Rathika Pvt. Ltd. Vs. Commr. of C. Ex. and Cus. - Court Judgment

Excerpt:
1. the appellants were manufacturing wrappers labels etc. by printing customer's design logos etc. on the plastic, paper or combination of plastic & paper sheets as per customers specification. the classification of such product under heading 4901.90 was accepted by the department from 1986. on 9-8-88 the same classification was approved finally. however, the wording "subject to chemical test" was also recorded thereon. the samples were drawn from july 1989 to january 1990. the test report showed that the product were printed upon paper, plastic, plastic or combination of both. show cause notice dated 3-2-1994 were issued raising demand for the period 16-1-1989 to 28-2-1989 on the ground that the classification warranted was as per the base material that is either under chapter 49 or under chapter 39.extended period was invoked on the allegations of suppression etc.before the commissioner a number of judgements were cited basically claiming limitation. the commissioner however, confirmed the demand of rs. 10,50,1367- and also imposed a penalty of rs. 50,000/- on the assessees. he also confiscated the land, building etc. but permitted their redemption on payment of a fine. the appeal against this order was argued by shri j.c. patel. shri b.k. choubey appeared for the revenue.2. the limited issue for consideration here is whether the characteristic of the base product would have any bearing on the classification under heading 49. the commissioner made the following observation in his order :- "the classification of the product under chapter 4901.90 of the central excise tariff act, 1985 specifically indicated that this chapter is only for paper printed books, pictures and other products of printing industries.3. the tariff entry as it existed prior to 1-3-1987 did in fact limit the coverage thereof to products of the printing industry where the base was paper. on this date vide an amendment, the word "paper" "was deleted". this has come out in the tribunal judgment in the case of rexor india ltd. v. collector of central excise 1991 (52) e.l.t. 392 (tribunal) [para 14]. the period, which covers the present case being subsequent to this amendment, the commissioner's observation is without any legal basis and therefore the entire order made by him under this presumption becomes untenable.4. we also have seen the hsn entry on which this entry is based. the explanatory note thereto indicated that the coverage thereof is not limited to products based on paper.5. substantial case law has been produced by both sides. in view of the limited issue it may not be necessary to go into the judgements. the fact that similar products would be covered under chapter 49 comes out in the tribunal judgment reported in 1999 (108) e.l.t. 680 (tribunal) in the case of fitrite packers v. collector of central excise, bombay as also in the case reported in 1988 (98) e.l.t. 365 (tribunal), collector of central excise v. adhunik plastic industries.metagraphs pvt. ltd. v.collector of central excise, bombay 1996 (88) e.l.t. 630 (s.c.) held printed aluminium labels as finally under chapter 49.7. in the result, we find that the commissioner's order does not sustain. this appeal is allowed with consequential relief.

Judgment:
1. The appellants were manufacturing wrappers labels etc. by printing customer's design logos etc. on the plastic, paper or combination of Plastic & Paper Sheets as per customers specification. The classification of such product under Heading 4901.90 was accepted by the Department from 1986. On 9-8-88 the same classification was approved finally. However, the wording "subject to Chemical Test" was also recorded thereon. The samples were drawn from July 1989 to January 1990. The test report showed that the product were printed upon paper, plastic, plastic or combination of both. Show cause notice dated 3-2-1994 were issued raising demand for the period 16-1-1989 to 28-2-1989 on the ground that the classification warranted was as per the base material that is either under Chapter 49 or under Chapter 39.

Extended period was invoked on the allegations of suppression etc.

Before the Commissioner a number of judgements were cited basically claiming limitation. The Commissioner however, confirmed the demand of Rs. 10,50,1367- and also imposed a penalty of Rs. 50,000/- on the assessees. He also confiscated the land, building etc. but permitted their redemption on payment of a fine. The appeal against this order was argued by Shri J.C. Patel. Shri B.K. Choubey appeared for the Revenue.

2. The limited issue for consideration here is whether the characteristic of the base product would have any bearing on the classification under Heading 49. The Commissioner made the following observation in his order :- "The classification of the product under Chapter 4901.90 of the Central Excise Tariff Act, 1985 specifically indicated that this Chapter is only for paper printed books, pictures and other products of printing industries.

3. The Tariff entry as it existed prior to 1-3-1987 did in fact limit the coverage thereof to products of the printing industry where the base was paper. On this date vide an amendment, the word "paper" "was deleted". This has come out in the Tribunal judgment in the case of Rexor India Ltd. v. Collector of Central Excise 1991 (52) E.L.T. 392 (Tribunal) [para 14]. The period, which covers the present case being subsequent to this amendment, the Commissioner's observation is without any legal basis and therefore the entire order made by him under this presumption becomes untenable.

4. We also have seen the HSN entry on which this entry is based. The Explanatory Note thereto indicated that the coverage thereof is not limited to products based on paper.

5. Substantial case law has been produced by both sides. In view of the limited issue it may not be necessary to go into the judgements. The fact that similar products would be covered under Chapter 49 comes out in the Tribunal judgment reported in 1999 (108) E.L.T. 680 (Tribunal) in the case of Fitrite Packers v. Collector of Central Excise, Bombay as also in the case reported in 1988 (98) E.L.T. 365 (Tribunal), Collector of Central Excise v. Adhunik Plastic Industries.Metagraphs Pvt. Ltd. v.Collector of Central Excise, Bombay 1996 (88) E.L.T. 630 (S.C.) held printed aluminium labels as finally under Chapter 49.

7. In the result, we find that the Commissioner's order does not sustain. This appeal is allowed with consequential relief.