2015 (8) TMI 100 - AT - Central Excise

Classification of goods - Whether product PVC films printed with logos is classifiable under Chapter 490190 or 3920.39 - Held that - Hon ble Supreme Court in the recent judgment in the case of Holostick India Ltd. Vs. Union of India 2015 (4) TMI 357 - SUPREME COURT settled the issue of what construes the products of printing industry classifiable under Chapter 4901 of CETA, 1985, wherein it was observed that It is important to remember therefore, that the 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 (3) TMI 93 - SUPREME COURT OF INDIA Decision relates to product hologram and the Hon ble Supreme Court held that it is a product of printing industry classifiable under Chapter 49. The only difference in the present case is the goods are PVC film printed with logos. - By respectfully following the above decision of the Hon ble Supreme Court and the Tribunal s decision in Srikumar Agencies (supra), we hold that the product printed PVC film is classifiable under Chapter 490190 chargeable to nil rate of duty. Accordingly, the impugned order is set aside - Decided in favour of assessee.

Summary

Issues Involved:
1. Classification of printed PVC films.
2. Applicability of Section Note 2 of Section VII of the Central Excise Tariff Act.
3. Determination of whether the product is a product of the printing industry or packaging industry.
4. Consideration of relevant case laws and Supreme Court decisions.

Issue-wise Detailed Analysis:

1. Classification of Printed PVC Films:
The core issue in this case is the classification of printed PVC films. The appellants classified the printed PVC films under Heading 4901.90 as products of the printing industry, whereas the Department classified them under Heading 3920.39. The adjudicating authority initially accepted the classification under Heading 4901.90, but the Commissioner (Appeals) later held that the goods should be classified under Heading 3920.39, leading to the present appeal.

2. Applicability of Section Note 2 of Section VII of the Central Excise Tariff Act:
The Tribunal had previously remanded the case to the adjudicating authority to consider the Hon'ble Supreme Court's decision in Metagraphs Pvt. Ltd. Vs. Collector of Central Excise and Section Note 2 of Section VII, which excludes products of the printing industry from Chapter 39. The adjudicating authority, in its denovo order, accepted the classification under Heading 4901.90, but the Commissioner (Appeals) reversed this decision.

3. Determination of Whether the Product is a Product of the Printing Industry or Packaging Industry:
The Tribunal examined the nature and scope of the printing on the PVC films. The Tribunal referenced the Hon'ble Supreme Court's decision in the case of CCE Vs. Srikumar Agencies, which emphasized examining the facts of each case individually. The Tribunal noted that the printed PVC films are used as wrappers for sewing threads, and the printing of logos and designs is essential to the product's use, thus classifying it under the printing industry.

4. Consideration of Relevant Case Laws and Supreme Court Decisions:
The Tribunal considered several case laws, including:
- Union of India Vs. Rollatainers Ltd.: The Supreme Court held that printed cartons are products of the packaging industry, not the printing industry.
- Holostick India Ltd. Vs. CCE, Noida: The Supreme Court clarified that the primary use of the product determines its classification. If printing is essential to the product's primary use, it falls under Chapter 49.

The Tribunal found that the printed PVC films, similar to the holograms in Holostick India Ltd., are primarily used for their printed logos and designs, making them products of the printing industry.

Conclusion:
The Tribunal concluded that the printed PVC films are classifiable under Heading 4901.90 as products of the printing industry, based on the nature and scope of the printing, and the relevant case laws. The impugned order was set aside, and the appeal was allowed, classifying the printed PVC films under Chapter 490190 with a nil rate of duty.