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2015 (4) TMI 357 - SUPREME COURT

2015 (4) TMI 357 - SUPREME COURT - 2015 (318) E.L.T. 529 (SC) - Classification of goods - Classification of Holograms and Holographic films - Classification under tariff entry 39.19 or 49.01 - held that:- It is clear that merely because a particular embossed hologram is self adhesive, therefore in all cases, it will attract entry 39 is not correct. What is to be seen, as has been pointed out above, is whether the self adhesive part of the product is of primary use or the printed matter is of pri .....

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of the said product. Equally, there is no reasoning so far as this aspect is concerned.

We therefore find that the CESTAT is not correct in the finding reached and the judgment dated 19.12.2003 of the CESTAT is, therefore, set aside. Only one further thing remains. Various arguments were made by both sides on the Rules of Interpretation of the First Schedule to the Central Excise Tariff Act, 1985. - it is not necessary to go into any of these Rules for the purposes of this judgment i .....

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man,JJ. JUDGMENT R. F. Nariman, J. The present case concerns itself with a classification issue. The facts necessary to appreciate the controversy are as follows: - The appellant manufactures security holograms. At the very beginning of the manufacturing process, they use coated metallised film which we are informed is classified under Tariff entry 39.20.36 after which the said film is embossed. Post embossing, there is adhesive coating and release coating which results in a hologram which ultim .....

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ification and classified the said goods under Tariff entry 39.19. An appeal to the Customs, Excise & Service Tax Appellate Tribunal (hereinafter referred to as 'CESTAT') by the appellant was dismissed. The Tribunal by the impugned judgment dated 19.12.2003, agreed with the learned Commissioner and added reasoning of its own to which we shall advert to later. At this stage, it is important to set out the relevant tariff entries: - 39.19 3919.00 Self-adhesive plates, sheets, film, foil .....

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le, laminated 3920.19 - Other - Of regenerated cellulose: 3920.21 - Film, plain 3920.22 - Film, lacquered 3920.23 - Film, metallised 3920.24 - Film, laminated 3920.25 - Sheet, plain 3920.26 - Sheet, lacquered 3920.27 - Sheet, metallised 3920.28 - Sheet, laminated 3920.29 - Other - Of other plastics: 3920.31 - Rigid, plain 3920.32 - Flexible, plain 3920.33 - Rigid, lacquered 3920.34 - Flexible, lacquered 3920.35 - Rigid, metallised 3920.36 - Flexible, metallised 3920.37 - Rigid, laminated 3920.38 .....

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s for Interpretation of the First Schedule to Central Excise Tariff Act, 1985, when properly read, would necessarily yield the result that the said goods would fall only under Entry 49.01. In the course of the argument, he also referred to the Harmonised System of Nomenclature (called 'HSN') Explanatory Notes to which we shall advert a little later. He also cited before us a decision of the Tribunal in 'Holographic Security Marking Systems Pvt. Ltd. v. C.C.E., Mumbai [2003 (151) E.L. .....

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nt should be sustained. Apart from the reasoning of the Tribunal, according to him, entry 49.01 would not at all apply if the ejusdem generis Rule is applied to the various items contained therein. Another argument was that viewed at from any angle Tariff entry 39.19 is a specific entry dealing with self-adhesive items of plastic, and printing on such items being merely incidental to such products would require us to maintain the classification post entry 39.20 under entry 39.19 and not under en .....

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ld be 39.19 or 49.01. On a cursory reading of entry 39.19, it becomes clear that it is part of a general scheme dealing with various items of plastics and must be read together with 39.20 as 39.20 begins with the expression Other plates.... . So read, it is clear that what is important is that various sheets, films, etc. of plastic should become self adhesive in order to attract 39.19. If, in addition, there is printed matter on such sheets, films etc., the question is whether the end product is .....

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oducts of the printing industry which alone would come under 49.01. We are afraid we are not able to agree with the said submission. It is clear that printed books, newspapers and pictures, manuscripts, typescripts, maps and plans of all kinds, are included within this entry whether they further the public interest in knowledge being disseminated or not. In fact, it becomes clear from a reading of the Explanatory Notes to HSN that this Heading would include a large number of obvious products whi .....

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01 or 49.02, as appropriate). (2) Brochures containing the programme of a circus, sporting event, opera, play or similar presentation. (3) Printed calendar backs with or without illustrations. (4) Schematic maps. (5) Anatomical, botanical, etc., instructional charts and diagrams. (6) Cinema, theatre, concert, railway and other tickets. (7) Microcopies on opaque bases of the articles of this Chapter. (8) Screens made by printing a film of plastics with letters or symbols to be cut out for use in .....

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roducts which have absolutely nothing to do with disseminating knowledge. The other argument of Shri Radhakrishnan is that the expression other products of the printing industry should be read ejusdem generis with the three expressions preceding these words, namely, printed books, newspapers, pictures . We do not find any genus in any of these expressions. Indeed, it is clear that the expressions manuscripts, typescripts and plans which are also part of the Heading also do not reveal that there .....

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tended by Shri Radhakrishnan in the narrow sense noted above. The printing industry would therefore, refer to products of various industries other than the printing industry stricto senso, which has printed material on them. Thus, construed, it is clear, that Tariff entry 49.01 would also be attracted on the facts of this case. One other interesting thing needs to be noted. In the Explanatory Notes of HSN which have already been referred to, Item 10 refers to self adhesive printed stickers. It i .....

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which reads as follows: - Except for the goods of Heading No. 39.18 or 39.19, plastics, rubber and articles thereof, printed with motifs, characters of pictorial representations, which are not merely incidental to the primary use of the goods, fall in Chapter 49. It is clear therefore, that the question resolves itself into whether printing is only incidental to the primary use of the goods or is something more than something merely incidental. We have already referred to the process hereinabov .....

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ogram of such adhesive tape would be incidental to the primary use of the said goods - the adhesive tape. By way of contrast, in the present case, the factor of adhesiveness is incidental to the primary use to which the goods are put, namely, that they are to be used for security purposes. Also, the HSN Explanatory Notes are relevant, which according to the judgment of this Court reported in 'Collector of Central Excise, Shillong v. Wood Craft Products Ltd.' [1995 (77) E.L.T. 23 (S.C.)] .....

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dged basis of the structure of Central Excise Tariff in the Act and the tariff classification made therein, in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Act. The ISI Glossary of Terms has a different purpose and, therefore, the specific purpose of tariff classification for which the internationally accepted nomenclature in HSN has been adopted, for enacting the Central Excise Tariff Act, 1985, must be preferred, in case of any diffe .....

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entry 39.19 (inter alia) because they are merely incidental to the primary use of the products, would not be so included. This test again provides a useful application of what is includable and what is left out by applying the primary and "incidental test outlined in Note 2 above. Obviously, a comic sticker would have as its primary use the comic part , the adhesive or sticker part being only incidental to its primary use. Similarly, in the facts of the present case, a security hologram st .....

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tion of Photo Identity Cards and Holograms - whether these should be classified under Chapter 39 as articles of plastics or under Chapter 49 as products of printing industry. 2. The production of photo-identity cards involves videography of the person, computerised capture of the videographed image, merging of the image with the date of the person already entered in the computer and the computerised printing out of the merged data and image through a laser printer. This print out is verified, va .....

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of Section VII of Central Excise Tariff also clearly excludes photo identity cards from the purview of Chapter 39 and places them squarely under Chapter 49. 5. On the other hand, Chapter Note (2) of Chapter 49 states that printing also means reproduced by means of a duplicating machine, produced under the control of a computer, embossed, photographed, photo-copied, thermocopied or typewritten. Further, as per general explanatory notes to HSN - page 691, with the few exceptions as referred to in .....

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. 7. All pending disputes may be finalized in view of the above guidelines. Field formations and trade may be informed accordingly. Circular No. 35/96-Cus., dated 21.06.1996 Subject : Classification of holograms under First Schedule, CTA 1975 - Regarding. Doubts have been raised regarding classification of embossed holograms under First Schedule to the Customs Tariff Act, 1975 (Customs Tariff), in the context of the Boards Circular No. 141/52/95-CX.4 dated 14.08.1995 stating the photo identify c .....

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t. 3. Self-adhesive plates, sheets, film, foil, tape, strip and other flat shapes, of plastic are classifiable under Heading 39.19 of the Customs Tariff. As per Note 2 to Section VII, read with Explanatory Notes to Heading 39.19, this heading also includes articles printed with motifs, characters or pictorial representations, which are not merely incidental to the primary use of the goods. In view of this, self-adhesive embossed holograms will fall under Heading 3919.90 of the Customs Tariff. Ho .....

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ectly. It is clear that merely because a particular embossed hologram is self adhesive, therefore in all cases, it will attract entry 39 is not correct. What is to be seen, as has been pointed out above, is whether the self adhesive part of the product is of primary use or the printed matter is of primary use. It cannot be that invariably in all cases, the moment a hologram is self adhesive it will fall within entry 39 without more. To this extent, it is clear that the circular as has been noted .....

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inted with motifs, character or pictorial representations which are not merely incidental to the primary use of the goods (See Note 2 to Section VII) . General Explanatory Notes of HSN below Chapter 49 clearly mentions that Goods of Heading 39.18, 39.19, 48.14 or 48.21 are also excluded from this Chapter, even if they are printed with motifs, characters or pictorial representations, which are merely incidental to the primary use of the goods. For this reason self-adhesive printed stickers design .....

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