Both orders have also confirmed recovery of interest under section 11AB of Central Excise 1 [order-in-original no. 28/SK/M-I/2013 dated 30th September 2013] 2 [order-in-original no. 02/SK/M-I/2012 dated 5th October 2012] E/85149/2013 & E/85072/2014 3 Act, 1944. The bone of contention in the appeals is excisability of books used for internal administration and record keeping in the zonal railway that were printed at zonal railway press.
2. It is the case of the central excise authorities that the activity is tantamount to manufacture rendering the goods liable to duties of central excise at the rate corresponding to sub-heading 4820 10, subject to effective rate as prescribed in the prevailing notifications, of Schedule to Central Excise Tariff Act, 1985.
3. According to Learned Counsel for the appellant, the goods, not being marketable and intended exclusively for internal use, are not liable to duties of central excise. It is also contended that the issue in dispute stands resolved by the decision of the Tribunal on identical controversy relating to another zonal railway in Dy Chief Manager (P & S), Central Railway v. Commissioner of Central Excise, Mumbai - I [2015 (328) ELT 296 (Tri. - Mumbai)].
4. We have heard Learned Authorised Representative.
5. We find that the issue in dispute is squarely covered by the decision of the Tribunal in re Dy Chief Manager (P&S), Central Railway in relation to the same activity undertaken by the Central Railway which held that '5. We find that in the show cause notices as well as in the E/85149/2013 & E/85072/2014 4 impugned order it was contended that appellant are engaged in manufacture of registers, accounts books, various forms, order books, receipt books, letter pad, memorandum pads and similar articles binding folders, file cover, mainly business and other articles of stationery papers and paper board. However, ld. Sr. Counsel for the appellant produced almost all types of forms and printed materials which are printed in the appellant's printing press and it was observed that products being manufactured by them in their printing press are mostly of various printed forms and not registers, books and pads therefore looking to the nature of the product being manufactured by the appellant it is found that same are not classifiable under chapter 48, all the forms are printed with very detailed information and only some blank column are printed for filling up by manuscript or typescript therefore in our considered view the product of appellant is correctly classifiable under Chapter 49. We have gone through various judgments on the identical issue and found that in those judgments products are more or less identical and same were held classifiable under Chapter 49. Relevant paras of judgments are reproduced below :-
Gopsons Papers Ltd. v. Commissioner of Central Excise, Noida [2006 (202) E.L.T. 313 (Tri. - Del.)]
10. The finding of the Commissioner is erroneous and is contrary to normal commercial practices. In the very nature of selling tickets, printed formats cannot have all the particulars. As already noticed in para 7 of this order, HSN Explanatory Notes under Chapter 49 specifically recognizes this and clarifies that certain printed articles may be intended for completion at the time of use and still would remain in the heading 49.11 provided "they are essentially printed matter". The note goes on to clarify that printed forms (e.g. magazine subscription forms), blank multi-
coupon travel tickets, circular letters, identity documents and cards etc. requiring only the insertion of particulars (e.g. dates and names) are classified in this heading. Thus, existence of blank portions in printed forms do not take them out of "other printed products or articles". Many are the items that readily come to mind. Most printed application E/85149/2013 & E/85072/2014 5 forms would leave the name and other particulars of the applicant blank. Similarly, ticket forms would not have names/numbers of the buyers. In the present case also, particulars of the buyers/numbers of the lottery tickets would get printed only at the time of sale of tickets. That does not affect the character and identity of the paper rolls as blank lottery tickets. Therefore, the finding of the Commissioner that these rolls are not products of printing industry is not sustainable.
11. We also find that an almost identical issue, of the classification of the lottery ticket, had come up before a Co- ordinate Bench of this Tribunal in the case of M/s. Sai Security Printers Ltd. v. C.C.E., Faridabad - 2006 - TIOL - 398-CESTAT-Del. and that Bench held that the correct classification would be under 4901.90. We are in complete agreement with that decision and following that order, the classification in the present case is ordered under heading 4901.90.
Commr. of C. Ex., Belapur v. Alpha Carbonless Paper Mfg. Co. Pvt. Ltd. [2014 (304) E.L.T. 604 (Tri. - Mumbai)] 6.1 From the HSN explanatory notes, it is seen that Heading 4823 excludes products like lottery tickets, scratch cards, raffle tickets and tombola 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, e.g. 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 goods, 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, E/85149/2013 & E/85072/2014 6 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 products 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 Bill, 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.
7. In the light of the above discussion, we are of the considered view that the impugned order does not suffer from any infirmity. Accordingly, we dismiss the appeal filed by the Revenue as devoid of merits.
Metagraphs Pvt. Ltd. v. Collector of Central Excise, Bombay [1996 (88) E.L.T. 630 (S.C.)]
10. The label announces to the customer that the product is or is not of his choice and his purchase of the commodity would be decided by the printed matter on the label. The printing of the label is not incidental to its use but primary in the sense that it communicates to the customer about the product and this serves a definite purpose. This Court in Rollatainers case held that "what is exempt under the notification is the 'product' of the printing industry. The 'product' in this case is the carton. The printing industry by itself cannot bring the carton into existence". Let us apply this above formula to the facts of this case. The 'product' in this case is the aluminium printed label. The printing industry has brought the label into existence. That being the position and further the test of trade having understood this label as the product of printing industry, there is no difficulty in holding that the labels in question are the products of the printing industry. It is true that all products on which some printing is done, are not the products of printing industry. It depends upon the nature of products and other circumstances. Therefore, the issue has to be decided with reference to facts of each case. A general test is neither advisable nor practicable. We are, therefore, of the opinion that the Tribunal was not right in concluding that the printed aluminium labels in question are not 'products of printing industry'.
11. Accordingly, the appeals are allowed and the impugned orders of the Collector, Central Excise are set E/85149/2013 & E/85072/2014 7 aside and the appellants are entitled to claim exemption on the labels in question under the above mentioned Notification. There will be no order as to costs.
Data Processing Forms Pvt. Ltd. v. Commr. of C. Excise, Ahmedabad [2014 (311) E.L.T. 161 (Tri. - Ahmd.)]
29. In view of this, we are of the opinion that there was inadequate assistance to the Bench in case of Surya Offset and hence though the decision in regards of similar products, is per incurium as it has not considered the binding decisions of co-ordinate Bench. We have followed the ratio of various decisions as cited hereinabove while coming to the conclusion in this case. We also find that the judgment of Hon'ble Supreme Court in the case of Metagraphs Pvt. Ltd. (supra), a ratio has been laid down which is guiding factor for coming to a conclusion whether the product will fall under the category of "product of Printing Industry" or otherwise. Their Lordship in Para 10 has laid down the ratio which is with respect reproduced.
"10. The label announces to the customer that the product is or is not of his choice and his purchase of the commodity would be decided by the printed matter on the label. The printing of the label is not incidental to its use but primary in the sense that it communicates to the customer about the product and this serves a definite purpose. This Court in Rollatainers case held that "what is exempt under the notification is the 'product' of the printing industry. The 'product in this case is the carton. The printing industry by itself cannot bring the carton into existence". Let us apply this above formula to the facts of this case. The 'product' in this case is the aluminium printed label. The printing industry has brought the label into existence. That being the position and further the test of trade having understood this label as the product of printing industry, there is no difficulty in holding that the labels in question are the products of the printing industry. It is true that all products on which some printing is done, are not the products of printing industry. It depends upon the nature of products and other circumstances. Therefore, the issue has to be decided with reference to facts of each case. A general test is neither advisable, nor practicable. We are, therefore, of the opinion that the Tribunal was not right in concluding that the printed aluminium labels in question are not 'products of printing industry'."
30. It can be seen that the product wherein printed aluminium labels, which indicates the primary use of said product was held as a labels and it was held as product of printing Industry. Applying the said ratio, we find that the products in the current appeal before us would definitely fall under category of product of printing industry and gets classified under Chapter 49 of the second Schedule of Customs Excise Tariff Act, 1985, as the pre-printed forms E/85149/2013 & E/85072/2014 8 contain motifs, characters or pictorial representations which are not merely incidental to the primary use of the product.
31. In view of the above foregoing, we hold that the classification of products as indicated in Paragraph 9, would be under Chapter 49 and more specifically under Chapter Heading 49.11 and not under Chapter Heading 48.20 as held by both the lower authorities.
32. Since we have disposed the appeals on merit, we are not recording any finding on the issue of limitation as issue argued by both sides.
33. In sum, the impugned order is set aside and appeals are allowed by holding that the classification of disputed products is under Chapter Heading 49.11.
From above judgments it is crystal clear that product in question being in the form of various printed forms with some blanks is product of printing industries and the same is classifiable under Chapter 49 and excluded from Chapter 48 therefore in our considered view the product in question are classifiable under Chapter 4901 and hence not liable for duty. On the issue of marketability, in view of the fact that all the printed products are contained details related to and for the purpose of various day to day function of Central Railway, these products are indeed used in-house by Central Railway. Excisebility of the product comes into play only when paper is printed. When bought out paper are printed and comes into existence an excisable product then test of marketability has to be under gone. After printing of the plain paper with the details containing therein all these forms leaflet, folders etc. can be used by Central Railway alone and it can neither be used nor shall be useful for any other person other than Central Railway. This undisputed facts is more than sufficient reason to hold that the product is not marketable because same is neither capable of being bought and sold nor can be factually bought and sold. As regard the marketability, the contention of the Revenue is that the product is commercially known in the market does not hold E/85149/2013 & E/85072/2014 9 water for the reason that if the product in the present case since not capable being bought and sold, cannot be commercially known as marketable. We agree with the submission of ld. Sr. Counsel that Revenue has not undertaken any exercise to prove that this very product are marketable. Therefore admittedly the Revenue has not discharged the burden lies on them as regard the test of marketability of the product. The judgments in this regard relied upon by the ld. Sr. Counsel squarely applicable to the present case that if the burden of proof of marketability does not discharged by the Revenue by producing the evidence then claim of appellant that the goods in question is not marketable must be accepted and no contrary view can be taken. In this context some judgments and relevant paras thereof are reproduced below.
Gujarat Nermada Valley Fert. Co. Ltd. v. Collector of Ex. & Cus. [2005 (184) E.L.T. 128 (S.C.)]
7. The onus was on the Revenue. The only piece of evidence which has been produced by the Revenue was a test report which merely stated that the sample showed that the items were organic chemicals. It does not in any way establish marketability. Nor can marketability be established on the basis of mere stability. Something more would have to be shown to establish that DECA AND CMBE were known in the market as commercial products.
Collector of Central Excise, Patna v. Tata Iron & Steel Co. Ltd. [2004 (165) E.L.T. 386 (S.C.)]
21. This Court, in conclusion, held that the onus to show that particular goods on which excise duty is sought to be levied have gone through the process of manufacture in India is on the Revenue and that the Revenue have done nothing to discharge this onus.
22. In our opinion, this Court in Indian Aluminium Co. Ltd. (supra) has held that merely selling does not mean dross and skimming are marketable commodity as even rubbish can be sold and everything, however, which is sold is not necessarily a marketable commodity as known to commerce and which, it may be worthwhile to trade in. The issue involved in this case is governed by the past decisions of the Tribunal and also of this Court where the Tribunal and this Court held that the zinc dross and skimming arising as E/85149/2013 & E/85072/2014 10 refuse during galvanisation process are not excisable goods. The Tribunal, in our opinion, has rightly relied upon the decision of this Court in Indian Aluminium Co. Ltd. (supra) and in view of the above decision of the Tribunal following this Courts opinion in Indian Aluminium Company Limited (supra), we disagree with the appellant that zinc dross, flux skimming and zinc scallings are goods and hence excisable.
F.G.P. Ltd. v. Union of India [2004 (168) E.L.T. 289 (S.C.)]
14. It is thus clear that the marketability of the goods is an essential ingredient of excisable goods for being subjected to the excise duty.
15. That the goods, are marketable, has to be proved by the excise authorities. In this case the appellants filed affidavits of certain concerns showing that they are not interested in purchasing 'glass lumps'. No evidence whatsoever has been brought on record by the excise authorities to show that the said goods are marketable in the sense stated above. Based on the evidence of affidavits filed by the appellant it is sought to be argued that the deponents may not be interested in purchasing 'glass lumps' but it does not disprove marketability of the goods. We are unable to accept this contention. The burden of showing that the goods are marketable is on the Revenue. In the absence of any proof brought on record by the Revenue that 'glass lumps' are marketable or capable of being marketed, it is not possible to hold that the test of marketability is satisfied. For these reasons we set aside the order of the CEGAT under challenge and allow the appeal with costs.
C.A. 7114/2000 @ SLP (C) 7908/85 :
Bhor Industries Ltd. v. Collector of Central Excise [1989 (40) E.L.T. 280 (S.C.)]
6. This view was reiterated again in Union Carbide India Ltd. v. Union of India - 1986 (24) E.L.T. 169 (S.C.) = (1986) 2 SCC 547 where Pathak, J. as the learned Chief Justice then was, speaking for the Court observed that in order to attract excise duty the article manufactured must be capable of sale to a consumer. The expression "goods manufactured or produced" must refer to goods which are capable of being sold to the consumer. This Court observed as follows :-
"It does not seem to us that in order to attract excise duty the article manufactured must be capable of sale to a consumer. Entry 84 of List I of Schedule VII to the Constitution specifically speaks of "duties of excise on tobacco and other goods manufactured or produced in India .........", and it is now well accepted that excise duty is an indirect tax, in which the burden of the imposition is passed on to the ultimate consumer. In that context, the expression "goods E/85149/2013 & E/85072/2014 11 manufactured or produced" must refer to articles which are capable of being sold to a consumer. In Union of India v. Delhi Cloth & General Mills, this Court considered the meaning of the expression "goods" for the purposes of the Central Excises and Salt Act, 1944 and observed that "to become 'goods' an article must be something which can ordinarily come to the market to be bought and sold", a definition which was reiterated by this Court in South Bihar Sugar Mills Ltd. v. Union of India."
7. It is necessary in this connection to reiterate the basic fundamental principles of excise. The Judicial Committee of the Privy Council in Governor General in Council v. Province of Madras - 1978 (2) E.L.T. (J280) = (1945 F.C.R.
179), this Court observed at page 1287 of the report that excise duty was primarily a duty on the production or manufacture of goods produced or manufactured within the country. This Court again In Re The Bill to Amend Section 20 of the Sea Customs Act, 1878, and Section 3 of the Central Excises and Salt Act, 1944 [1964 (3) SCR 787] at page 822 of the report referring to the aforesaid observations of the Judicial Committee reiterated that taxable event in the case of duties of excises is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. Therefore, the essential ingredient is that there should be manufacture of goods. The goods being articles which are known to those who are dealing in the market having their identity as such. Section 3 of the Act enjoins that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or 'manufactured' in India. "Excisable goods"
under Section 2(d) of the Act means goods specified in the Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise and includes salt. Therefore, it is necessary, in a case like this, to find out whether there are goods, that is to say, articles as known in the market as separate distinct identifiable commodities and whether the tariff duty levied would be as specified in the Schedule. Simply because a certain article falls within the Schedule it would not be dutiable under excise law if the said article is not "goods" known to the market. Marketability, therefore, is an essential ingredient in order to be dutiable under the Schedule to Central Excise Tariff Act, 1985.
11. In view of the Appellate Collector's order dated 14-1- 1974 it was the duty of the Revenue to adduce evidence or proof that the articles in question were goods. No evidence or proof was produced. The Tribunal went wrong in not applying the proper test. The test of marketability or capable of being marketed was not applied by the Tribunal.
Moti Laminates Pvt. Ltd. v. Collector of Central Ex., Ahmedabad [1995 (76) E.L.T. 241 (S.C.)] E/85149/2013 & E/85072/2014 12
11. It cannot thus be disputed that even if the resin produced by the appellants are resols as mentioned in Item 15A it could not be subjected to duty. The purpose of specifying the goods in the Schedule is two-fold, one, the rate on which the duty would be charged and other that if the goods satisfy the description and are covered in the Entry then they are liable to pay excise duty. But even in respect of specified goods it could be established that it was not marketable or capable of being marketed, therefore, no duty was leviable on it. The finding on this aspect has been extracted earlier. The Assistant Collector (Excise) found that unless some retarder or stabiliser was added the unstable solution was not marketable. Even assuming that such solution could last for 15 days as found by the Tribunal that would not help the Department unless it is further found that is was a produce which was marketable or capable of being marketed. The Collector had agreed with the finding of Assistant Collector that without any further process the solution was incapable of being used for any other purpose. It further cannot be disputed that even the life for 15 days depended on maintenance of particular temperature and heat. It cannot, therefore, be said that the goods were marketable or capable of being marketed. Since the test of marketability or capable of being marketable applies even to those goods which are mentioned in the tariff item the intermediate resin produced by the appellants which are mentioned as resols under Tariff Item No. 15A were not exigible to duty. The finding of the Tribunal that once the product manufactured by the appellants answered the chemical description of the product under Tariff Item 15A it was assessable to duty whether it was marketable or not was thus not well founded.
Cipla Ltd. v. Commissioner of C. Ex., Bangalore [2008 (225) E.L.T. 403 (S.C.)]
11. Since marketability is an essential ingredient to hold, that a product is dutiable or exigible, it was for the Revenue to prove that the product was marketable or was capable of being marketed. Manufacturing activity, by itself, does not prove the marketability. The product produced must be a distinct commodity known in the common parlance to the commercial community for the purpose of buying and selling. Since there is no evidence of either buying or selling in the present case, it cannot be held that the product in question was marketable or was capable of being marketed. Mere transfer of BMS by the appellant from its factory at Bangalore to its own unit at Patalganga for manufacture of final product does not show that the product was either marketed or was marketable.
12. Since the Revenue has failed to lead any evidence to show that the product in question was marketable or was capable of being marketed and that the product in question was a distinct product for being sold in the market, it has to E/85149/2013 & E/85072/2014 13 be held that the product in question was not marketable. Accordingly, the appeal is accepted. The order of the Tribunal is set aside with consequential effect. No costs.
On going through above judgments it is found that since, in the present case, first the Revenue has not discharged the burden of proof that the product in question is marketable or otherwise and from the nature of the product coupled with the fact that printed material printed in the appellants' printing press is not for general use in the market but for their own use, the goods clearly not marketable. We are fully in agreement with the ld. Sr. Counsel that in terms of definition of excisable goods and explanation thereto the goods should be capable of being bought and sold and that too for consideration. In the present case goods being printed with name and details of Central Railway is not capable of being bought and sold for consideration hence the same is not marketable goods. In view of our above discussion, we are of the considered view that product in question are not dutiable on both the counts of classification as well as marketability. We therefore set aside the impugned orders and allow the appeals with consequential relief, if any, in accordance with law.'
6. In view of this settled decision of the Tribunal, we find that the impugned orders lack merit and are consequently set aside to allow the appeals.
(Order pronounced in the open court on 02/11/2023) (AJAY SHARMA) (C J MATHEW) Member (Judicial) Member (Technical) */as