2025 (2) TMI 948 - AT - Central Excise

Classification of Printed Thermal Paper ATM rolls - classifiable under CETH 49019900 or under CETH 48119099 of Central Excise Tariff Act 1985 or not - HELD THAT - The process of printing on the Thermal rolls brings into the existence of the product ATM Rolls. Where an article is printed with materials the primary purpose of the printing is to convey the message contained in the article and so would be more appropriately classifiable under the heading 49.01. The CESTAT Mumbai in the case of Alpha Carbonless Paper Manufacturing Co. Pvt. Ltd. vs. The Commissioner of Central Excise Belapur 2014 (2) TMI 589 - CESTAT MUMBAI had the occasion to examine a similar issue and classified ATM Rolls Printed lottery ticket rolls and printed bus ticket rolls as products of the printing industry. The case also took into consideration the Amendment made to the Finance Act 2012 by the insertion of note 14 under Chapter 48 and held that the same cannot have retrospective operation. In Sai Security Printers Ltd. Vs. Commissioner of C. Ex. Faridabad 2006 (2) TMI 23 - APPELLATE TRIBUNAL NEW DELHI the Tribunal held that the Thermal papers that were imported printed cut and slit to size were products of the printing industry. In Kayen Print Process (P) Ltd. Vs Commissioner of C. Ex. Bangalore 2006 (7) TMI 87 - CESTAT BANGALORE the Tribunal held that printing on paper sheet and paper board would come within the category of the printing industry. In the present case in addition to the black bar code details of transactions the sheet also contains instructions on keeping the ATM premises clean instructions on use of ATM cards safely etc. This further strengthens the point that the product is not merely of incidental use but it is of primary use. The thermal paper cut rolls printing of paper with logos / marks of customers are not merely incidental but essential to primary use i.e. providing information of bank statements and receipts. The pre-printed matter and the matter to be printed by ATM are inter connected and constituted a single matter. Further the existence of blank portions in printed forms do not take them out of other printed products and articles . Conclusion - The printed thermal paper rolls were correctly classifiable under Chapter 49. Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The primary issue in these appeals was the classification of Printed Thermal ATM Rolls under the Central Excise Tariff Act, 1985. The specific legal questions considered were:

• Whether the Printed Thermal ATM Rolls should be classified under CETH 49019900 (as products of the printing industry) or under CETH 48119099 (as paper and paperboard products).
• Whether the demands for duty and cess confirmed by the lower authorities are sustainable.
• Whether the penalties imposed by the lower authorities were justified.

2. ISSUE-WISE DETAILED ANALYSIS

Classification of Printed Thermal ATM Rolls

• Relevant Legal Framework and Precedents: The classification dispute centered around Chapter 48 and Chapter 49 of the Central Excise Tariff Act. Chapter 48 pertains to paper and paperboard products, while Chapter 49 relates to printed products of the printing industry. The Tribunal considered various precedents, including the Supreme Court's decision in Commissioner of Central Excise Vs. Gopsons Papers Ltd., which emphasized the nature of printing in determining classification.
• Court's Interpretation and Reasoning: The Tribunal noted that the primary use of the printed thermal paper rolls was for further printing by ATMs. It emphasized that the printed matter on the rolls was not merely incidental but integral to their primary use. The Tribunal relied on the Supreme Court's ruling in Gopsons Papers Ltd., which held that the end use of the product at the hands of the purchaser is not the concern of the assessee and cannot be the consideration for classifying goods.
• Key Evidence and Findings: The Tribunal found that the thermal paper rolls were pre-printed with logos and other customer-specific information, indicating their primary use for further printing by ATM machines. The Tribunal also considered the legislative amendments in Budget 2012, which inserted Chapter Note 14 to Chapter 48, clarifying the classification of certain printed paper products.
• Application of Law to Facts: The Tribunal applied the principles from the Gopsons Papers Ltd. case and other relevant precedents to conclude that the printed thermal paper rolls should be classified under Chapter 49 as products of the printing industry. The Tribunal emphasized that the printing on the rolls was not incidental but essential to their primary use.
• Treatment of Competing Arguments: The Tribunal addressed the Department's argument that the rolls should be classified under Chapter 48 due to the pre-printing being incidental to their primary use. The Tribunal rejected this argument, reiterating that the printing was integral to the product's primary function.
• Conclusions: The Tribunal concluded that the printed thermal paper rolls should be classified under Chapter 49, and the demands for duty and cess under Chapter 48 were not sustainable.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal quoted the Supreme Court's decision in Gopsons Papers Ltd.: "The end use of the said product at the hands of the purchaser is not the concern of the assessee and cannot be the consideration for classifying the goods in question...."
• Core Principles Established: The Tribunal reaffirmed the principle that the classification of printed products should be based on the nature and scope of printing, not merely on the material used. It emphasized that printing integral to the primary use of the product dictates classification under Chapter 49.
• Final Determinations on Each Issue: The Tribunal set aside the impugned Orders-in-Appeal, concluding that the printed thermal paper rolls were correctly classifiable under Chapter 49. Consequently, the demands for duty and cess were also set aside, and the appeals filed by the Appellant were allowed with consequential benefits.