caselaws
Supreme Court of India
M/S. Hcl Ltd vs Commissioner Of Customs, New … on 21 July, 2015Bench: A.K. Sikri, Rohinton Fali Nariman
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4513 OF 2005
|M/S. HCL LIMITED |…..APPELLANT(S) |
|VERSUS | |
|COMMISSIONER OF CUSTOMS | |
|NEW DELHI |…..RESPONDENT(S) |
J U D G M E N T
A.K. SIKRI, J.
Classification of the machines known as Risograph, which
are imported by the appellant M/s. HCL Limited, is the issue involved in
the present appeal. The question is as to whether Risograph is an office
machine having duplicating function and thus to be classified under sub-
heading 8472.90 of the Customs Tariff Act, 1975 or is it a printing machine
to fall under sub-heading 8443.50. The main chapter under which both the
sub-headings fall is Chapter 84 which deals with ‘Machinery and mechanical
appliances’. Sub-heading 84.43 thereof relates to ‘Printing machinery;
machines for uses ancillary to printing’ and various entries under this sub-
heading are as follows:
|84.43 | |Printing machinery; machines for uses | |
| | |ancillary to printing | |
| | |- Offset printing machinery: | |
|8443.11 |- |Reel fed |65% |
|8443.12 |- |Sheet fed, office type (sheet size not |65% |
| | |exceeding 22 x 36 cm) | |
|8443.19 |- |Other |65% |
| | |- Letterpress printing machinery, | |
|8443.21 |- |Reel fed |65% |
|8443.29 |- |Other |65% |
|8443.30 |- |Flexographic printing machinery |65% |
|8443.40 |- |Gravure printing machinery |65% |
|8443.50 |- |Other printing machinery |65% |
|8443.60 |- |Machines for uses ancillary to printing |65% |
|8443.90 |- |Parts |65% |
Sub-heading 84.72, on the other hand, deals with ‘Other office machines’
and includes duplicating machines. Various entries under this sub-heading
read as under:
|84.72 | |Other office machines (for example, | |
| | |hectograph or stencil duplicating | |
| | |machines, addressing machines, automatic| |
| | |banknote dispensers, coin-sorting | |
| | |machines, coin-counting or wrapping | |
| | |machines, pencil-sharpening machines, | |
| | |perforating or stapling machines) | |
| | | | |
|8472.10 |- |Duplicating machines |65% |
|8472.20 |- |Addressing machines and address plate |65% |
| | |embossing machines | |
|8472.30 |- |Machines for sorting or folding mail or |65% |
| | |for inserting mail in envelopes or | |
| | |bands, machines for opening, closing or | |
| | |sealing mail and machines for affixing | |
| | |or cancelling postage stamps | |
|8472.90 |- |Other |65% |
As per the appellant-assessee, Risograph machine is a printing machine
which should be covered by sub-heading 8443.50, namely, ‘other printing
machinery’. On the other hand, the respondent-Revenue has taken the
position that it is a specie of duplicating machine and falls under the sub-
heading 8472.90, viz. ‘Other’. Though under both the sub-headings the
import duty is 65%, however, insofar as printing machinery is concerned, by
virtue of Notification No. 59/94-CUS dated March 01, 1994, which includes
Chapter Heading 84.43, the duty is to be calculated at the rate of 25% ad
valorem. That is the precise reason behind the present lis between the
parties
From the aforesaid, one thing is clear. Risograph machine does not fit in
any of the specific descriptions contained either in sub-heading 84.43 or
84.72. Both the parties are trying to fit it in the respective residual
clauses viz. “Other printing machine” or “Other” respectively. Therefore,
what needs to be examined is as to whether the Risograph machine would
belong to the family of ‘printing machinery’ or it belongs to the clan of
‘duplicating machine’. Right from the Order-in-Original passed by the
Adjudicating Authority, Commissioner of Customs (Appeals) to the Customs
Excise and Service Tax Appellate Tribunal (CESTAT), the view taken is in
favour of the Revenue thereby holding the Risograph machine to be in the
nature of a duplicating machine, which does not qualify to be a printing
machine at all. The Tribunal, while holding that it is to be classified as
an office machine having duplicating function, has relied upon its earlier
judgment in the case of Pioneer International v. Collector of Customs,
Kandla[1]. The attempt on the part of the appellant to demonstrate that it
does printing job and is improperly referred to as a duplicating machine
has not cut any ice with the Tribunal which has chosen to follow its own
decision in the case of Pioneer International. In a case like this, the
first query of the Court was as to whether in the case of Pioneer
International any appeal was preferred. Answer given was in the negative,
which means that the correctness of the order of the Tribunal in Pioneer
International was not tested in this Court.
Questioning the wisdom of the authorities below with the contention that
they have arrived at incorrect conclusion in this behalf, it was argued by
the learned counsel for the appellant that a detailed reply dated February
01, 1995 was filed to the show-cause notice dated January 13, 1995 issued
by the Assistant Collector of Customs contending that the machine is
classifiable under sub-heading 8443.50. It was pointed out that in support
of the aforesaid plea taken by the appellant it had enclosed opinions from
various customers who were using the Risograph machine as a printing
machine and also the assessment by the Japanese Customs specifically
classifying the machine under sub-heading 8443.50. The appellant
categorically brought to the notice of the Assistant Commissioner the
following facts for the purpose of classification:
(a) Riso Kagaku Corp, the manufacturers of Risograph, were themselves
clearing the machine under sub-heading 8443.50 of the classification
without raising any objection;
(b) test of trade parlance was in favour of the appellant wherein
Risograph is commercially known and understood as a digital printing
machine in India as well as abroad, as evident from the declaration of the
manufacturers;
(c) the mere fact that Risograph starts with an original cannot be a
ground to say that it is not a printing machine when all other printing
machines require an original in some form or the other, be it in the form
of plates or digital images;
(d) HSN Explanatory Notes clearly support the classification of the
machine under Chapter Heading 84.43 wherein it specifically provides that
in addition to normal type of printing machine Chapter Heading 84.43 also
cover special machines such as small office printing machines which operate
by means of printing type or by offset process, and which are improperly
referred to as ‘duplicating machines’ because their operating principles
and appearances are similar to those of duplicating machines, no doubt
referring to machines like Risograph;
(e) even if principles of duplication are involved, Chapter Heading 84.72
would not be attracted because the HSN Explanatory Notes clearly provide
that the said heading specifically excludes small printing machines even if
intended for office use; and
(f) Risograph machine functions in the principles of printing machines as
it uses ink drums and squeegee rollers therein to print images similar to
the process of screen printing.
Besides this, the appellant explained in detail the
technical specifications of a Risograph machine and its functioning and
also explained that the principle of Risograph is akin to screen printing
for which the appellant submitted technical literature. Learned counsel
for the appellant submitted that the aforesaid aspects are totally ignored
by the authorities below and insofar as the Tribunal is concerned, it has
conveniently omitted to look into these aspects by blindly following its
decision in Pioneer International and has erred in the following manner
thereby:
(a) The opinion rendered by the DGTD/Deputy Chief Controller of Imports
and Exports is in favour that the Risograph is a printing machine and such
technical opinion has not been overcome by the impugned order. There is no
rebuttal to the opinions obtained from DGTD etc. by the Revenue. A number
of other buyers have certified that the machine is a printing machine and
not rebutted by the Revenue.
(b) The Japanese Customs have classified the Risograph only under Chapter
Heading 84.43 and this position is not disputed even by the Indian Customs.
(c) The scanner has been extensively used in the printing industry to
transfer the image by utilising a thermal head to make masters used for
printing, and hence the classification of the Risograph can only be under
that Chapter Heading.
(d) Risograph does not cut stencils but makes masters of the image to be
printed.
(e) Chapter Heading 84.72 is a residuary entry and the HSN specifically
rules out classification of the Risograph under that heading.
(f) The bare literature of the Risograph Machine clearly shows that the
machine is nothing but a printing machine.
(g) The Tribunal in para of the order in Pioneer International has held
that the Risograph is used to reproduce copies and does not have any
mechanism to print any original matter. This is totally incorrect inasmuch
as once the master is made then from the master, by the principle principle
using ink, which flows through the pores of the paper/plastic master, fresh
prints are taken out. There is no copying principle as in a photocopying
machine.
(h) Operation Guide itself shows how the master is first made and
thereafter prints are taken out and hence the Conclusion of the Tribunal in
para 9 in Pioneer International is totally incorrect and perverse.
(i) In the case of offset printing, as per the Tribunal, the impression
is taken on a rubber roller and then on to the paper. In other words, the
master is made which is transferred to the rubber rollers, which thereafter
prints on the blank paper. In the present case, the Risograph makes the
master and from the master prints are obtained and hence it is nothing but
a printing process. The process of making master is akin to the printing
plates made in the printing industry and there is no escape from this
conclusion. Moreover, the inked prints obtained as per the technical
literature of the Risograph is the same as what is recorded in para 10 of
the order in Pioneer International, that is ‘offset printing is a process
in which the inked impression is made on to the paper’. In the case of the
Risograph machine, ink goes through the pores of the long fibred paper used
in the paper plastic master to make the prints.
(j) The master made by the Risograph is not like the stencil which is a
simple process in stencil duplicating machine, but the master is by the
printing technology principles for making the master. Such stencil making
process for printing is indeed recognised in the HSN Explanatory Notes
inasmuch as Heading 84.43 even covers screen printing machines using a
stencil screen band. Thus, the Risograph, after making the master, prints
as in the case of an ordinary printing machine. It is incorrect to equate
the Risograph master to an ordinary tencil cut out on a typewriter for use
in a stencil duplicating machine.
Mr. K. Radhakrishnan, learned senior counsel appearing for the Revenue, on
the other hand, took us through the reasons given by the Assistant
Commissioner as well as the Commissioner (Appeals) in support of their
findings and also relied upon the Tribunal’s decision in Pioneer
International for the reasons given therein and submitted that the impugned
order of the Tribunal does not call for any interference. He further
submitted that Risograph machine is not a machine to print original matter.
Master board is only for reproduction. Giving details of the Risograph
machine, he submitted that the Risograph works by the process of automatic
digital scanning, thermal screening duplicating systems. The principal
operations involved in the Risograph printer are screening, master making
and printing. The printer’s scanner consists of photo sensors comprising
of light emitting devices and of photo detector. The light emitted from
the light emitting devices strikes the original. The light is reflected by
lighter/white area of the original, whereas the light falling on the darker
area of the original is absorbed. The photo detector detects the reflected
light and reads white and black areas of the original, as read by the
scanner. The thermal head, which consists of hundreds of heat emitting
elements, is used to make the master copy on the basis of the signal
received from the image scanner. This master copy is exactly similar to a
stencil used in a duplicating machine, which is then loaded on to the drum.
The ink which is carried in the drum pieces through the micro-pores in the
master on the paper when it is fed underneath the rotating drum. It is,
therefore, submitted that Risograph is nothing but a transformation of the
duplicator with certain additional functions. The afore-mentioned process
clearly indicates that there are no principles of offset printing or
photocopying involved. It is further submitted that the principal function
is that of a duplicating machine and cannot be treated as a offset printing
machine.
He also submitted that on February 02, 1993, the Conference of Collector of
Customs examined under which chapter tariff heading Risograph should be
classified. The Collectors’ Conference, after examining the detailed
catalogue and working of Risograph, came to the conclusion that the machine
is a duplicating machine and, therefore, appropriately classifiable under
Heading 84.72. The Collectors’ Conference also came to conclusion that
Risograph is more appropriately classifiable under sub-heading 8472.10.
He, thus, summed up his arguments by contending that printing and
photocopying were somewhat overlapping in the instant case. However,
insofar as Risograph machine is concerned, unlike normal printing machines,
original goes into the said machine and master copy is made inside the
machine and then copies are prepared/taken. Simply because it is able to
make 130 copies in one minute would not make it a printing machine, but it
was only a high quality photocopy machine with following features:
A. The following three systems function in tandem to produce 130 copies
or so per minute:
|(a) |Master making system |: |High-speed Digital Scanning |
| | | |and Thermal Screening system |
| | | | |
|(b) |Printing system |: |Automatic Stencil Duplicating |
| | | |System |
| | | | |
|(c) |Image scanning system |: |Flat-bed scanner moving system|
Thus, the specification itself establishes that the printing
system inside the Risograph is an Automatic Stencil Duplicating System.
B. The input is the original and the output is the copy of the original.
C. Technology in Risograph is simple, highly reliable, speed-wise far
more superior and cost-wise less expensive than a standard photocopier.
D. Per contra, in printing there is no original. The original has to be
printed.
E. The concepts of Common Parlance and Principal Function ensure that
the Risograph merits classification in sub-heading 8472.90.
According to Mr. Radhakrishnan, Common Parlance theory shall
also apply in this case inasmuch as in the market and to the general
consumers of this product, it was known as photocopying/ duplicating
machine only and not as printing machine, which was its principal function.
We have given our due consideration to the aforesaid submissions of the
learned counsel for the parties and have also gone through the material as
well as literature produced by the learned counsel in support of their
respective submissions. In a matter like this it is obvious that we have
to understand what is duplicating machine and what is printing machine and
how they differ from each other. Thereafter, we will have to take note of
the technical specifications and functioning of the machine in question,
namely, Risograph Machine, to enable us to find an answer as to whether it
fits the description of a duplicating machine or a printing machine. For
better understanding of the matter and to answer the question
appropriately, we may first scan through certain statutory and other
relevant provisions.
As already noted above, Chapter Heading 84.72, applies to ‘Other office
machines, includes duplicating machines’. HSN Explanatory Notes to Chapter
Heading 84.72 explains that the term ‘office machine’ is to be taken in a
wide general sense to include all machines used in offices, shops,
factories, workshops, schools, railway stations, hotels, etc., for doing
‘office work’ (i.e. work concerning the writing, recording, sorting,
filing, etc., of correspondence, documents, forms, records, accounts,
etc.). It, thereafter, gives the description of duplicating machines,
which is included in the aforesaid Heading, as under:
“Duplicating machines of the hectograph type (e.g. gelatin or spirit
duplicators), and stencil duplicating machines which operate with waxed
paper stencils previously cut by a stylus or on a typewriter. The heading
includes small presses designed for use with hectographic apparatus.
But it excludes small printing machines (e.g. letterpress,
lithographic or offset printing machines) even if intended for office us,
and duplicators using embossed plastic or metal sheets (including such
machines which can also operate with stencils) (heading 84.43), and
photocopying or thermocopying apparatus and microfilm apparatus (Chapter
90).”
The HSN Explanatory Notes makes it amply clear that small printing
machines, even if intended for office use and even duplicators using
embossed plastic or metal sheet, which can also operate with stencils, and
photocopying etc. are specifically excluded. What follows from the above
is that if there is a small printing machine like letterpress, lithographic
or offset printing machine, which does the printing work and also, at the
same time, performs duplicating work with stencils or otherwise and even
photocopying work, it would still be treated as a printing machine and not
duplicating machine.
This would lead us to the description of ‘printing machinery’ as given in
HSN Explanatory Notes to Chapter Heading 84.43. It is stated therein that
this heading covers all machines used for printing by means of the type,
printing books, plates or cylinders of the previous heading and excludes
the following:
“(a) Office hectograph or stencil duplicating machines, addressing
machines and other office machines of headings 84.69 to 84.72.
(b) Photocopying or thermocopying apparatus (e.g. for the production of
blue prints, plans, etc., or for the reproduction of documents, picture
postcards, etc.) (Chapter 90).”
HSN Explanatory Notes further clarifies that this Heading
includes the following:
“(1) Machines for printing a repetitive design, repetitive wordings or
overall colour on textiles, wallpaper, wrapping paper, rubber, plastics
sheeting, linoleum, leather, etc.
(2) Ancillary machinery (whether or not presented separately) such as
feeders and folding machines, provided they are specially designed as
ancillary machines to printing machines.”
Thereafter, description of ‘printing machinery’ is given by dividing it
into three main categories, namely, (i) printing presses, (ii) cylinder
printing machines, and (iii) Rotary presses. Insofar as printing presses
are concerned, the variety thereof is stated in the following manner:
“(i) Ordinary presses, used particularly for printing artists’ engravings
or proofs. In their simplest form they usually consist of a fixed
horizontal slab (or bed) to hold the forme, cliché or plate to be
reproduced, and a movable plate which is pressed against the bed by means
of a screw or lever mechanism; the paper sheet is interposed and backed
with a special material (blanket) to distribute the pressure evenly; inking
is done by hand or mechanically.
(ii) Platen presses; these are much more powerful but similar in
principle. The movable pressure plate (or platen), with the blanket and
paper sheet is almost horizontal, and closes like a jaw against the type
matter held in position by the fixed vertical bed. Normally, such presses
are equipped with a roller inking arrangement, but the group also includes
non-inking platen presses for dry relief printing.”
The aforesaid explanation acknowledges that this simplest form of printing
presses consists of a fixed slab (or bed) to hold the forme, cliché or
plate to be reproduced. The ingredient of a plate from which there can be
reproduction is, thus, recognised as a process of printing. It would also
be pertinent to mention that these very HSN Explanatory Notes clarify that
apart from the normal types of printing machines, there are special
printing machines which are also covered by this heading. Examples of 7
such machines are specifically given. For the purpose of this case,
printing machine described at serial No.7 would be pertinent. Therefore,
we reproduce the said description hereunder:
“(vii) Certain small office printing machines which operate by means of
printing type or by the offset process, and which are impropery referred to
as “duplicating machines” because their operating principles and papearance
are similar to those of duplicating machines.
This group also includes colour printing machines, used to
colour, after they have been first printed in black and white, special art
editions, playing cards, children’s illustrations, etc., by means of
stencils or stencil-plates, the colour being applied by brushes, rollers or
by spraying.”
What is significant is the recognition of the fact that there are many
special machines (obviously due to advancement of technology) which are
small office printing machines and they operate by means of printing type
or by the offset process. It is also acknowledged that many times these
machines are confused with duplicating machines and improperly referred to
as such, primarily because of their appearance as duplicating machines and
similar operating principles. Nevertheless, as per this Note these are not
to be treated as duplicating machines, but printing machines. Underneath
the aforesaid special printing machines it is further mentioned that there
may be machines for printing a repetitive design, repetitive words, etc.
which would still qualify to be printing machines. Example of four such
machines are given in this inclusive description and screen printing
machines are specifically included therein. The aforesaid aspects are
demonstrated in the following specific words:
“Machines for printing a repetitive design, repetitive words or overall
colour on textiles, wallpaper, wrapping paper, linoleum, leather, etc.,
include:
(1) Block printing machines in which blocks engraved with the design,
generally in relief, are repeatedly pressed on the cloth, wallpaper, etc.,
as it passes through the machine, thus producing a continuous design; the
same machines are also used for printing separate designs (e.g. on scarves
or handkerchiefs).
(2) Roller printing machines, usually consisting of a large central
cylinder (pressure bowl) around the periphery of which is placed a series
of engraved colour rollers, each with its colour trough, furnisher roller,
doctor blades, etc.
(3) Screen printing machines. The material to be printed passes through
the machine together with a stencil-screen band, the colour being applied
through the stencil.
(4) Yarn printing machines. These produce colour effects on the yarn (or
sometimes on the roving before it is spun into yarn).”
Thus, a fine distinction between the printing machine on the one hand and
duplicating machine on the other has to be borne in mind with specific
understanding that in many cases there may be confusion between duplicating
machine and specific form of printing machine, namely, screen printing
machine. We may point out at this juncture that the endeavour of the
appellant is to establish that Risograph machine is nothing but Screen
Printing Machine.
After taking note of the basic features which distinguish printing from
duplicating, let us understand the process adopted in Risograph machine.
Risograph machine consists of an automatic digital scanner, a thermal head
and a printing station. The prints of tex/images which can be taken from
these Risographs can be suitably enlarged or reduced as per the user. The
scanner portion of the Risograph consists of a photo sensor comprising of
light emitting diodes and photo detectors. The light emitted from these
diodes strike the original. The light falling on the dark areas of the
original are absorbed. The photo detector then detects the reflected light
and reads the white and black area of the original as read by image
scanner. The image thus formed by the scanner is a digital image and not
an optical image or continuous image. From the scanner, image signals are
transferred to thermal head. The thermal head is used to make master
necessary for printing, based on the signals received from the image
scanner. The thermal head carrying the signal received from the scanner
touches the plastic film portion of the master. Since the film is heat
sensitive, the plastic film melts while the base paper remains unaffected,
thus, forming the image of the original documents on the base paper. This
constitutes the master used for subsequent printing. The master material
consists of film based on polyester plastic material boded with long fibre
Japanese type paper (through which ink can penetrate). The master film is
a few microns in thickness and is, thus, thin. The polyester based
material is bonded to the long fibre Japanese type paper by co-
polymerization. The plastic film used is heat sensitive. The paper is
basically cellulose web through which ink can penetrate. The master
material is in the form of a roll of paper. The paper is drawn from the
roll and thermal head prepares the master. The prepared head is cut from
the master and wound on the drum. The surface of the drum is a fine mesh
of steel wire so as to allow ink to pass through the drum as well as the
master while printing. A squeegee roller is fitted against the drum. Ink
gets filled between the squeegee roller and steel mesh of the drum. During
printing the squeegee roller rotates thereby forcing the ink to pass
through first, the drum surface, then to the master and then on to the
paper to be printed.
From the aforesaid description of the process adopted in Risograph machine,
it becomes apparent that Risograph printing process is more akin to screen
printing. As already pointed out above, the screen printing process
requires a stencil and a screen, with the stencil carrying the design to be
printed. This stencil is mounted against the screen. The printing itself
takes place when the ink is squeegeed through the stencil onto the screen
and ultimately onto the paper. It is the screen which holds the image
area, which can carry either a pictorial or typographic material.
Similarly, in the case of a Risograph, the long fibre Japanese type paper
is the master through which the ink is pressed to reproduce the image or
text. The screen printing stencil prepared is equivalent to the plastic
film coating on the cellulose fibre of Risograph master. Thus, the
principles adopted for printing in the Risograph is akin to that found in
screen printing.
At this stage, let us embark on a brief journey of printing from Gutenberg
to date to see how it has evolved over a period of time leading to screen
printing which is one of the most sophisticated form of printing.
Printing, today, has become one of the most important means of mass
communication though with the advent of computers and e-form of
communication, in recent years its importance is somewhat dented. Fact
remains that even today it remains an important means of mass communication
along with Radio, Television and Films. In or around the year 1440,
Johannes Gutenberg invented and developed the printing press. It was
‘printing with movable type’. Gutenberg made separate pieces of metal type
for each character to be printed. With movable type, a printer could
quickly make many identical copies of a book. Using this process, the same
pieces of type could be used over and over again – to print many different
books. Over a period of time, there has been improvement in the
methodology of printing with the advancement of technology.
However, there are certain steps which are common to all printing
processes. These steps include: (i) typesetting, (ii) proofing, (iii)
preparing illustrations for reproduction, and (iv) page makeup. Typesetting
is the process of putting into type the words to be printed. It is also
called composition. Typesetting can be classified as (1) hot-metal
typesetting or (2) photocomposition. Hot-metal type printing is now done
mostly by machine, which was earlier done by hand. There are two main kind
of machines that set metal type – the line caster and the Monotype.
Photocomposition (which is also called phototypesetting) on the other hand
includes all type setting methods that do not set metal type.
Phototypesetting machines produce images of type characters on
photosensitive film or paper. It is this method which is now widely used
and has replaced hot-metal composition for most printing. Most commercial
printing today is done by one of the three processes: (1) relief printing,
(2) offset lithography, or (3) gravure printing. Each of these processes
uses a different kind of image carrier (the printing surface that carries
the images to be printed). In relief printing, the printing surface is
raised above the level of the non-printing surface. In offset lithography,
the printing surface and the non-printing surface are on the same level.
In gravure printing, the printing surface is below the non-printing
surface.
In addition to the aforesaid three kinds of processes, many other printing
processes have also been developed. Notable among those are: (a) screen
process printing, (b) collotype printing and (c) flexographic printing.
(a) Screen process printing requires a stencil and a fine cloth or wire
screen. The stencil carries the design to be printed. It can be made
simply by cutting the design out of paper. The stencil is mounted against
the screen. Ink is squeezed through the stencil onto the surface to be
printed. The design can also be traced directly on the screen, and the non-
printing parts painted out. Or the screen can be given a light-sensitive
coating and the design put on it photographically. Screen process can be
used to print on paper, glass, cloth, wood, or almost any other material.
It is used to print on objects of almost all sizes and shapes, including
draperies, banners, bottles, toys, and furniture. Most screen process
printing is done on automatic or hand-operated presses. Screen process is
also called silk-screen printing.
It is difficult to equate Risograph machine with duplicating machine.
Duplicating, as opposed to photocopying, requires the preparation of a
master sheet which makes duplicates on a machine. There are two main types
of duplicating: stencil duplicating and spirit or hectographic duplicating.
Stencil duplicating is a technique which uses a master sheet on to which
lettering is impressed as lines of perforations through which ink can be
squeezed on to the copy paper. Spirit duplicating (also known as
hectographic duplicating) is a process/method which uses strong aniline
dye. Originally the ink was transferred to a sheet of gelatin by placing
the sheet of paper with the dye on it in a shallow tray. The moisture
retaining qualities of gelatin kept the ink moist, and the copy was made by
pressing an ordinary sheet of paper on to the gelatin. The modern process,
which has replaced the aforesaid original version, was developed in the
year 1923. In this process, the master is in two parts, the lower one like
a sheet of carbon paper with the dye on the top side; the dye is
transferred to the back of the top sheet when it is typed or written upon.
This sheet is then clipped to a revolving drum, and the sheets to be
printed are moistened with a volatile fluid which dissolves a thin layer of
dye on the master, thus transferring it to the clean paper. In a
duplicating machine, as provided for in the Customs Tariff Act, the stencil
itself is made using a typewriter or stylus i.e. the stencil is created
outside of the machine before the same is fed and ink directly passed
through it. The HSN Explanatory Notes to Customs Tariff Heading 84.72
itself confirms this understanding wherein it is stated that duplicating
machines include the stencil duplicating machines which operate with waxed
paper stencils previously cut by a stylus or on a typewriter.
As pointed out above, the Tribunal has simply relied upon its earlier
decision in Pioneer International. We have gone through the said judgment.
In that case also the assessee had specifically argued that the printing
was the principal function of the Risograph machine. In support, the
assessee had relied upon the dictionary meaning assigned to the ‘printing
machines’ as well as ‘duplicating machines’ and it was argued that it was
not a duplicating machine or a photocopier. It was emphasized that
Risograph is a more sophisticated machine with previously unheard print
quality; that the machine uses a method of scanning at 400 DPI resolution
as used in Scanners in Printing Industry; that instead of optical system
(Lens & Mirror) as used in a photocopier, Risograph uses a charged couple
device, as used in the scanners in printing industry; that the method is
digital only; that just like in Offset Printing which uses a lithographic
plate made of aluminium or Zinc coated with photo sensitive material, the
Risograph uses similar materials which are heat sensitive called master;
that a number of masters are required in the Risograph for multicolour
printing; that inversion of image is carried out during scanning and master
making process itself; that all the facilities available in printing are
available in Risograph such as registering errors, adjustment of margin on
four sides of paper, margin for binding and fine tuning of the print. It
was also argued that the process of scanning and master making are
ancillary to printing and are inbuilt in the machines; that simply because
certain processes are separately done in offset printing does not mean that
where these processes are inbuilt the same is precluded from the term
‘printing machinery’.
However, the aforesaid arguments were not accepted and
plea of the Department was acceded to with the solitary observation that
the Risograph machine is used only to reproduce copies from the originals
and it does not have any mechanism to print in original matter. This
observation, according to us, is contrary to plethora of material produced,
coupled with the HSN Explanatory Notes, as noticed above, which clinch the
issue in favour of the assessee herein. We are, therefore, of the opinion
that Pioneer International does not lay down the law correctly and over-
rule the said judgment.
The outcome of the aforesaid discussion would be to allow the appeal
holding that the Risograph machine is in the nature of a screen printing
machine and not duplicating machine. It would, therefore, be covered under
sub-heading 84.43 and not 84.72.
We, thus, allow the appeal and set aside the orders of the Tribunal and
authorities below. In the given circumstances, there shall not be any
order as to costs.
………………………………………J.
(A.K. SIKRI)
………………………………………J.
(ROHINTON FALI NARIMAN)
NEW DELHI;
JULY 21, 2015
———————–
[1] 2000 (122) ELT 430 (Tri.)
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