2020 (4) TMI 632 - AAR - GST

Classification of goods - rate of GST - Technical Varnish and Medium used in printing industry - HELD THAT - Medium / Technical varnish is independent product and is being sold to the printing industries. In the production of printing ink, varnish can refer to either a combination of oils, resins, waxes, solvents and other materials used as an ink vehicle. The use of varnish tends to increase the gloss of a printed ink. Technical Varnish / Medium are liquid used in printing ink. As such, Technical Varnish / Medium and Printing ink are having separate identity and, hence, both are distinct products. The Explanatory Notes for Tariff Heading 3208 includes Varnishes but excludes Printing inks which though having a similar qualitative composition to paint, are not suitable for painting applications (heading 32.15). The Tariff Heading 3215 covers all Goods, including printing ink, writing or drawing ink and other inks, whether or not concentrated or solid, fountain pen ink, ball pen ink. As the Varnishes are different than Printing ink and are specifically covered under Tariff Heading 3208, the same do not fall under Tariff Heading 3215. Thus, HSN code of the product Technical Varnish / Medium is 3208.

Summary

Issues Involved:
1. Classification of "Technical Varnish" and "Medium" used in the printing industry.

Detailed Analysis:

1. Classification of "Technical Varnish" and "Medium":

The applicant sought to determine the correct HSN code for "Technical Varnish" and "Medium" used in the printing industry, arguing that these products should share the same HSN code as printing ink due to their exclusive use in printing.

Applicant's Interpretation:
- The applicant contended that since Technical Varnish and Medium are used solely for printing packaging material, they should be classified under the same HSN code as printing ink.
- They referenced a High Court decision emphasizing the natural meaning of terms in taxing statutes, asserting that varnish is a colorless liquid applied for protective or decorative purposes, which does not align with their product's use in printing.

Central Goods & Services Tax and Customs Commissionerate's Comments:
- The Commissionerate noted that the manufacturing activities for varnish, medium, and printing ink were ongoing and classified under different chapter headings during the Central Excise regime, each attracting a uniform duty rate of 12.5%.
- In the GST regime, different GST rates apply: Printing ink (HSN 32151190) at 12% and Varnish (HSN 32089011) at 28%.
- The manufacturing process of printing ink involves solvents, resins, and colors, with Technical Varnish being an intermediary product. The term "Medium" is used when Technical Varnish is supplied independently.
- They concluded that Technical Varnish/Medium and printing ink have separate identities and should not share the same HSN code.

Discussion & Findings:
- The Authority examined the submissions and found that Technical Varnish/Medium is an independent product sold to the printing industry, distinct from printing ink.
- They referenced the Customs Tariff Act and Harmonized System of Nomenclature (HSN) for guidance on classification.
- The Explanatory Notes for Tariff Heading 3208 include varnishes but exclude printing inks, indicating that varnishes are distinct from printing inks.
- The Authority observed that Technical Varnish/Medium, used as an intermediate product in printing ink production, should be classified under Tariff Heading 3208, not 3215.

Conclusion:
- The Authority ruled that the HSN code for "Technical Varnish"/"Medium" is 3208, distinguishing it from printing ink classified under HSN 3215.

Ruling:
- The correct HSN code for Technical Varnish and Medium used in the printing industry is 3208.