ORDER
Gowri Shankar, Member (T)
1. The question for consideration in these two appeals is the classification of what the manufacturer described as “printed trade advertising material”. The appeal by the manufacturer M/s. Classic Stripes Pvt. Ltd., is against the demand for duty on these goods, on the ground that they are classifiable under Heading 94.05 of the Tariff, and not, as claimed by the manufacturer, under Heading 49.01. Penalties have also been imposed on the manufacturer and its director, Kishore Musale, who is the other appellant.
2. The goods in question consist of sheets of vinyl printed on them, generally, a picture, and a slogan. The goods are used to advertise material. We were shown an example of such a product, which is an advertisement for a brand of coffee containing a picture of a man and a woman drinking from cups, and a few words praising its taste. It was explained that such a sheet is placed in a frame made of metal on three sides, the sheet being placed in the open front. It is illuminated from behind by a light source in the frame. Such displays are found where the public congregate, as in bus stops and railway stations.
3. The Commissioner has described, in paragraph 28 of his order, the process of manufacture of this product. The customer supplies a floppy disc containing the relevant picture and text. The first appellant prints this material using a digital printer on electrostatic paper. The design is then transferred by thermo copying, resulting in the final product that we have to consider. The appellant manufacturer does nothing further with these sheets but clears them in that form to advertising company, and other persons, who may use for advertising, as we have described earlier.
4. Heading 49.01, which the appellant claims, is for printed pictures, newspapers pictures, and other products of the printing industry; manuscript, typescript and plans. The relevant portion of Heading 94.05 which we are concerned with is “Illuminated signs, illuminated name plates and the like, having a permanently fixed light source, and parts thereof not elsewhere specified or included.”
5. An argument of the manufacturer before the Commissioner was that parts of illuminated signs and name plates would fall for classification under Heading 94.05, only if they were not elsewhere specified or included. These sheets are included in Heading 49.01, being product of the printing industry, and therefore will not be classifiable under Heading 94.05.The Commissioner accepts the logic of this argument. He says this in paragraphs 26 and 27 of his order :
“26. There is no doubt that when any material is subjected to printing, then, in terms of the HSN and the case law on the subject, the factor that is determinative of its Tariff classification is whether the resultant item is a product of the printing industry, that is, whether the process of printing is primary to the use for which the resultant product is intended, in which case the goods will be classified under heading 49.01, or the printing is only incidental to its intended use, in which event the item will be classified under the appropriate Tariff heading, and not under heading 49.01. It is essential here to emphasise that this consideration comes into play only where the item is subjected to the process of “printing” as such.
27. The fundamental question that needs to be addressed in the case covered by these proceedings, therefore, is whether the process being undertaken by M/s. CSPL is one of printing or otherwise.”
6. He answers the question posed in paragraph 27 by saying that it not a process of printing. The reason that he advances is that the first appellant undertakes a series of individual processes starting by first printing art work and text on electrostatic paper, then transferring the image through the surface to another material by applying heat and pressure and thereafter spreading electrostatic paper from the material on which the image is finally reproduced.
7. The process of manufacture of this product, as we have noted, consists essentially in two stages. The first is to transfer the design from the floppy disc through digital printing to the paper. The second is transfer of the design on the paper of the final sheets. Each of these processes is specifically included in the definition of “printing” contained in Note 2 to Chapter 49. If that is the case, then obviously the combination of these processes will not cease to be printing. The answer posed to the question that the Commissioner frames in paragraph 27 is therefore that the goods are products of the printing industry. In that case, they would not be classifiable under heading 94.05, since there are included elsewhere in the tariff.
8. The departmental representative raises the contention that the goods are intended to be used solely in the illuminated signs, and therefore must necessarily be considered to be part of such signs. We do not propose to examine this question in detail. We note the objection of the counsel that the goods may not be considered to be parts of such signs. They are temporarily fixed in these signs to be replaced by another sheet. The signs are complete by themselves. Even if we assume the goods to be part of the illuminated sign, they would not be classifiable under the heading for parts of such signs for the reason that they are specified elsewhere i.e. as products of the printing industry.
9. In the light of our finding, we have not considered the arguments on limitation.
10. It will then follow that no duty was leviable, since the goods fall under heading 89.05 (sic) being to subject to nil rate of duty, or penalty imposable on either of the appellants.
11. Both appeals are allowed, and the impugned order set aside. Consequential relief, if permitted by law.