N.K. Bajpai, Member (T)
1. Only one appeal has been filed by the Department, although the impugned order disposes of two appeals by a common order. The appeal before us is, therefore, confined to Order No. GII/78/87 (issued from F. No. CL/PL/BDMC/RIII/86/7094 dated 23-9-1987) passed by the Assistant Collector of Central Excise, Division III, Bombay-I, Collectorate.
2. The question for consideration in this appeal is the classification of account books and other registers, canteen coupons/booklets, cyclostyled circulars and letters on duplicating machines. The respondents had filed a Classificatin List No. ST-1/86-87 effective from 1-3-1986 for these products, claiming assessment under Heading 4901.90 as products of printing industry etc., attracting nil duty. The Assistant Collector issued a notice asking them to show cause why these products should not be classified under sub-heading 4818.90. The respondents claimed that their products were classifiable under Tariff Item 68 before the introduction of the new Tariff. They further claimed that all their products are printed with motifs, subjects and characters and could not, therefore, be classified under Chapter 48. They had at that stage invited attention to Chapter Note No. 8 of Chapter 48, which is as under :
“8. Except for the articles of Heading No. 48.14 or paper labels of Heading No. 48.18, paper, paperboard, cellulose wadding and articles thereof, printed with motifs, characters or pictorial representation, which are not merely incidental to the primary use of the articles fall in Chapter 49.”
3. The Assistant Collector took the view that the products were meant for maintaining day-to-day accounts and would fall in the category of exercise books/stationery. The printing of the name of the Company on the top was incidental to their primary use. Products were essentially meant for completion in manuscript or typescript and were therefore, excluded from Chapter 49 by virtue of Note 8 to Chapter 48.
4. When the matter went up in appeal, Collector (Appeals) expressed the view that Heading 48.18 covers toilet paper and similar paper and the products in question being printed, they would correctly be classifiable under Chapter 49 as products of the printing industry in view of the Note 2 to that Chapter.
5. An appeal has been filed against this order by the Department requesting restoration of the Assistant Collector’s order for classification under Chapter Heading 4818. The appellants are manufacturers of textiles and textile articles. They also have a small printing press in their factory for their own use where they print the articles, the classification of which is in dispute. This printing is done for instant use in their mills. It is stated in the grounds of appeal that the goods in question are not products of the printing industry under Chapter 49 which covers printed books, newspapers, pictures etc., whereas the products in dispute are used for maintaining day-to-day accounts of the appellants and should therefore, be classified under Chapter Heading 48.18. The printing of the name of the respondents’ Company on the top of the products, is incidental to their primary use and the products are essentially for completion in manuscript or typescript. Reliance has, for this purpose, been placed on Note 8 to Chapter 48.
6. The other ground in the appeal is that the exemption from duty to registers, account books, note-books etc., became applicable only by issue of Notification No. 24/87 dated 1-3-1987, which itself shows that these articles were chargeable to duty before 1-3-1987. An inference has been drawn from this that the products in question were correctly classifiable under sub-heading 4818.90. It is stated that since the products were manufactured prior to 1-3-1987, they attracted duty @ 12% ad valorem.
7. The learned Departmental Representative, Shri L. Narasimhamurthy, while reiterating the grounds of appeal, referred to Explanatory Notes of HSN to Item No. 48.20 (appearing on page 686) which covers registers, account books, etc., and stated that the Explanatory Notes should be considered to be of persuasive value even though they relate to the Customs Tariff.
8. Shri Willingdon, the learned Counsel for the respondents, stated that the Department’s claim to put the products under consideration under Chapter 48.20 appeared to him to be correct. He also submitted that registers, account books, receipt books etc., were exempted from duty under Notification No. 43/86 dated 10-2-1986.
9. Shri Willingdon also invited attention to Notification No. 28/89(NT)-C.E., dated 12-6-1989 issued under Section 11C of the Central Excises & Salt Act, 1944 granting exemption from duty on registers, account books, note-books etc., falling under Chapter 48 during the period beginning 28th February, 1986 and ending on 28th February, 1987 and stated that this notification had to be issued because of a practice that was generally prevalent of not levying duty on these articles during the aforesaid period. His claim was that once it is accepted that the products in question fall under Chapter 48.20 they are exempt under Notification No. 43/86 dated 10-2-1986.
10. We have carefully considered the appeal and the submissions made by both the sides. It appears that by issuing a Notification under Section 11C, the Government had recognised the existence of a practice regarding non-levy of duty on registers, account books etc., falling under Chapter 48 during the period 28th February, 1986 to 28th February, 1987. Thereafter, by issue of Notification No. 24/87 dated 1-3-1987, the aforesaid articles, which did not initially figure in Notification No. 43/86, were added to it and the exemption to these articles became applicable from 1-3-1987. The aforesaid notifications themselves recognise the classification of these items under Chapter 48 and exempt them from duty with effect from 28th February, 1986 by issue of a notification under Section 11C and by amendment of Notification No. 43/86 with effect from 1-3-1987.
11. The position becomes clear by a perusal of Notification No. 28/89 (NT)-C.E., dated 12-6-1989 which appears at page No. 6.22 of R.K. Jain’s Central Excise Manual (10th Edition) and is as under :-
“EXEMPTION TO SPECIFIED GOODS FALLING WITHIN CHAPTER 48 DURING 28-2-1986 TO 28-2-1987 :-
WHEREAS the Central Government is satisfied that according to a practice that was generally prevalent regarding levy of duty of excise (including non-levy thereof) under Section 3 of the Central Excises and Salt Act, 1944 (1 of 1944), the duty of excise on registers, account books, note-books, order books, receipt books, letter pads, memorandum pads, diaries and similar articles, exercise books, blotting pads, binders (loose-leaf or other), folders, file covers, manifold business forms, interleaved carbonates and other articles of stationery of paper or paperboards; albums for samples or for collections and book covers of paper or paperboard, (hereafter referred to as such stationery items), falling within Chapter 48 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), was not being levied under the said Section 3 during the period commencing on the 28th day of February, 1986 and ending with 28th day of February, 1987.
NOW, THEREFORE, in exercise of the powers conferred by Section 11C of the said Central Excises and Salt Act, the Central Government hereby directs that the whole of the duty of excise payable under the said Act, on such stationery items but for the said practice, shall not be required to be paid in respect of such stationery items on which the said duty of excise was not levied during the period aforesaid in accordance with the said practices.”
12. It appears that Notification No. 43/86-C.E., dated 10-2-1986 granted unconditional exemption only to exercise books. Subsequently, this notification was amended by Notification No. 24/87-C.E., dated 1-3-1987 by replacing Sl. No. 6 of the Notification which related to exercise books by substituting the entry which is exactly the same as in Notification No. 28/89 (NT)-C.E., dated 12-6-1989 issued under Section 11C. It will thus appear that after products like registers, account books etc., were exempt from duty with effect from 1-3-1987, it came to light that there was a general practice not to levy duty on these articles in the past and therefore, a Notification had to be issued under Section 11C to regularise the practice and treat the goods as exempt from duty.
13. It is clear from the above that registers, account books etc., were regarded by the department itself as classifiable under Chapter 48, and they have later been specifically incorporated under Heading 48.20 in the Tariff. We also accept this clarification. The appeal is disposed of accordingly.