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2015 (10) TMI 42 - CESTAT CHENNAI

2015 (10) TMI 42 - CESTAT CHENNAI - 2015 (325) E.L.T. 408 (Tri. - Chennai) - Classification of goods - classification of hologram under Chapter 39 or Chapter 49 of CETA - 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 (2015 (4) TMI 35 .....

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n the main appellant as well as on the other appellants are also liable to be set 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 p .....

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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 order dt. 12.12.2014 by relying Tribunal s order in the appellant s own case i.e. Holostick India Ltd. Vs CCE Meerut-II - 2004 (167) ELT 301 (Tri.-Del.) classified the goods under 3919 of CET along with interest and confirmed the demand and also imp .....

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ined that they are exclusively supplying security holograms to the Government of Tamil Nadu to State Excise & Prohibition Wing. He drew our attention to the agreement dt. 6.9.2011 enclosed at page 145 of the paper book signed between Commissioner of Prohibition and Excise, Department of Prohibition and Excise, Govt of Tamil Nadu and appellant M/s.Holostik India Ltd. He drew our attention to the definition provided in the agreement clause (2) (v) and as per the definition, they have supplied .....

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r heading 3212, HMPS adhesive (CH 3506) Release paper (CH 4810). He further submits that before they started manufacturing of hologram, the design and art work is approved by the Tamil Nadu State Excise Department and the hologram grade includes logo of Tamil Nadu Government and signature of the State Excise Commissioner and high security features such as Multi-level animation effect, Four Channel image, Pearl Effect, Micro text, 3D True Object image etc. He further submits that product hologram .....

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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 thi .....

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bunal s order of Noida unit, they preferred appeal before the Hon ble Supreme Court and the Hon ble Supreme Court in their order reported in 2015 (318) ELT 529 (SC) set aside the Tribunal s order. and Hon ble Supreme Court has settled the issue finally and also set aside the Board s circular dt. 21.6.96. The Hon'ble Supreme Court categorically held that the primary use of the product (hologram) is security and not the quality of being adhesive and classified under 4901. 3.2 He drew attention .....

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e Court s decision in their own case, the product is classifiable under chapter 49 as a product of 'printing industry' chargeable to NIL rate of duty. He produced copy of invoice etc. Accordingly, he pleaded to set aside the demand and penalty. 4. On the other hand, Ld. A.R reiterated the findings of OIO. He submits that appellants were not registered with Central Excise nor they sought any clarification from the Central Excise and not filed any declarations or returns. 5. Heard both sid .....

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he tender as per clause(2) of the definition of the agreement, the "Polyester Hologram Excise Label" has been defined as under :- "Tamper Evident [Transfer Foil] on Metallized Polyester Film of Ultra Clear EMCL Grade (35-40) Micron thickness) with standard 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 app .....

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ity 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 flat shapes, of plastics whethe .....

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s stamping foil, with a supporting sheet of plastic. Unless the process to which the appellant subjects the material alters it to such extent that it is no longer classifiable in Heading 32.12, it will not lead to Heading 39.19. The only possible way that a stamping foil can become plastic, that we can conceive of is, to remove the metal of pigment which is deposited on the stamping foil. The fact that the stamping foil become self-adhesive will not by itself result in its ceasing to be stamping .....

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r not such finding in the tariff to dictate such view. Therefore until the product became transformed because of the printing of the material on it, it continued to be stamping foil and at no stage became converted into plastic of Heading 39.19. The Commissioner himself accepts that stamping foil was the starting point of the manufacture, and there is not slightest evidence to show use of other material. The test report that the Commissioner relies upon cannot be considered to have effect of say .....

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s 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 Noi .....

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ing 3920.36 as a flexible metallised film of plastic. The fact that it got laminated later would not take it out of this particular sub-Heading. The only question which arises is, after such classification, which is not disputed by the appellant, whether the relevant Tariff Entry would be 39.19 or 49.01. 9. 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 .....

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is that it refers to printed books, newspapers and pictures. Mr. K. Radhakrishnan sought to project before us that since printed books, newspapers and pictures are of general public utility in that they are all knowledge-based items, the idea of this Tariff Entry is to have knowledge-based products of the printing industry which alone would come under 49.01. 11. We are afraid we are not able to agree with the said submission. It is clear that printed books, newspapers and pictures, manuscripts, .....

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ications devoted essentially to advertising, trade catalogues of all kinds (including book or music publishers lists, and catalogues of works of art) and tourist propaganda. Newspapers, periodicals and journals, whether or not containing advertising material, are however excluded (Heading 49.01 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 .....

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ory 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 ejusde .....

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to hereinabove, which would refer to an industry which includes printing presses and nothing beyond, is also in our opinion not correct. A simple example will suffice. Newspapers, which are included within Entry 49.01 are obviously products of the newspaper industry and not of the printing industry as is contended 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, w .....

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generis rule, would obviously be outside this entry. The fact that Item No. 10 in the Explanatory Notes to HSN exists is also an important pointer to the construction of Entry 49.01 which we have just given above. 16. The real question, therefore, in this appeal is the application of Note No. 2 to Entry 49, 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 no .....

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uality 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 .....

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rnationally accepted nomenclature was taken into account to reduce disputes on account of tariff classification . Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN. This being the expressly acknowledged 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 expr .....

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atter , Item No. 10 which has already been referred to hereinabove states that self-adhesive printed stickers designed to be used, for example, for publicity, advertising or mere decoration, e.g. comic stickers and window stickers would be included. 19. It also goes on to say that goods of 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 ou .....

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alt with. He placed before us two circulars of the Department one dated 14-8-1995 and the other dated 21-6-1996. These circulars reads as follows :- Circular No. 142/53/95-CX, dated 14-8-1995 I am directed to say that certain doubts have been expressed regarding the correct classification 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. The production of photo-identity cards i .....

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ir 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 .....

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nctive character, process of 6. manufacture, relevant tariff headings, Section notes, Chapter notes and HSN notes, the Board is of the view that photo-identity cards and holograms merit classification under sub-heading 4901.90 of the Schedule to the Central Excise & Tariff Act, 1985. All pending disputes may be finalized in view of the above 7. guidelines. Field formations and trade may be informed accordingly. Circular No. 35/96-Cus., dated 21-6-1996 Subject : Classification of holograms un .....

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ess and end use, etc. The issue has been examined. It is observed that embossed 2. holograms presently are made by embossing plastic films with mechanical dies and are self-adhesive, however in some cases, the possibility such holograms being other than self-adhesive is also not ruled out. Self-adhesive plates, sheets, film, foil, tape, strip and 3. 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 .....

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olograms will now fall under Heading 39.19, whereas embossed 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 .....

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ure, 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 : - It should be noted that this heading includes articles printed 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 .....

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.19. In view of this, the decisions relied upon by the learned Advocate are not applicable to the facts of the present matters. In Holographic Security Marking Systems case the product involved was stamping foils falling under Heading 32.12 of the Tariff which was classified under Heading 49.01 after the hologram was printed thereon. The Tribunal observed that until the product became transformed because of the printing of the material on it, it continued to be stamping foil.. . In the present c .....

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result without telling us why. Secondly, we are again left guessing as to how the self-adhesive aspect of the product is more important than the security aspect 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 above and the judgment dated 19-12-2003 of the CESTAT is, therefore, set aside. 24. Only one further thing remains. Various arguments were made by both sides on the Rules of Int .....

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