CESTAT-Chennai : Whether printed computer stationary/manifold business forms being manufactured by assessee being customized business forms which cannot be sold in open market are classifiable under chapter heading 4901.90 attracting NIL rate of duty

CESTAT, Chennai Bench

Mehra Computers System Ltd. Vs. Commissioner of Central Excise, Chennai-IV

Section 2

Ms. Sulekha Beevi, Judicial Member And Madhu Mohan Damodhar, Technical Member

Final Order No. 41811/2017

Appeal No. E/673/2007/DB

July  28, 2017 

ORDER

1.1 The issue involved is whether the printed computer stationary/manifold Business Forms’ are to be classified under Chapter Heading 4820.00 attracting 4% duty adv. from 01.03.2002 to 28.02.2003 or under Chapter Heading 4901. 90 attracting NIL rate of duty as contended by the appellant.

1.2 The appellants are engaged in the manufacture of computer stationary and manifold business forms. It appeared to the department that the appellants had not registered themselves with the Central Excise Department even after crossing the SSI exemption limit of turnover of Rs. 10 lakhs during March, 2002 and Rs. One crore during 2002-03. The department therefore issued SCN dated 9.11.2005, proposing demand of differential central excise duty of Rs. 6,45,506/- for clearances made from Mary 2002 to October 2002 along with interest thereon and proposing penalties under various provisions of law. In adjudication, the duty demand of Rs.6,20,678/- was confirmed and in addition, equal penalty of Rs.6,20,678/- was imposed under Section 11 AC of the Central Excise Act, 1944. Hence this appeal. The seventeen items (final products) listed in the SCN (Annexure-II) are as under:—

1. Blank

2. Blank with logo

3. EZR

4. EZR logo

5. General

6. OMR sheets

7. Pay slips

8. Vouchers

9. Label

10. Price tags

11. Stickers

12. A4 sheets

13. Advertisement

14. Bank statement

15. Invoice

16. Letterheads

17. Job cards

Out of the above, the assessee accepted the classification as put forward by the Department for the following items:—

Table-I

1. Blank-4820.00 4820.00
2. Blank with logo
3. EZR
4. EZR with logo
5. Labels 4821.00
6. Price tags
7. Stickers

 

The appellant however, disputed classification for the following:—

Table-II

1. Computer stationary (general)
2. OMR sheets
3. Pay slips
4. Vouchers
5. A4 sheets – Benefit given in OIA
6. Advertisement – Benefit given in OIA
7. Bank statement
8. Invoice
9. Letterheads
10. Job cards – Benefit given in OIA

 

2. On 20.07.2017, when the matter came up for hearing, on behalf of the appellant. ld. Advocate Shri R. Suresn summarized their contentions as follows:—

(a) Computer stationary manufactured by them is classifiable under CETH 48.20, stickers, price tags, labels etc., are classifiable under CETH 48.21 and other products are classifiable under CETH 49.01. He submits that all these products are not dutiable till 28,02.2002. Only from 01.03,2002 by Notification No. 10/2002-CE dated 01,03.2002 these products failing under 48.20, 48.21 were chargeable to duty @ 4% adv. and SSI exemption of Rs. 10 lakhs was provided for March 2002.

(b) He further submits that the appellants purchased duty paid paper in jumbo rolls, which are cut or slit/perforated as per the order and appellant’s job is printing the matters thereon as furnished by the customers. It is their contention that mere cutting, slitting, perforation of the paper do not change the character of the paper and printing on such papers is classifiable under Heading 4901 being products of printing industry and these goods does not attract excise duty.

(c) The products falling in Table-II above being are products of printing industry and therefore would fall under 4901.90 attracting NIL rate of duty. He relies on HSN Note of Chapter 49 which reads as under:—

“Continuous computer sheets with printed sheets are formed only at intermediate stage in making final products and thus these printed products cannot be regarded as marketable goods attracting levy of central excise duty or alternatively they should be regarded as products of printing industry classified under chapter 49 attracting NIL duty”.

(d) The Ld. Counsel referred to Chapter Note 12 of Chapter 48 which reads as under:-

“Except for the goods of heading 48.11 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 submitted that the printing done on the job card, pay slip, letter pad, Advertising (Telephone Bills, Indane Gas Agency Bills), Tear Coupons for promotional schemes etc., are customized printing and are not merely incidental to the primary use of the goods. That such manifold printed forms is customer specific and cannot be sold in open market. He explained that the products manufactured by the appellant are not printed matter requiring filling up of details and which can be used commonly or available in any shop. That the product is printed as per requirement of customer. Therefore these are rightly classifiable under Chapter 49.

(e) Ld. Advocate relied on further the Board Circular No. 11/91- CX-4, dated 15.10.1991. The Board therein had clarified that products which have a fiduciary value in excess of intrinsic value eg: cheques, forms, stock certificates, bills of lading, documents of title, rail tickets, Airline tickets etc., would be classifiable under Heading 4901.90. Cheques, are Bank/Customer specific. Similarly is the case with rail tickets, air tickets etc. That therefore the printing being customer specific, the products manufactured by appellant would fall under CTH 49 only.

(f) Hence the products in Table-II would merit classification under CETH 49 for which no duty is liable to be paid. In such case, total clearances in March 2002, would only come to Rs. 9,44,237/-, which is well within the SSI exemption limit. So also, for the period April to October, 2002, the remaining taxable value of clearances will be only Rs. 70,47,086/-, which again is within the exemption limit of Rs. One crore.

(g) Ld. Advocate draws our attention to the Tribunal decision in the case of Data Processing Forms (P.) Ltd. v. CCE 2014 (311) ELT 161 (Tri.-Ahmd.), where it has been held that pre-printed forms such as excise invoice forms, commercial invoice forms, letterhead forms, PF slip forms, monthly bill forms, bank payment voucher forms, etc., already printed with details, as per Note 12 of Chapter 48 CET, such goods will be classifiable under CETH 49.11 ibid. As such printing containing motif or pictorial representations are not merely incidental to primary use of the products.

(h) Ld. Advocate also places reliance on the ratio of the Hon’ble Apex Court’s judgment in the case of CCE v. Gopsons Papers Ltd. – 2015 (374) ELT (5) (SC). He also places reliance on Board’s Circular No. 11/91-CX4, dated 15.10.1991.

(i) Ld. Advocate further raised the plea of entire proceedings being hit by limitation. He submits that investigation was over in September 2002, however SCN was issued only after a gap of three years in November, 2005.

3. On the other hand ld. AR, Shri B. Balamurugan supports the adjudication.
4. H
eard both sides.

5. The ld. Counsel has produced before us the sample copies of the manifold business forms pertaining to Table II which is under dispute. We have perused these items carefully. One such item is the cash certificate/fixed deposit certificate printed for a Bank. The others are Bill for Telecom, Tuticorin District, Tax invoice for S.P. Hotel &Towers, Receipt for LIC, Inland letter form for submitting voting particulars for Rane Brake Lining Ltd. etc. We are convinced that these are customized manifold business forms and cannot be sold in open market. The co-ordinate Bench of the Tribunal in the case of Data Processing Forms (P.) Ltd. (supra) had occasion to analyse a similar issue. In the said decision, scanned copies of the disputed forms have been included which we have taken note of. The printed products scanned and made part of the judgment are identical in character to those placed before us. The Tribunal has observed that merely because some details are to be filled in, such customized forms cannot be excluded from Chapter 49. The relevant portion of the decision is reproduced as under:—

’19. It can be seen from the above reproduced General Notes TO HSN that Chapter 49, that they very clearly indicate barring few exceptions, Chapter 49 covers all printed matters of which essential nature and use is determined by the fact of its being printed with motifs, characters or pictorial representation. In our considered view, entire issue needs to be read in context of Chapter Note 12 of Chapter, 48, which clearly defines the scope and purport of Chapter Heading 48.20. A plain reading would mean that even if a product falls under the general description of Tariff Heading 48.20, it would not get classified thereunder if the printed motifs, characters or pictorial representations are not merely incidental to the primary use of goods. The products with motifs, characters or pictorial representation may get covered under Chapter Heading 48.20, however by virtue of Chapter Note 12, if the printing is incidental to its primary use, it will fall under Chapter 49. Hence, in our considered view, if the printing that is carried out on the product, itself conveys a message e.g. details of the contractual terms, information of messages received or sent, details of the supplier/manufacturer, advertisement of his products, then in all such cases, the printing cannot be merely incidental to the primary use.

20. It can be seen that for classification of a product under Chapter Heading 49.11, HSN explanatory notes has the following notes :

“This heading covers all printed matter (including photographs and printed pictures) of this Chapter (see the General Explanatory Note above) but not more particularly covered by any of the preceding headings of the Chapter.

Framed pictures and photographs, frames remain classified in this heading when the essential character of the whole is given by the pictures or photographs: in other cases such articles are to be classified in the heading appropriate to the frames, as articles of wood, metal etc.

Certain articles may he intended for completion in manuscript hut remain in this heading provided they are essentially printed matter. (See Note 12 to Chapter-48). Thus, printed forms (e.g. magazine. subscription forms), blank multi-coupon travel (e.g. air. rail and coach) tickets, circular letters, identify documents and cards and other articles printed with messages, notices, etc, but requiring the insertion of particulars (e.g. dates or 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.” (Emphasis supplied)

21. It can be seen from the above reproduced notes to HSN Chapter Note 49.11 covers all articles wherein there are blank spaces requiring only insertion of particulars, are classified under Chapter Heading 49.11. The abovesaid HSN explanatory note was considered by Commissioner (Appeals) in the impugned order in respect of few of the forms as recorded by us in Paragraph 12.’

6. From the above discussions, appreciating the facts and applying the ratio of the decision in Data processing Forms (supra), we are of the view that the products listed in Table II merit classification under Chapter 49. It is seen that the Commissioner (Appeals) has accepted the contention of appellant and classified items like A4 sheets, advertisement and job card under Chapter 49. Thus when the impugned items are classified under CETH 49 would attract NIL duty and then the appellant would be well within the SSI exemption limit. The demand is therefore unsustainable. The impugned order is set aside. Appeal is allowed with consequential relief, if any, as per law.

7. From the foregoing, we hold ‘that the demand is unsustainable. The impugned order is set aside. The appeal is allowed with consequential reliefs, if any.

[Citation : 2017-Taxcaselaw-67-CESTAT-Chennai-GST]