Customs, Excise and Gold Tribunal - Delhi
Metagraphs Private Ltd. vs Collector Of Central Excise on 13 June, 1986
Equivalent citations: 1986(9)ECC91, 1986(8)ECR465(TRI.-DELHI), 1986(26)ELT66(TRI-DEL)
ORDER H.R. Syiem, Member (T)
1. By order No. 10 of 1980 (undated) the Collector of Central Excise, Bombay-I, by exercising his powers under Section 35-A of the Central Excises and Salt Act, 1944, revised the assessment of the Assistant Collector of the Central Excise, Bombay Division 'K', in classification list No. 168/79 dated 24th December, 1979, of goods declared as printed aluminium labels assessable under item 68 of the Central Excise Tariff at nil rate of duty by reason of notification No. 55/75-C.E. dated 1-3-1975. The manufacturers, M/s. Metagraphs Private Ltd. claimed the goods to be products of the printing industry and, therefore, exempted under serial No. 13 of the notification. That claim was approved by the Assistant Collector and this led to the revision under Section 35A by the Collector who held that the labels served only the purpose of displaying the name of the manufacturers and the name of the product and were in no way related to the printing industry and, therefore, could not be described as products of that industry. He accordingly modified the Assistant Collector's order and directed assessment of the goods under item 68 without the benefit of the exemption under the notification No.55/75-CE.
2. The learned counsel for the party read from notification No. 55/75-CE and said that the exemption covered All products of the printing industry, not being newspapers and printed periodicals.
He argued that this exemption covers all products, not only some products, of the printing industry and this assessment had been approved by the Assistant Collector. He read the Collector's show cause notice F. No. V(V-Cell)30-47/80/609 dated 29th May, 1980 and their reply to that notice and pointed out that they wrote that their products denote the name of the manufacturer; the words like Atlas or Raleigh are not printed on the labels, the product would be totally useless and would not be accepted by customers who would like to buy brands of their own choice. The word "printing" had been side-tracked in the show cause notice, because their products are the results of printing done on them. The labels are printed on metal, but they can also be printed on paper; presumably the department would accept them to be products of the printing industry. However, paper labels will have no durability and will not be able to resist wear and tear as metal labels can.
3. The labels are printed on flatbed offset printing presses and the printing is done on a deep offset printing machine. The trade accepts the products as products of the printing industry. Unfortunately, argued the learned counsel, the Collector did not deal with any of these arguments in his order. He read from the order of the Collector and pointed out to the statement that "it is actually the purpose that the products serves which should govern its classification." The counsel said that he totally agreed with this. The purpose of the labels is served by the printed matter which they carry and not their metal nature. The material on which the printing is done cannot make a difference to a product being a product of the printing industry, but only whether there has been printing on it, because printing can be done on almost any material.
4. He would not, of course, advocate acceptance of all printed materials as products of the printing industry; thus paper packaging and wrappers may contain printing but they would not be products of the printing industry, because their purpose is to wrap the goods that they contain and this is their main or primary purpose; the printing is only incidental to the main purpose of wrapping/packaging. They used a printing machine and, therefore, even on this count their goods would qualify as products of the printing industry. The counsel referred to the Harmonised Tariff and note 11 at chapter 48 which reads Except that 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.
He also read note 2 of Section VII of the same tariff. This note provides that "Except for the goods of heading No. 39.18 or 39.19, plastics, rubber, 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."
The printing on a packaging paper or a wrapping paper or a cardboard carton or other containers is always incidental to the primary use of such containers or cartons or wrappers. The wrappers or the containers are discarded as soon as the contents they contain are consumed or used; the cartons are no longer containers, and the printing on them becomes meangingless; they then are not even incidental to the primary use, a use which had disappeared when the contents were taken out and consumed. For a newspaper, the printing is not incidental; it is its main use. The printing provides the purpose for which a newspaper is bought and sold and used; it has no other purpose. It is the same with this label because without the printing it is nothing; its only purpose is in the printing that it carries, which communicates to the customer what the product is or what the brand of the product is. It is a communication to the reader about the product and its manufacturer and sometimes about its quality as and when a buyer who prefers one brand of bicycle to another does so only by the name printed on the label. That label announces to the customer that the bicycle is or is not the product of his choice and his purchase of the commodity would be decided by the printed matter on the label. The printing on the label is thus not incidental to its use but the sole purpose that gives it its utility, unlike the printing on a paper wrapper: to communicate is the only purpose that the printed material on the metal label serves.
5. The learned counsel attacked the order of the Collector as a non-speaking order, because it explains nothing.
6. The learned counsel for the department said that the opposite counsel claims that anything produced in a printing machine and used for communication is a product of the printing industry. However, the notification No. 55/75-CE speaks of printing industry, and not a printing machine. He said the printed matter is only an advertisement. He read from the advertisement regarding the printing machine. The machine evidently can produce printing on toys, soles of shoes, telephone dials and a host of similar goods which no one can seriously suggest are printed matter, and nobody has ever heard of them being referred to as products of the printing industry. The samples produced in court may contain printing, they may also contain only decorative reproductions but they are not known as products of the printing industry.
7. It is the claimant who should claim, with evidence, that he fulfils the conditions of the exemption. The appellants claim that these goods are classified by the industry as products of the printing industry but classification of goods can never be based on what the industry regards the goods to be. Nor can the basis be the purpose of production. Identification of products cannot be a product of the printing industry. He referred in support to 1985 (June) ECR 1010.
8. The notification can clearly mean only printing with a purpose and there is no evidence that these products are known as products of the printing industry.
9. IN reply the learned counsel for the appellants said that it was correct to say that these are the products of a printing machine, but all printed products are products of a printing machine. They have shown whatever evidence was available to prove their case to the Assistant Collector and the Assistant Collector was satisfied and it was their case accordingly these are products of the printing industry. He even visited the factory. On the other hand, the Collector did not discharge his burden even through they had discharged theirs.
10. Printing is an identity and the appellants have been members of the Bombay Master Printers Association much before 1975 when notification No. 55/75-CE was enacted.
11. Printed textiles do not fall under item 68. But their products are not such to fall in items 1 to 57. The Collector accepts that their goods fall under 68, therefore, the question of printed textiles being given the exemption cannot arise. The Collector did not deal with their reply that their products were known as products of the printing industry.
12. The samples we saw were all made of aluminium and carry several kinds of printing on them. Some of them are meant to be fixed to refrigerators, radios, airconditioners and television sets, others appear to be identity discs or plates of clubs. There is a certificate of an award printed on aluminium sheet of an association; another is the face of a clock and carries the number 1 to 12, there is also a data plate to be fixed to an electrical device indicating the necessary information required in respect of that device. There are other plates which carry no literal or numerical printing, but only pictorial designs, obviously to serve as decorative fixtures. One is meant to serve as a name plate for an individual who, in the course of his duty, may have to display it on his uniform. According to the appellants, all these aluminium sheets are meant to serve a purpose connected only with the printing on them. This can be very briefly described as the communication to the reader that the commodity, product, device, machine etc. etc. to which the printed aluminium plate is attached is such and such product made by so and so. It is not an advertisement plate or a decorative plate but it serves a communication need that the reader or a potential customer feels the need of when he looks at a product be it a refrigerator or a clock, or an airconditioner or a motor car or a fan. It tells him what he wants to know in precise and certain words and enables him to make his choice to pick and to choose from, perhaps, a variety of brands of the same kind of product or machine.
13. For the manufacturer of the product the need to meet the demands of the potential customer is met by the printing on the aluminium plate affixed to his product. He fulfils by this printing the need of the customer to know before he purchases. It is possible for a purchase to be completed only on the word of mouth of the manufacturer that the machine or contrivance or commodity is of such and such kind, or quality or brand, but in every day transactions such word of mouth communication is hardly ever sufficient and few customers will buy a product unless he sees specific details in print on the product or in a close conjunction with the product. In other words, the printed word oh the product informs the customer that he is buying the product of his choice or of his brand. These aluminium printed plates serve the purpose of the written word that conveys to the buyer what he needs to know about the product he is contemplating to purchase and to pay money for.
14. The question here is whether the printed aluminium plates are products of the printing industry and whether the printing we see on them are the kind of the printing that the notification 55/75-CE extends the exemption to.
15. To print, according to the Shorter Oxford English Dictionary is to impress or stamp (a surface with a seal, die, or the like; to mark with any figure or pattern; to brand. Said also of footsteps upon soft or yielding ground; to impress. or stamp (a form, figure, mark, etc.) in or on a yielding substance; also, by extension, to set or trace (a mark, figure, etc.) on any surface, by carving, writing, or otherwise.
16. The same dictionary gives a meaning of the word in senses relating to typography. This is to produce (a book, picture etc.) by applying to paper, vellum, etc., in a press or machine, inked types, blocks, or plates, bearing characters or designs.
17. In the technological senses analogous to typographical senses, the dictionary gives the word the meaning to mark (a textile fabric) by hand or machinery with a pattern or design in colours; to transfer to the unglazed surface a decorative design in colour from paper, or in oil from a gelatine sheet or bat; or in photography to produce (a positive picture) by the transmission of light through a negative placed immediately upon the sensitized surface; to produce a photograph.
18. We can see that etymologically the word "print" refers to various kinds of impresses or marks made by one material on another, softer or more yielding, material or, more impressionable surface. It is always the surface worded upon or printed upon that produces the impress of a mark of the other working member. Thus, it is always the paper that receives the mark of the type pressed upon it. It is the clay that always receives the print of the foot upon it, and so on and so forth. A cursory glance would lead one to the conclusion, therefore, that whenever there has been printing, whatever the reason, the purpose, the method or the utility of the printing, the products must be considered to be printing and that it would not make any difference whether the printing represents written characters or pictorial designs or any other kind of impression. The surface could be paper, metal, glass, cloth, plastic, leather, wood, stone, earth (clay) etc. All that is needed is a suitable surface in a material that will accept the impress and carry it so that it is exhibited in a more or less permanent display. We have type printing, picture printing with inks, colouring of books, of textiles, of metal sheets, plastic sheets and so on where the methods used for printing are many. Both the design of a cotton textile fabric and the reading matter of a newspaper are the results of printing, that is, made by the impress of a hard surface on a softer surface to produce words, figures, patterns, pictures. The component that prints is a prepared component generally of metal, although wood and stone have been used and are, in, isolated cases, still being used. The surface that accepts the printing can also be prepared, although in simpler types of printing not much preparation is required except that the surface should be clean, free from dirt or moisture or any other matter that may interfere or affect the quality of the impress that the surface accepts. In fact, to list all the various methods, styles and purposes of printing would be impossible in this short work. We have to see whether, when the law speaks of the printing industry in notification No. 55/75-CE, it means all the different kinds of printing or only the printing associated with reading matter. The appellants resist the department's classification as too narrow, although in a way the learned counsel himself would go a certain way with this interpretation, because he says that it does not cover printed packaging paper but would cover printed label whose purpose is communication of the kind that his products serve. We think the dispute can be resolved if we can answer the question whether the printing on these aluminium metal plates manufactured by M/s. Metagraph are or are not merely incidental to the primary use of the goods.
19. The use of the goods is to be affixed permanently to a product like a bicycle, a radio receiver set, a television set, a motor bicycle, a clock, an airconditioner, a refrigerator and a host of other machines and equipments. According to the learned counsel for M/s. Metagraph, Mr. Lakshmi Kumaran, the metal plates communicate by means of the message in the printed representation they carry on them. Their primary purpose, according to the learned counsel, therefore, is served by the printing which is a means of communication to the reader of a certain basic and vital information. The plate conveys something in language that the reader is able to understand and, therefore, it forms a printed material. There may be metal plates which carry statistics and vital information about, say, an electrical component like a transformer, which may not be intelligible to the common man, but to an electrical engineer they signify important messages. The messages that the plates carry are sometimes written in language that is no better than a code to say what the component is or what its qualities, its capacities, its load bearing factors, its stresses, tolerances, etc. etc. are. This, according to the learned counsel for M/s. Metagraphs, is not merely incidental to the primary use of the goods in the way that printing on a carton or packaging or a wrapper is. The printing on the paper wrapper or a carton is only incidental for its use in the main application for which it is meant, i.e. packaging of goods. The printing bears no relation to the work of the wrapping paper viz. the work of packaging or wrapping. That printing can as well be dispensed with: the wrapping paper or the carton would still be good as wrapping paper or carton. It is not so with these printed aluminium labels.
20. It is the printing that gives the aluminium labels their use; without the printing they carry on them, the aluminium sheets or plates would not be labels and their attachment to other products would serve no purpose and, indeed, no one would attach them to their products. Therefore, the printed matter carried by the labels serves as a reading matter that forms the very substance of their utility and use. If the labels are not in position, the product to which they are meant to be attached or affixed would lose, in their customer overture, a vital component as might happen when a potential customer is deprived of information that he may require to have if he is to weigh his preferences about selection of the product. His actual purchase of the product or rejection of it may depend on what he reads in the label. The label does for the product what a salesman might do, that is to say, inform a potential customer or perhaps a passerby what the product is, its quality, price, manufacturer and so on, and by so doing tilt the scales its way. There is, therefore, no difference in content between a printed book or a printed piece of paper meant for reading, and these printed labels. The printed paper that forms the reading material conveys information in the same way that the printed aluminium labels does. The latter communicates information, even if laconic or abbreviated by reason of the limitations of its size, and the space it must not exceed.
21. The learned counsel's arguments are without doubt very attractive and very skilful; but there is a flaw in them. The difference between these labels and the printed packaging papers and cartons is more apparent than real. Obviously the packaging paper cannot do the work that these labels do in regard to their permanency. Furthermore, the contents that the packaging and wrapping papers and cartons hold are by their nature meant to be taken out of their confinement in the package or the carton, if they are to be used. A shirt wrapped in a packaging paper or a pair of shoes in the printed carton or a litre of milk in the printed polythene bag, are soon removed from their packing when they are about to be consumed. But as often as not the shoe or the shirt still carry some printing on it in the form of a tab or a die-impressed embossment that give at least the name of the manufacturer or the size of the wear and sometimes the price. The fact that this is not true with the aluminium label is because the label is attached permanently to its surface. But this must obscure the fact that, like the packaging for a shirt or a pair of shoes, it carries propaganda material advocating the virtues of this or that manufacturer and of the goods he makes. To be sure, the aluminium label will carry sometimes added information like the wattage or resistance of the equipment if it is an electrical appliance, but this information is in principle no different from, the paper packaging that carries information about the contents. The label by itself contributes nothing to the goods any more than the paper package contribute anything to the quality of the products they carry in them. If the aluminium label on an appratus like a transformer or an electric motor is required to remain permanently fixed, it is not because of the service that the printed label provides to the equipment or to its owner but because it may carry certain information which is useful to anyone who uses it. That information could as easily have been stamped on the body of the electric motor itself or on the body of the transformer, as they are stamped on shirts or as the size is embossed on shoes. We must not be deceived into reading the printed aluminium labels as products of printing simply because the information they carry may be vital. The information qualifies not the aluminium label but the equipment that it (label) is affixed to. We see the same phenomenon when we look at a paper packet that packs cigarettes indicating the quality, the size and the manufacturers etc. etc., or when we buy a bottle of medicine and read on the carton the year of manufacture, the date of expiry and so on. The information that the carton or the medicine label has is just as vital as the information the aluminium label carries, but that information relates not to the label or the carton but to the contents or machine which a customer buys; in so doing he has to also buy the wrapper, the carton, the aluminium label.
22. The difference between the printed aluminium label and the printed packing paper or wrapper is only of form and shape. The printed matter on the wrapper paper informs the buyer about the quality, nature, quantity, amount of the contents, in the same way that the printed aluminium label tells the window shopper what he is looking at. A buyer of the medicine frequently has to know the concentration of the preparation he is buying, just as the buyer of the motor must know the ratings and capacities of the motor he needs for his workshop. There is no difference in quality but only in their shape, contours and body. The paper carton is thrown away partly because it is detachable and partly because the contents are soon used up and, therefore, there is nothing more for the carton or the wrapper to contain. The aluminium label, on the other hand, is in association with a product that lasts for years and is discarded only when the product itself is no longer serviceable and. is thrown away. The presence of the aluminium label serves the machine as long as the machine lasts and is in service. In its limited life, the paper carton serves the same purpose until it is finally thrown away by the contents having been extracted and having been used. The difference in the longevity of the two points nothing more than to the nature and use of the contents or the products they are created to serve. It is not an indication that one is a product of the printing industry and the other is not. Neither is a product of the printing industry; it is more a case of their being products of the so-called packaging or packing industry of which one hears every now and then. It is significant that in both cases, the principal i.e. the medicine or the machine, determines the useful life of the wrapper or the label, the servitors.
23. Chapter 49 of the harmonized code has this heading:
printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans.
The headings and sub-headings are all about printed books, booklets and similar printed matter whether folded or single sheet, dictionaries, newspapers, children's picture books, printed music, maps, drawings and architectual plans, unused postage and revenue stamps, cheque forms, decalcomanias, printed postcards, calendars, trade advertising material and so on. There is not one heading or sub-heading which would suggest an article resembling a printing that is meant to be used only as a label to be attached to an equipment or a machine.
24. The above matters are all products of printing in the true sense as we understand them, and these products are, to repeat chapter 49 of the harmonised code, printed books, newspapers, pictures, manuscripts and typescripts and plans. All these products are self-sufficient matters; they are not simply adjuncts of other goods, products or equipments but are themselves bought for the contents, that is, the printed matter, on them. They derive nothing from another product. The information that they carry and convey to the reader is full and complete and sufficient to the extent that it tells the reader what he needs to know even when the subject dealt with in the printed matter may be hundreds of miles away. But the fact that the subject may be present in front of the reader does not detract from this truth; that he can still read the contents of the printed book or paper when he is not in visible contact with the subject. Indeed, the printed matter may not have any concrete or visible subject at all as when a book deals with fiction or a children's book deals with fairy tales and legends. The reading matter in them does not depend on seeing the ghost or the fairy princess or the hero of legend or the dragon that devours all. The newspaper one reads deals with events of far away lands and peoples and one does not need to go there and see the events taking place to extract mentally the value of the printed matter in the newspaper. A new discovery in chemistry or physics in a distant research laboratory is discussed in scientific papers and is read by all students of science; it does not make the discovery or the research or the work in the laboratory any the whitless because the person who reads the paper is thousands of miles away and never saw and may never see the actual results of the research and the evolution of the scientific investigations. We read Darwin's Origin of Species and marvel at the rich descriptions given by a mind of unequalled depth of vision, descriptions that have now been accepted by all scientific men; but no one has ever seen the actual act of evolution taking place nor is ever likely to do so. This does not make the theory one bit less scientifically valid even if it is for the most part empirical deductions.
25. The printing on a printed matter is its whole substance and that printed matter is bought for itself and is itself good value for its printed contents. The clientele is wide and varied and knows neither class nor boundary. Printed matter like books, maps, etc. are bought and stored as valuable goods for themselves and for their own sake; old manuscripts have a price far beyond their face value. Trade and advertising materials lead to more commerce in the subject that they write about. And then, of course, we have newspapers, magazines which are widely bought by all educated persons in order to keep abreast of events in their own countries and in the wide world abroad. In all the cases the printed matters are bought for their contents.
26. It is not so for the printed label and the printed packaging paper. They do not form goods of commerce and trade except to the person who is going to use them on his goods. In the majority of cases, in fact, printed labels and printed packing are made on the orders of the person who is going to use them on his products. The motor manufacturer orders a consignment of metal labels to be affixed on his motors; these labels will find no buyers in the general market or even in other motor manufacturers. This is true of printed paper packaging and cartons. Their buyers are always the actual user who will use them in packaging his own goods. When they reach the general public, it is not that they have found a market but because the contents that they contain have such a general market, and in being bought, the packagings and the labels are also bought. The printed label and the printed packing paper is useful only as adjuncts of the product they contain or the equipment to which they are affixed. The printed aluminium label has no utility until it is affixed to the motor or the airconditioner or whatever it is affixed to and so it goes with the printed paper packing or printed carton. Without the product or the equipment, or without the apparatus, the printing on the aluminium label or the paper carton packing communicates nothing to the reader. Even an electrical engineer who reads a label about a new design of transformer will understand nothing except when the label is on the transformer. In a realm of subject understanding, the aluminium label in such cases is preceded by the presence, the structure and the appearance of the apparatus like the transformer, before the reading on the label registers itself as a valuable intelligence. From this it will follow that the printing on the aluminium lable as the printing on the paper package or the paper carton, is merely incidental to its use as a label or a wrapper and is not inherently a piece of reading matter and, therefore, the label will not rate as a product of the printing industry. In view of the above, we do not think it would be correct to assess the printing materials as products of the printing industry.
27. We reject the appeal and direct assessment at standard rate under tariff item 68 without benefit of the exemption under notification No. 55/75-CE dated 1-3-1975.