2018 (1) TMI 1086 - AT - Central Excise

Classification of goods - Envelope/Outer/jacket/Sim sleeve or Pouch - Forms - Start-up Kit(SUK)/Kit - Carry bags - Pads - Score card - Hangers-Mill Board - Hangers Plastic - Printed Sheet - Printed matter - Scrap - Held that - as regards envelpos, It is clear that an envelope is a sub-species of a general category of containers. When there is a specific entry for paper envelopes, we find it is not tenable to classify it under the broad category of cartons, boxes, cases, bags and other packing materials of paper, paperboard, etc. We find that between these competing tariff entries, more appropriate will be under main heading 4817 which specifically covers envelops instead of a general heading of other packing containers - the classification, as claimed by the appellant, is more appropriate. Start-up kit contains outer envelope - CIF/CAF form - leaflet containing details of telecom service - Held that - these are printed material. As the envelopes, they will be classified 4817 10 00 or when the leaflets and printed materials are cleared, the same will be classifiable under other printed matter under heading 4911 as products of printing industry etc. Forms - Held that - It is clarified that forms of telecom companies, educational institutions, etc. are loose sheets cut-to-size and are not covered under heading 4820. Printing on these forms is not merely incidental. In view of explanatory note to heading 4901 and 4911, these forms are classifiable under heading 4911 - the impugned order classifying the forms under chapter 48 is not sustainable. Carry Bags - Held that - On perusal of the tariff classifications and the sample material, we are of the considered view that the printing made on such carry-bags is merely incidental and accordingly they cannot be called as product of printing industry under chapter 49 - more appropriate classification will be as bags made of paper under heading 4819. Score Cards - Held that - the product under consideration carries extensive printing with information and design and such printing cannot be considered as merely incidental to the primary use of the goods - the printing on the paper gives the essential character for product and accordingly is classified as a product of printing industry under chapter 49. Hangers Mill board/plastic - Held that - these are the printed loose sheets which are not bound in the form of books. These are mainly misc. items in the nature of advertisement or messages panels or posters under rightly classifiable under chapter 49 - there was no discussion or finding was recorded in the impugned order. Scrap of paper - denial of N/N. 2/2005 CE and 12/2012 CE on the ground that the claim that these scrap were generated in the course of printing educational text books was not supported by evidence - Held that - The emergence of such waste and scrap from duty paid paper and paper board is not as a result of manufacturing activity and no excise duty leviable on such item - in the present case, the appellants are not engaged in the manufacture of paper or paper board. They are essentially engaged in producing various printed products. The products which they produced were variously classified as discussed above. They do not manufacture any waste and scrap paper - there are no justification to demand central excise duty on the scrap paper arising during the process of production of various items. Appeal disposed off.

Issues Involved:
1. Classification of various products manufactured and cleared by the appellant.
2. Dutiability of scrap of paper.
3. Imposition of penalty on the appellant.

Detailed Analysis:

1. Classification of Various Products:

a. Envelope/Outer/Jacket/Sim Sleeve or Pouch/Start-up Kit (SUK)/Kit:
The appellant classified these under CETH 4817 10 00/4911 99 90, while the Revenue classified them under CETH 4819 50 90. The Tribunal held that these items are more appropriately classified under CETH 4817 10 00 as envelopes, as they are custom-made paper products used for specific purposes and not general packing containers.

b. Forms:
The appellant classified forms under CETH 4911 99 90, while the Revenue classified them under CETH 4820 10 90. The Tribunal, referencing a Board circular, concluded that these forms should be classified under CETH 4911, as the printing on these forms is not merely incidental.

c. Carry Bags:
The appellant classified carry bags under CETH 4911 10 90, while the Revenue classified them under CETH 4819 40 00. The Tribunal agreed with the Revenue, stating that the printing on these carry bags is incidental, making the more appropriate classification under CETH 4819.

d. Score Cards:
The appellant classified score cards under CETH 4909 00 90, while the Revenue classified them under CETH 4820 10 90. The Tribunal held that the extensive printing on these score cards gives them their essential character, thus classifying them under CETH 4909.

e. Hangers - Mill Board/Plastic:
The appellant classified hangers under CETH 4911 10 90, while the Revenue classified them under CETH 4823 70 30 or 3928 90 69. The Tribunal, referencing previous decisions, held that these hangers should be classified under CETH 4911 as the printing is not incidental but intended to advertise the products.

f. Printed Sheet/Printed Matter:
The Tribunal noted that no specific discussion or classification was recorded in the impugned order. They concluded that these printed loose sheets, mainly used for advertisements or messages, should be classified under CETH 4901.

2. Dutiability of Scrap of Paper:
The original authority denied exemption on scrap paper, claiming insufficient evidence that the scrap was generated from printing educational text books. The appellant argued that they are engaged in printing, not manufacturing paper, and referenced previous Tribunal decisions that waste and scrap from duty-paid paper do not attract excise duty. The Tribunal agreed with the appellant, finding no justification to demand excise duty on the scrap paper arising during the production process.

3. Imposition of Penalty:
Considering the nature of the dispute and the detailed analysis of classification issues, the Tribunal found no reason for imposing penalties on the appellants. The penalties were set aside, and the duty demand on carry bags was restricted to the normal period, as the issue involved was one of tariff interpretation.

Conclusion:
The Tribunal upheld the classification and duty demand for pads and carry bags. For other items, the Tribunal found the classifications and duty demands by the Revenue unsustainable. Penalties imposed on the appellants were set aside, and the appeals were disposed of accordingly.

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