Printing on smart cards held non-manufacture; Chapter 49 classification upheld where no programming or software loading occurred.

Printing on pre-embedded smart cards or identity cards was treated as printing activity, not manufacture, because no software loading, programming, or other substantive manufacturing process was shown. The distinctive character of the cards arose from the printed data, so classification under Chapter 49 as printed material was upheld. On that basis, the claimed excise tariff headings did not apply and the demand for duty, interest, and penalty was not sustainable.

---

---

Issues: Whether the activity of printing on pre-embedded smart cards or identity cards amounted to manufacture attracting Central Excise duty under the proposed tariff headings, or whether the goods were correctly classifiable under Chapter 49 as printed material.

Analysis: The impugned order had found that the respondent only printed on pre-embedded plain identity cards or smart cards and did not undertake any actual manufacturing process such as loading software or programming. The Board circulars on photo identity cards were relied upon to hold that where the distinctive character of the card arises from the printed data and not from the material or shape of the card, the activity is classifiable under Chapter 49. The Revenue did not produce substantive evidence to dislodge those findings, and the appellate tribunal accepted the Commissioner (Appeals)' view that the activity was only printing and not manufacture of goods falling under the tariff headings claimed by the Revenue.

Conclusion: The classification under Chapter 49 was upheld and the demand of duty, interest and penalty was not sustainable. The appeal filed by the Revenue failed.

---