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2015 (7) TMI 790 - SUPREME COURT

2015 (7) TMI 790 - SUPREME COURT - 2015 (322) E.L.T. 129 (SC) - Classification of goods - Whether Risograph is an office machine having duplicating function and thus to be classified under sub-heading 8472.90 of the Customs Tariff Act, 1975 or is it a printing machine to fall under sub-heading 8443.50 - Held that:- The HSN Explanatory Notes makes it amply clear that small printing machines, even if intended for office use and even duplicators using embossed plastic or metal sheet, which can also .....

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o hold the forme, cliché or plate to be reproduced. The ingredient of a plate from which there can be reproduction is, thus, recognised as a process of printing. It would also be pertinent to mention that these very HSN Explanatory Notes clarify that apart from the normal types of printing machines, there are special printing machines which are also covered by this heading. Examples of 7 such machines are specifically given. For the purpose of this case, printing machine described at serial No.7 .....

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inting process is more akin to screen printing - The printing itself takes place when the ink is squeegeed through the stencil onto the screen and ultimately onto the paper. It is the screen which holds the image area, which can carry either a pictorial or typographic material. Similarly, in the case of a Risograph, the long fibre Japanese type paper is the master through which the ink is pressed to reproduce the image or text. The screen printing stencil prepared is equivalent to the plastic fi .....

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ing 84.43 and not 84.72. - Decided in favour of assessee. - Civil Appeal No. 4513 of 2005 - Dated:- 21-7-2015 - A. K. Sikri And Rohinton Fali Nariman,JJ. For the Petitioner : Mr. M. P. Devanath For the Respondent : Mr. B. Krishna Prasad JUDGMENT A. K. Sikri, J. Classification of the machines known as Risograph, which are imported by the appellant M/s. HCL Limited, is the issue involved in the present appeal. The question is as to whether Risograph is an office machine having duplicating function .....

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y to printing - Offset printing machinery: 8443.11 - Reel fed 65% 8443.12 - Sheet fed, office type (sheet size not exceeding 22 x 36 cm) 65% 8443.19 - Other 65% - Letterpress printing machinery, 8443.21 - Reel fed 65% 8443.29 - Other 65% 8443.30 - Flexographic printing machinery 65% 8443.40 - Gravure printing machinery 65% 8443.50 - Other printing machinery 65% 8443.60 - Machines for uses ancillary to printing 65% 8443.90 - Parts 65% 2) Sub-heading 84.72, on the other hand, deals with 'Other .....

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orting or folding mail or for inserting mail in envelopes or bands, machines for opening, closing or sealing mail and machines for affixing or cancelling postage stamps 65% 8472.90 - Other 65% 3) As per the appellant-assessee, Risograph machine is a printing machine which should be covered by sub-heading 8443.50, namely, 'other printing machinery'. On the other hand, the respondent-Revenue has taken the position that it is a specie of duplicating machine and falls under the sub-heading 8 .....

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n sub-heading 84.43 or 84.72. Both the parties are trying to fit it in the respective residual clauses viz. Other printing machine or Other respectively. Therefore, what needs to be examined is as to whether the Risograph machine would belong to the family of 'printing machinery' or it belongs to the clan of 'duplicating machine'. Right from the Order-in-Original passed by the Adjudicating Authority, Commissioner of Customs (Appeals) to the Customs Excise and Service Tax Appellat .....

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hat it does printing job and is improperly referred to as a duplicating machine has not cut any ice with the Tribunal which has chosen to follow its own decision in the case of Pioneer International. In a case like this, the first query of the Court was as to whether in the case of Pioneer International any appeal was preferred. Answer given was in the negative, which means that the correctness of the order of the Tribunal in Pioneer International was not tested in this Court. 5) Questioning the .....

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various customers who were using the Risograph machine as a printing machine and also the assessment by the Japanese Customs specifically classifying the machine under sub-heading 8443.50. The appellant categorically brought to the notice of the Assistant Commissioner the following facts for the purpose of classification: (a) Riso Kagaku Corp, the manufacturers of Risograph, were themselves clearing the machine under sub-heading 8443.50 of the classification without raising any objection; (b) t .....

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pport the classification of the machine under Chapter Heading 84.43 wherein it specifically provides that in addition to normal type of printing machine Chapter Heading 84.43 also cover special machines such as small office printing machines which operate by means of printing type or by offset process, and which are improperly referred to as 'duplicating machines' because their operating principles and appearances are similar to those of duplicating machines, no doubt referring to machin .....

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he technical specifications of a Risograph machine and its functioning and also explained that the principle of Risograph is akin to screen printing for which the appellant submitted technical literature. Learned counsel for the appellant submitted that the aforesaid aspects are totally ignored by the authorities below and insofar as the Tribunal is concerned, it has conveniently omitted to look into these aspects by blindly following its decision in Pioneer International and has erred in the fo .....

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ding 84.43 and this position is not disputed even by the Indian Customs. (c) The scanner has been extensively used in the printing industry to transfer the image by utilising a thermal head to make masters used for printing, and hence the classification of the Risograph can only be under that Chapter Heading. (d) Risograph does not cut stencils but makes masters of the image to be printed. (e) Chapter Heading 84.72 is a residuary entry and the HSN specifically rules out classification of the Ris .....

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er, fresh prints are taken out. There is no copying principle as in a photocopying machine. (h) Operation Guide itself shows how the master is first made and thereafter prints are taken out and hence the Conclusion of the Tribunal in para 9 in Pioneer International is totally incorrect and perverse. (i) In the case of offset printing, as per the Tribunal, the impression is taken on a rubber roller and then on to the paper. In other words, the master is made which is transferred to the rubber rol .....

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'offset printing is a process in which the inked impression is made on to the paper'. In the case of the Risograph machine, ink goes through the pores of the long fibred paper used in the paper plastic master to make the prints. (j) The master made by the Risograph is not like the stencil which is a simple process in stencil duplicating machine, but the master is by the printing technology principles for making the master. Such stencil making process for printing is indeed recognised in .....

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ommissioner as well as the Commissioner (Appeals) in support of their findings and also relied upon the Tribunal's decision in Pioneer International for the reasons given therein and submitted that the impugned order of the Tribunal does not call for any interference. He further submitted that Risograph machine is not a machine to print original matter. Master board is only for reproduction. Giving details of the Risograph machine, he submitted that the Risograph works by the process of auto .....

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tor detects the reflected light and reads white and black areas of the original, as read by the scanner. The thermal head, which consists of hundreds of heat emitting elements, is used to make the master copy on the basis of the signal received from the image scanner. This master copy is exactly similar to a stencil used in a duplicating machine, which is then loaded on to the drum. The ink which is carried in the drum pieces through the micro-pores in the master on the paper when it is fed unde .....

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amined under which chapter tariff heading Risograph should be classified. The Collectors' Conference, after examining the detailed catalogue and working of Risograph, came to the conclusion that the machine is a duplicating machine and, therefore, appropriately classifiable under Heading 84.72. The Collectors' Conference also came to conclusion that Risograph is more appropriately classifiable under sub-heading 8472.10. 8) He, thus, summed up his arguments by contending that printing and .....

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ies or so per minute: (a) Master making system : High-speed Digital Scanning and Thermal Screening system (b) Printing system : Automatic Stencil Duplicating System (c) Image scanning system : Flat-bed scanner moving system Thus, the specification itself establishes that the printing system inside the Risograph is an Automatic Stencil Duplicating System. B. The input is the original and the output is the copy of the original. C. Technology in Risograph is simple, highly reliable, speed-wise far .....

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ot as printing machine, which was its principal function. 9) We have given our due consideration to the aforesaid submissions of the learned counsel for the parties and have also gone through the material as well as literature produced by the learned counsel in support of their respective submissions. In a matter like this it is obvious that we have to understand what is duplicating machine and what is printing machine and how they differ from each other. Thereafter, we will have to take note of .....

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HSN Explanatory Notes to Chapter Heading 84.72 explains that the term 'office machine' is to be taken in a wide general sense to include all machines used in offices, shops, factories, workshops, schools, railway stations, hotels, etc., for doing 'office work' (i.e. work concerning the writing, recording, sorting, filing, etc., of correspondence, documents, forms, records, accounts, etc.). It, thereafter, gives the description of duplicating machines, which is included in the afo .....

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cluding such machines which can also operate with stencils) (heading 84.43), and photocopying or thermocopying apparatus and microfilm apparatus (Chapter 90). 11) The HSN Explanatory Notes makes it amply clear that small printing machines, even if intended for office use and even duplicators using embossed plastic or metal sheet, which can also operate with stencils, and photocopying etc. are specifically excluded. What follows from the above is that if there is a small printing machine like let .....

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rinting books, plates or cylinders of the previous heading and excludes the following: (a) Office hectograph or stencil duplicating machines, addressing machines and other office machines of headings 84.69 to 84.72. (b) Photocopying or thermocopying apparatus (e.g. for the production of blue prints, plans, etc., or for the reproduction of documents, picture postcards, etc.) (Chapter 90). HSN Explanatory Notes further clarifies that this Heading includes the following: (1) Machines for printing a .....

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nes, and (iii) Rotary presses. Insofar as printing presses are concerned, the variety thereof is stated in the following manner: (i) Ordinary presses, used particularly for printing artists' engravings or proofs. In their simplest form they usually consist of a fixed horizontal slab (or bed) to hold the forme, cliché or plate to be reproduced, and a movable plate which is pressed against the bed by means of a screw or lever mechanism; the paper sheet is interposed and backed with a sp .....

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printing. 14) The aforesaid explanation acknowledges that this simplest form of printing presses consists of a fixed slab (or bed) to hold the forme, cliché or plate to be reproduced. The ingredient of a plate from which there can be reproduction is, thus, recognised as a process of printing. It would also be pertinent to mention that these very HSN Explanatory Notes clarify that apart from the normal types of printing machines, there are special printing machines which are also covered b .....

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ncludes colour printing machines, used to colour, after they have been first printed in black and white, special art editions, playing cards, children's illustrations, etc., by means of stencils or stencil-plates, the colour being applied by brushes, rollers or by spraying. 15) What is significant is the recognition of the fact that there are many special machines (obviously due to advancement of technology) which are small office printing machines and they operate by means of printing type .....

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itive words, etc. which would still qualify to be printing machines. Example of four such machines are given in this inclusive description and screen printing machines are specifically included therein. The aforesaid aspects are demonstrated in the following specific words: Machines for printing a repetitive design, repetitive words or overall colour on textiles, wallpaper, wrapping paper, linoleum, leather, etc., include: (1) Block printing machines in which blocks engraved with the design, gen .....

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hines. The material to be printed passes through the machine together with a stencil-screen band, the colour being applied through the stencil. (4) Yarn printing machines. These produce colour effects on the yarn (or sometimes on the roving before it is spun into yarn). 16) Thus, a fine distinction between the printing machine on the one hand and duplicating machine on the other has to be borne in mind with specific understanding that in many cases there may be confusion between duplicating mach .....

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s which can be taken from these Risographs can be suitably enlarged or reduced as per the user. The scanner portion of the Risograph consists of a photo sensor comprising of light emitting diodes and photo detectors. The light emitted from these diodes strike the original. The light falling on the dark areas of the original are absorbed. The photo detector then detects the reflected light and reads the white and black area of the original as read by image scanner. The image thus formed by the sc .....

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al documents on the base paper. This constitutes the master used for subsequent printing. The master material consists of film based on polyester plastic material boded with long fibre Japanese type paper (through which ink can penetrate). The master film is a few microns in thickness and is, thus, thin. The polyester based material is bonded to the long fibre Japanese type paper by co-polymerization. The plastic film used is heat sensitive. The paper is basically cellulose web through which ink .....

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es thereby forcing the ink to pass through first, the drum surface, then to the master and then on to the paper to be printed. 19) From the aforesaid description of the process adopted in Risograph machine, it becomes apparent that Risograph printing process is more akin to screen printing. As already pointed out above, the screen printing process requires a stencil and a screen, with the stencil carrying the design to be printed. This stencil is mounted against the screen. The printing itself t .....

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iples adopted for printing in the Risograph is akin to that found in screen printing. 20) At this stage, let us embark on a brief journey of printing from Gutenberg to date to see how it has evolved over a period of time leading to screen printing which is one of the most sophisticated form of printing. 21) Printing, today, has become one of the most important means of mass communication though with the advent of computers and e-form of communication, in recent years its importance is somewhat d .....

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- to print many different books. Over a period of time, there has been improvement in the methodology of printing with the advancement of technology. 22) However, there are certain steps which are common to all printing processes. These steps include: (i) typesetting, (ii) proofing, (iii) preparing illustrations for reproduction, and (iv) page makeup. Typesetting is the process of putting into type the words to be printed. It is also called composition. Typesetting can be classified as (1) hot- .....

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nd has replaced hot-metal composition for most printing. Most commercial printing today is done by one of the three processes: (1) relief printing, (2) offset lithography, or (3) gravure printing. Each of these processes uses a different kind of image carrier (the printing surface that carries the images to be printed). In relief printing, the printing surface is raised above the level of the non-printing surface. In offset lithography, the printing surface and the non-printing surface are on th .....

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e stencil is mounted against the screen. Ink is squeezed through the stencil onto the surface to be printed. The design can also be traced directly on the screen, and the non-printing parts painted out. Or the screen can be given a light-sensitive coating and the design put on it photographically. Screen process can be used to print on paper, glass, cloth, wood, or almost any other material. It is used to print on objects of almost all sizes and shapes, including draperies, banners, bottles, toy .....

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et on to which lettering is impressed as lines of perforations through which ink can be squeezed on to the copy paper. Spirit duplicating (also known as hectographic duplicating) is a process/method which uses strong aniline dye. Originally the ink was transferred to a sheet of gelatin by placing the sheet of paper with the dye on it in a shallow tray. The moisture retaining qualities of gelatin kept the ink moist, and the copy was made by pressing an ordinary sheet of paper on to the gelatin. T .....

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ean paper. In a duplicating machine, as provided for in the Customs Tariff Act, the stencil itself is made using a typewriter or stylus i.e. the stencil is created outside of the machine before the same is fed and ink directly passed through it. The HSN Explanatory Notes to Customs Tariff Heading 84.72 itself confirms this understanding wherein it is stated that duplicating machines include the stencil duplicating machines which operate with waxed paper stencils previously cut by a stylus or on .....

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photocopier. It was emphasized that Risograph is a more sophisticated machine with previously unheard print quality; that the machine uses a method of scanning at 400 DPI resolution as used in Scanners in Printing Industry; that instead of optical system (Lens & Mirror) as used in a photocopier, Risograph uses a charged couple device, as used in the scanners in printing industry; that the method is digital only; that just like in Offset Printing which uses a lithographic plate made of alumin .....

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