TMI Blog2015 (10) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... aside. - Decided in favour of assessee. - Appeal Nos. E/40497/2015, E/40500/2015, E/40501/2015 and E/40503/2015 - Final Order No.41276-41279/2015 - Dated:- 25-9-2015 - Shri R. Periasami, Technical Member And Shri P.K. Choudhary, Judicial Member For the Appellants : Dr. G.K. Sarkar, Advocate For the Respondent : Ms. Indira Sisupal, AC (AR) ORDER Per R. Periasami All the four appeals are arising out of common order passed by Commissioner of Central Excise, Chennai-II. Therefore, they are taken up together for disposal. 2. The brief facts of the case is that appellants are manufacturers of holograms and clearing the same to the State Excise and Prohibition Department, Govt of Tamil Nadu classifying the product under 4901 of the Central Excise Tariff and clearing the same without payment of duty. The department issued SCN No.46/2014 dt.8.5.2014 classifying the goods under chapter 3919 of CET and chargeable to appropriate rate of duty and demanded duty of ₹ 22,01,01,514/- under proviso to Section 11A(1) and also proposed for penalty under Section 11AC. Penalty was also proposed on the co-noticees under Rule 26. Adjudicating authority in his impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of OIO (para-27) where the Commissioner has made the grounds and classified the product under chapter 39 based on the Tribunal s order in their own case (supra) and Board s circular No.35/96-Cus. dt. 21.6.96. 3.1 He further submits that their case is squarely covered by Tribunal s decision in the case of Holographic Security Marketing Systems Pvt. Ltd. Vs CCE 2003 (151) ELT 470 (Tribunal) wherein the Tribunal held that hologram produced or printed with stamping foil is rightly classifiable under chapter 4901. He further submits that Revenue preferred appeal against Tribunal s above order and the Hon ble Supreme Court dismissed the Revenue s appeal in CCE Vs Holo 2003 (158) ELT A181 (SC). When this Tribunal decision was relied before the adjudicating authority, adjudicating authority has not accepted the above decision. In this regard, he relied Tribunal s order in their own case reported in 2004 (167) ELT 301. He further submits that product manufactured at their Noida unit is entirely different than what was manufactured in Chennai. At Noida unit, they have produced Holograms out of polyester film which is classified under 39. He submits that they have used stamping foil at Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quality adhesive material on the label suitable to be affixed firmly (non manual mechanical application) on bottle cap and partly on the neck of the glass bottle through automatic mechanical applicator suitable for automatic application. 6. On a perusal of the invoice and on perusal of the sample of the security hologram, there is no dispute on the fact that hologram contained logo of Govt of Tamil Nadu State with signature of State Excise Commissioner along with high security features such as multi level animation effect, four channel image, pearl effect, Micro text and 3D True object image. There is no dispute on the fact that hologram printed and supplied by the appellants to Govt of Tamil Nadu is a high security label affixed on the IMFL and other distillery products marketed by the T.N. State Govt to prevent from spurious / fake products. The adjudicating authority in his finding at para 27 mainly relied the Tribunal s decision in appellant s own case 2004 (167) ELT 301 (Tri.-Delhi) and the Board s circular No.35/96-Cus. dt. 21.6.96 and proceeded to classify the Hologram under chapter heading 39199090 as self-adhesive plates, sheets, film, foil , tape strip and other f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiable in Heading 49.01 that the appellant claimed. Penalty therefore was not imposable on the appellant and its director. It is relevant to see that the above order has been upheld by the Hon ble Supreme Court and the Revenue s appeal was dismissed in the case of CCE Vs Holographic S.M.S. Pvt. Ltd. (supra). The ratio of the Apex court decision squarely applies to the facts of the case as the base material used for making hologram is stamping foil which is classifiable under 3212. Further, we find that the adjudicating authority had relied the Tribunal Bench (Delhi) order passed in appellant s own case pertaining to Noida unit. On appeal by the appellant, the Hon ble Supreme Court set aside the above Tribunal s order and also set aside the Board s circular dt. 21.6.96 relied by the Tribunal and also relied by adjudicating authority. The relevant paragraph of Apex Court order is reproduced as under : 8. We have heard learned Counsel for the parties. The first important thing to notice is that the original coated metallised film that has been used by the appellant has already been classified under sub-heading 3920.36 as a flexible metallised film of plastic. The fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 design work. Such screens simply printed with dots, lines or squares are excluded (Chapter 39) (9) Maximum cards and illustrated first-day covers not bearing postage stamps (see also Part (D) of the Explanatory Note to Heading 97.04). (10) Self-adhesive printed stickers designed to be used, for example, for publicity, advertising or mere decoration, e.g., comic stickers and window stickers . 12. On a reading of the various products outlined herein, it is obvious that they include a large number of products which have absolutely nothing to do with disseminating knowledge. 13. 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, printe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... primary use of the product is security and not the quality of being adhesive. Here again, a simple example will suffice. Take an adhesive tape with a monogram printed upon it. The primary use of such tape is by virtue of its adhesiveness to bind and package containers in which goods are to be stored and transported. Obviously, in such an example, the printed monogram 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.)] in para 12 are a safe guide in case of doubt :- It is significant, as expressly stated, in the Statement of 12. Objects and Reasons, that the Central Excise Tariffs are based on the HSN and the internationally accepted nomenclature was taken into account to reduce disputes on account of tariff classification . Accordingly, for resolving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideography 2. of the person, computerised capture of the videographed image, merging of the image with the data 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, validated and pasted with the Holograms of the State emblem and then cut, folded and laminated before issue to the person. The Board has carefully considered the matter. It is felt 3. that photo identity cards get their distinctive character and identity because of the data imprinted on them and not because of the material they are made of or because of their shape and size. Thus, photo-identity cards are a distinct product as compared to other identifiable articles of plastic. Section Note (2) of Section VII of Central Excise Tariff also 4. clearly excludes photo-identity cards from the purview of Chapter 39 and places them squarely under Chapter 49. On the other hand, Chapter Note (2) of Chapter 49 states that 5. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bossed plastic holograms which are not self-adhesive alone will fall under Entry 49. This is said to be in view of Note 2 to Chapter 49. We are afraid that the second circular which has been quoted hereinabove does not set out the law correctly. 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 above, does not lay down the correct law. 22. We will now come to the impugned judgment. The CESTAT in the impugned judgment states as under :- It is thus apparent that even if printing is of essential nature, the product of 39.19 would remain classifiable under Heading 39.19 and will not be regarded as a product of printing industry . This view is further strengthened by the Explanatory Notes of HSN below Heading 39.19 which reads as under : - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 1 and Shri Lakshmikumaran referred to and relied upon Rule 3. We do not think it necessary to go into any of these Rules for the purposes of this judgment inasmuch as we have found as a fact, in accordance with Note 2 to Entry 49, that the security hologram part of the product in question is primary and the self-adhesive part only incidental insofar as the user of the said goods is concerned. With the above observations, the appeals are allowed. There will be no orders as to costs. We are informed, that the appellant has paid the duty during the pendency of these appeals. He will be entitled to a refund of the same in accordance with law. The Hon'ble Apex Court in the above decision clearly held that as per HSN Note (2) of Chapter 49 the security holograms the product in question where the primary use is of security and self-adhesive is only incidental and therefore rightly falls under chapter 49 as a product of 'printing industry'. By respectfully following both the Hon'ble Apex Court decisions (supra), (later decision is of appellant's own case) we hold that appellant's Polyester Hologram Excise Label produced out of stamping foil (transfer foil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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