2015 (7) TMI 790 - SC - Customs

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 operate with stencils, and photocopying etc. are specifically excluded. What follows from the above is that if there is a small printing machine like letterpress, lithographic or offset printing machine, which does the printing work and also, at the same time, performs duplicating work with stencils or otherwise and even photocopying work, it would still be treated as a printing machine and not duplicating machine. Simplest form of printing presses consists of a fixed slab (or bed) to hold the forme, clich 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 would be pertinent. 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 machine and specific form of printing machine, namely, screen printing machine. We may point out at this juncture that the endeavour of the appellant is to establish that Risograph machine is nothing but Screen Printing Machine. Risograph printing 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 film coating on the cellulose fibre of Risograph master. Thus, the principles adopted for printing in the Risograph is akin to that found in screen printing. - It is difficult to equate Risograph machine with duplicating machine. Duplicating, as opposed to photocopying, requires the preparation of a master sheet which makes duplicates on a machine. Risograph machine is in the nature of a screen printing machine and not duplicating machine. It would, therefore, be covered under sub-heading 84.43 and not 84.72. - Decided in favour of assessee.

Summary

Issues Involved:

1. Classification of Risograph machines under the Customs Tariff Act, 1975.
2. Whether Risograph machines are office machines with duplicating functions or printing machines.
3. Interpretation of relevant sub-headings 8443.50 and 8472.90 under Chapter 84 of the Customs Tariff Act.
4. Consideration of HSN Explanatory Notes for classification.
5. Analysis of technical specifications and functioning of Risograph machines.
6. Validity of the Tribunal's reliance on the Pioneer International case.

Issue-wise Detailed Analysis:

1. Classification of Risograph Machines:
The primary issue is the classification of Risograph machines imported by the appellant, M/s. HCL Limited, under the Customs Tariff Act, 1975. The contention revolves around whether these machines should be classified under sub-heading 8443.50 as printing machinery or under sub-heading 8472.90 as office machines with duplicating functions.

2. Office Machines vs. Printing Machines:
The appellant argued that the Risograph machine is a printing machine and should be classified under sub-heading 8443.50. The respondent-Revenue contended that it is a duplicating machine, falling under sub-heading 8472.90. The main chapter, Chapter 84, deals with 'Machinery and mechanical appliances', with sub-heading 84.43 covering 'Printing machinery; machines for uses ancillary to printing' and sub-heading 84.72 dealing with 'Other office machines'.

3. Interpretation of Relevant Sub-headings:
Sub-heading 84.43 includes various types of printing machinery, while sub-heading 84.72 includes duplicating machines and other office machines. The appellant emphasized that the Risograph machine should be classified under sub-heading 8443.50 due to its printing capabilities, supported by opinions from customers and the Japanese Customs' classification. The Revenue maintained that it falls under the residual category of sub-heading 8472.90.

4. Consideration of HSN Explanatory Notes:
The HSN Explanatory Notes to Chapter Heading 84.72 exclude small printing machines, even if intended for office use, and duplicators using embossed plastic or metal sheets from this heading. Conversely, the Notes to Chapter Heading 84.43 include special printing machines, such as small office printing machines that operate by means of printing type or the offset process, even if they resemble duplicating machines.

5. Analysis of Technical Specifications and Functioning:
The Risograph machine's process involves an automatic digital scanner, a thermal head, and a printing station. The machine creates a master using a heat-sensitive plastic film, which is then used for printing. This process is akin to screen printing, where ink is pressed through a stencil onto the paper. The Tribunal's reliance on the Pioneer International case was challenged, as the Risograph's functioning aligns more with printing technology than duplicating.

6. Validity of Tribunal's Reliance on Pioneer International:
The Tribunal had previously classified Risograph machines as duplicating machines based on the Pioneer International case. However, this judgment was found to be flawed as it did not consider the detailed technical specifications and the HSN Explanatory Notes, which support the classification of Risograph machines as printing machines.

Conclusion:
The Supreme Court concluded that the Risograph machine is more akin to a screen printing machine and should be classified under sub-heading 84.43, not 84.72. The appeal was allowed, and the orders of the Tribunal and lower authorities were set aside. The judgment emphasized the importance of understanding the technical aspects and proper classification guidelines provided by the HSN Explanatory Notes.