2017 (4) TMI 686 - AT - Central Excise

Classification of goods - paper stickers and labels - classified under Chapter 48 of Central Excise Tariff or under Chapter 49 as product of printing industry? - penalty - Held that - the items in question are not simple paper or paper board labels with or without printing rather they are printed matter and primarily understood as printed labels for publicity - the printed matter (motifs pictures and sentences) provide the primary use/purpose of the goods in question. Further the printed adhesive labels are more appropriately and specifically can be categorized as printed material covered under Heading 4911. Penalty - Held that - the SCN has not brought out any specific role or malafide intention which will establish that the partner had knowledge or reasons to believe that the goods cleared by the respondent were liable for confiscation nor any goods have been proposed to be confiscated in the SCN - there is no justification to impose penalty on the partner of the respondent firm. Appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of paper stickers and labels under Central Excise Tariff
Imposition of penalty on the partner of the respondent firm

Classification Issue Analysis:
The case involved the correct classification of paper stickers and labels manufactured by the respondent. The Original Authority had classified the products under Chapter 48 of the Central Excise Tariff, while the Commissioner (Appeals) reclassified them under Chapter 49 as products of the printing industry. The Tribunal examined samples of the items and concluded that they are primarily understood as printed labels for publicity, falling under Chapter 49. It was noted that the printed matter on the items provided their primary use/purpose, making them more appropriately categorized as printed material covered under Heading 4911. The Tribunal disagreed with the Revenue's emphasis on Note 12 of Chapter 48, stating that trade advertising materials are correctly classifiable under Chapter 49 and chargeable to nil rate of duty.

Penalty Imposition Issue Analysis:
The Revenue contested the non-imposition of a penalty on the partner of the respondent firm. The impugned order had recorded reasons for not imposing the penalty, stating that the show cause notice did not establish any specific role or malafide intention on the partner's part. It was also noted that no goods were proposed to be confiscated in the notice. The Tribunal found no justification to interfere with this finding, concluding that there was no basis to impose a penalty on the partner under Rule 26 of the Central Excise Rules, 2002.

In the final decision, the Tribunal dismissed the Revenue's appeal, affirming the classification of the paper stickers and labels under Chapter 49 and upholding the non-imposition of a penalty on the partner of the respondent firm. The cross objection filed by the respondent was also disposed of accordingly.