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TMI Blog2015 (4) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... t the CESTAT is not correct in the finding reached and the judgment dated 19.12.2003 of the CESTAT is, therefore, set aside. Only one further thing remains. Various arguments were made by both sides on the Rules of Interpretation of the First Schedule to the Central Excise Tariff Act, 1985. - it is not necessary to go into any of these Rules for the purposes of this judgment inasmuch as we have found as a fact, in accordance with Note 2 to entry 49, that the security hologram part of the product in question is primary and the self adhesive part only incidental insofar as the user of the said goods is concerned - Since appellant has paid the duty during the pendency of these appeals. He will be entitled to a refund of the same in accordance with law. - Decided in favour of assessee. - Civil Appeal Nos. 2729-2730 of 2004 - - - Dated:- 30-3-2015 - A. K. Sikri And R. F. Nariman,JJ. JUDGMENT R. F. Nariman, J. The present case concerns itself with a classification issue. The facts necessary to appreciate the controversy are as follows: - The appellant manufactures security holograms. At the very beginning of the manufacturing process, they use coated metallised film ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.01 Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans 4901.10 - Transfers (decalcomanias) 4901.20 - Maps and hydrographic or similar charts of all kinds including atlases, wall maps, topographical plans and globes, printed 4901.90 - Other Shri V. Lakshmikumaran, learned counsel appearing for the appellant, has raised a number of arguments before us. According to him, a reference to the Rules for Interpretation of the First Schedule to Central Excise Tariff Act, 1985, when properly read, would necessarily yield the result that the said goods would fall only under Entry 49.01. In the course of the argument, he also referred to the Harmonised System of Nomenclature (called 'HSN') Explanatory Notes to which we shall advert a little later. He also cited before us a decision of the Tribunal in 'Holographic Security Marking Systems Pvt. Ltd. v. C.C.E., Mumbai [2003 (151) E.L.T. 470], an appeal from which was dismissed by the Supreme Court In addition, he cited a judgment of this Court reported in 'Collector of Central Excise, Shillong v. Wood Craft Products Ltd.' [1995 (77) E.L.T. 23 (S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the said submission. It is clear that printed books, newspapers and pictures, manuscripts, typescripts, maps and plans of all kinds, are included within this entry whether they further the public interest in knowledge being disseminated or not. In fact, it becomes clear from a reading of the Explanatory Notes to HSN that this Heading would include a large number of obvious products which are set out in this Explanatory Note as follows: - The heading includes the following in addition to the more obvious products: (1) Advertising matter (including posters), year books and similar publications devoted essentially to advertising, trade catalogues of all kinds (including book or music publishers' lists, and catalogues of works of art) and tourist propaganda. Newspapers, periodicals and journals, whether or not containing advertising material, are however excluded (heading 49.01 or 49.02, as appropriate). (2) Brochures containing the programme of a circus, sporting event, opera, play or similar presentation. (3) Printed calendar backs with or without illustrations. (4) Schematic maps. (5) Anatomical, botanical, etc., instructional charts and diagrams. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other products if one were to apply the ejusdem generis rule, would obviously be outside this entry. The fact that Item No. 10 in the Explanatory Notes to HSN exists is also an important pointer to the construction of entry 49.01 which we have just given above. The real question, therefore, in this appeal is the application of Note No. 2 to entry 49, which reads as follows: - Except for the goods of Heading No. 39.18 or 39.19, plastics, rubber and articles thereof, printed with motifs, characters of pictorial representations, which are not merely incidental to the primary use of the goods, fall in Chapter 49. It is clear therefore, that the question resolves itself into whether printing is only incidental to the primary use of the goods or is something more than something merely incidental. We have already referred to the process hereinabove and the final product which emerges is a product which is used for security purposes. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the primary and incidental test outlined in Note 2 above. Obviously, a comic sticker would have as its primary use the comic part , the adhesive or sticker part being only incidental to its primary use. Similarly, in the facts of the present case, a security hologram sticker would have as its primary part, the security hologram, the sticker part or adhesive part only being incidental to the primary use of the said goods. One other submission of Shri Radhakrishnan needs to be dealt with. He placed before us two circulars of the Department one dated 14.08.1995 and the other dated 21.06.1996. These circulars reads as follows: - Circular No. 142/53/95-CX, dated 14.08.1995 I am directed to say that certain doubts have been expressed regarding the correct classification of Photo Identity Cards and Holograms - whether these should be classified under Chapter 39 as articles of plastics or under Chapter 49 as products of printing industry. 2. The production of photo-identity cards involves videography of the person, computerised capture of the videographed image, merging of the image with the date of the person already entered in the computer and the computerised printi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that embossed holograms presently are made by embossing plastic films with mechanical dies and are self adhesive, however in some cases, the possibility such holograms being other than self adhesive is also not ruled out. 3. Self-adhesive plates, sheets, film, foil, tape, strip and other flat shapes, of plastic are classifiable under Heading 39.19 of the Customs Tariff. As per Note 2 to Section VII, read with Explanatory Notes to Heading 39.19, this heading also includes articles printed with motifs, characters or pictorial representations, which are not merely incidental to the primary use of the goods. In view of this, self-adhesive embossed holograms will fall under Heading 3919.90 of the Customs Tariff. However embossed plastic holograms, which are not selfadhesive, will fall under Heading 49.11, in view of Note 2 to Chapter 49. It will be seen that under Para 3 of the second circular self adhesive embossed holograms will now fall under Heading 39.19, whereas embossed plastic holograms which are not self adhesive alone will fall under entry 49. This is said to be in view of Note 2 to Chapter 49. We are afraid that the second circular which has been quoted hereinabove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the classification of the impugned product under Heading 39.19 of the Tariff. It is clear that the aforesaid reasoning is flawed in more than one respect. After setting out the Explanatory Notes to HSN and the conclusion of such Note that products such as comic stickers would not fall within entry 39, the CESTAT arrives at the exactly opposite result without telling us why. Secondly, we are again left guessing as to how the self adhesive aspect of the product is more important than the security aspect of the said product. Equally, there is no reasoning so far as this aspect is concerned. We therefore find that the CESTAT is not correct in the finding reached above and the judgment dated 19.12.2003 of the CESTAT is, therefore, set aside. Only one further thing remains. Various arguments were made by both sides on the Rules of Interpretation of the First Schedule to the Central Excise Tariff Act, 1985. Shri Radhakrishnan referred to and relied upon Rule 1 and Shri Lakshmikumaran referred to and relied upon Rule 3. We do not think it necessary to go into any of these Rules for the purposes of this judgment inasmuch as we have found as a fact, in accordance with Note 2 to entry ..... X X X X Extracts X X X X X X X X Extracts X X X X
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