Customs, Excise and Gold Tribunal - Delhi
Gopsons Papers Ltd., Shri Nitin Goel, ... vs C.C.E. on 2 May, 2006
Equivalent citations: 2006(109)ECC649, 2006ECR649(TRI.-DELHI), 2006(202)ELT313(TRI-DEL)
ORDER C.N.B. Nair, Member (T)
1. The main dispute in all these appeals is the correct classification of the items produced by the appellant. The appellant imports thermal paper. It is classified under heading 4811.90 at the time of import. At the import stage, the paper is in jumbo rolls.
2. In terms of specific orders from their customers, the appellant makes paper rolls out of imported jumbo rolls. The size specified in one such order is 3.5 cm wide. Thus, the width falls from that of a jumbo roll packing to 3.25". Before slitting into such small width rolls, the appellant prints the particulars as ordered by its clients on the paper. The printing is mostly rules and regulations of lottery tickets. We may reproduce one such printed material:
Rules and Regulations 7609944 For information How To Win please refer to the playslip. Please write your name and sign the receipt below as proof of ownership.
HOW TO CLAIM PRIZES: Prizes up to Rs. 5,000 can be paid by any licensed Playwin retailer. If the prize totals more than Rs. 5,000 the retailer will give you a claim ticket, a postal claim form and return your winning ticket. You must send the claim form & your winning ticket to Prize Claims Department, Pan India Network Infravest Pvt. Ltd., Band Box Building, 4th Floor, Dr. Annie Besant Road, Worli, Mumbai- 400 018. The ticket is sent at your own risk. Retain the claim ticket as your receipt and proof of winning. You should receive your winning cheque within 45 working days.
You must claim your prize within 90 days of the draw to which it relates, otherwise the money goes to the charity which promoted the draw. If you have a problem, want more information, or would like to claim form call at (022) 24903926.
The ticket is subject to Rules & Regulations for the draw. Details of these are available from all Playwin licensed outlets. This ticket will be considered as invalid should the details contained not correspond with the data on the Central Computer Server. YOU MUST BE 18 YEARS OR OLDER TO PLAY AND CLAIM PRIZES.
Playwin markets the game on behalf of the State mentioned overleaf.
Results of the draw are available on the Zee Network channels & licensed retailers of Playwin. For more information please refer the game playslip. Rules & regulations are available with licensed Playwin retailers.
Do not deface Avoid heat Do not iron Keep Dry NAME______ SIGNATURE _____
3. Appellant's buyers are mostly online lottery operators and the rolls are used for printing lottery tickets. Therefore, the printed rolls are rolls for lottery tickets.
4. The dispute is about classification of these rolls. The appellant claims classification under heading 4901.90. This heading covers other products of printing industry. Under the impugned order, the Commissioner has held that the correct classification is under 4811.90 as printed thermal paper. Thus, according to the Commissioner, the classification of the imported material and the classification of the processed material are one and the same.
5. The contention of the learned Counsel for the appellants is that the rolls have been specifically prepared as blank lottery tickets by printing the required materials; but the Commissioner has rejected this contention by noting that lottery ticket number and other particulars are printed only at the time of sale of the tickets at the ticketing terminals and not on the rolls at the time of their removal from the appellant's factory.
6. We have perused the record of the case and heard both sides. The submission of the learned Counsel for the appellant is that distinction between paper and product of printing industry is whether the printing is incidental or not. He has referred in this connection to Note 11 of Chapter 48. We reproduce that note below:
11. Except for the goods of heading No. 48.14 or 48.21, paper, paper-board, cellulose, wadding and articles thereof, printed with motifs, characters or pictorial representations, which are not merely incidental to the primary use of the goods, fall in Chapter 49.
It is his contention that the printing in the present case is the essence of the manufacturing activity carried out by the appellant inasmuch as what makes the paper rolls blank lottery tickets are the particulars printed on the rolls. It is being pointed out that in such a case, the authorities are not right in treating the printing as incidental.
7. Learned Counsel has also relied on the list of products of printing industry given under heading 49.11 (other printed matter, including printed material). It is being pointed out that lottery tickets and blank raffle tickets are specifically mentioned under heading 49.11. Learned Counsel has also drawn our attention to the following note under the same heading:
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 (e.g. magazines subscription forms), blanks multi-coupon travel (e.g., air, rail and coach) tickets, circular letters, identity documents and cards and other articles printed with messages, notices, etc., requiring only the insertion of particulars (e.g., dates and names) are classified in this heading. Stock, share or bond certificates and similar documents of title and cheque forms, which also require completion and validation are, however, classified in heading 49.07.
8. Learned SDR would submit that in the absence of printed serial numbers and other particulars, the rolls do not acquire the character of lottery tickets. According to the learned SDR, they remain as thermal paper roll to be used in lottery tickets.
9. The basic dispute here is whether the printed rolls prepared in question have changed their character from the imported thermal paper to products of printing industry. The test laid down in the HSN Notes is whether the printing is incidental or not. If the printing is incidental, the item would continue to be paper. If it is not, the item becomes product of printing industry. The parties canvass opposite contentions on the nature of printing carried out. According to the appellant, printing is not incidental and printing makes the rolls blank lottery tickets and the paper has ceased to be thermal paper. Commissioner has found fault with this contention about the changed character by pointing out that, in the absence of specific ticket numbers, the printed rolls continue to be thermal paper.
10. The finding of the Commissioner is erroneous and is contrary to normal commercial practice. 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 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 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.
12. While the main dispute in all these appeals is about classification, in appeal No. E/380/05, there is also an additional dispute that the appellant's imports were not of authorised material. This dispute has been raised on the ground that the thermal paper imported by the appellant did not come within the authorised raw materials and tickets exported by the appellant among authorised export items. It is seen that vide letter dated 29.1.2002, the NOIDA Export Processing Zone Authority had allowed the appellant to import "all types of printed tags, tickets, printed rolls, sheets, seal pay slip pass & cards". It is the appellant's contention that the imported thermal paper is required for the manufacture of tickets. The revised entry covers the items under import. Therefore, there is no merit in the finding on this ground also.
13. In view of what is stated above, the impugned orders are set aside and the appeals are allowed with consequential relief to the appellants.
(Dictated and pronounced in open Court)