2026 (3) TMI 102 - AT - Central Excise

Classification of printed paper: bound articles for further writing stay in the bound-article heading; loose printed forms fall under printed-matter headings.

Printed products intended as bound articles with blank spaces for subsequent manuscript or typescript entries retain classification under the tariff ... Classification of goods - listed printed products fall under Chapter sub-heading 4820 Or under Chapter sub-headings 4901/4911 - dutiability of paper scrap arising during manufacture - binding effect of CBEC Circular No.1052/1/2017-CX on classification. Classification - University answer booklets and bank passbooks - HELD THAT: - The Tribunal held that the primary purpose of university answer booklets is for further writing by examinees and that bank passbooks are prepared for subsequent entries; the security or anti duplication features are ancillary. Note 14 to Chapter 48 preserves classification in heading 4820 where paper products of heading 4820 are intended for further printing or writing. The Tribunal applied the HSN Explanatory Notes and precedent (including Holostick) to conclude that security printing is ancillary where the product's primary use is stationery for manuscript or typescript completion, and therefore answer booklets and passbooks fall within Chapter 4820. [Paras 21, 22, 23, 24, 29] University answer booklets and bank passbooks are within Chapter Sub heading 4820. Classification of other printed matter under Chapters 4901 and 4911 - interpretation of Chapter Note 12 vis a vis Note 14 - Other items such as loose application forms, ticket type sheets, leaflets and similar printed matter are classifiable under Chapter Sub heading 4901/4911 as indicated in the Board Circular. - HELD THAT: - Having examined Chapter Notes 10, 12 and 14 and the CBEC Circular No.1052/1/2017 CX, the Tribunal accepted the Circular's distinctions: loose sheets cut to size, printed forms requiring insertion of particulars and items where printing is not merely incidental are outside heading 4820 and fall under headings in Chapter 49 (4901/4911). The Circular was treated as a binding clarification directing uniform classification of the illustrative items. [Paras 16, 18, 26, 29] Remaining examined items are classifiable under Chapter Sub heading 4901/4911 as per the Circular. Dutiability of paper scrap arising during manufacture - manufacturing process for classification of waste - Paper scrap/end cuttings arising during production of the disputed items are not dutiable. - HELD THAT: - The Tribunal found that the appellant is not a paper manufacturer and the waste comprised end cuttings arising from printing and finishing operations; no fresh manufacturing of paper from pulp takes place. Reliance was placed on Tribunal precedents (Wimco Ltd. [2008 (7) TMI 108 - CESTAT NEW DELHI] and Universal Offsets [2018 (1) TMI 1086 - CESTAT NEW DELHI] to conclude that such end cuttings are not dutiable. [Paras 6, 28] Paper scrap generated during manufacture is not chargeable to duty. Re quantification of demand after classification - fresh adjudication on limitation and applicability of penal provisions - The matter is remanded to the adjudicating authority to re quantify demand in accordance with the Tribunal's classification and to decide limitation and penal consequences after affording opportunity of hearing. - HELD THAT: - Because the Tribunal modified the classification (answer booklets and passbooks under 4820; other items under 4901/4911), it directed remand for recomputation of duty/demand. The Tribunal observed that the learned Commissioner had not recorded findings on limitation; therefore limitation and consequent applicability of penal provisions must be examined afresh by the adjudicating authority with a reasonable opportunity to the respondent. [Paras 29, 30] Matter remanded for re quantification of demand and fresh adjudication on limitation and penalties after hearing. Final Conclusion: The Tribunal held that university answer booklets and bank passbooks are classifiable under Chapter Sub heading 4820, other specified printed items fall under Chapter Sub headings 4901/4911 in accordance with CBEC Circular No.1052/1/2017 CX, and paper scrap arising as end cuttings is not dutiable. The matter is remanded to the adjudicating authority to re quantify the demand and to decide limitation and penal issues after giving the respondent an opportunity of hearing. Issues: (i) Whether printed labels, printed cartons, cheque books, bank passbooks, university answer booklets, bank account opening forms, deposit/withdrawal challans, subscription/application forms, and similar products are classifiable under Chapter sub-heading 4820 of the Central Excise Tariff Act, 1985 or under Chapter sub-headings 4901/4911 of the Central Excise Tariff Act, 1985; (ii) Whether paper scrap/end-cuttings arising during manufacture of the aforesaid items are dutiable.Issue (i): Whether the listed printed products fall under Chapter sub-heading 4820 or under Chapter sub-headings 4901/4911.Analysis: The Court examined Chapter Notes 12 and 14 to Chapter 48, the HSN explanatory notes to headings 4820, 4901 and 4911, the CBEC Circular No.1052/1/2017-CX dated 23.02.2017, and relevant precedents. Note 12 directs that paper products printed with motifs/characters/pictorial representations not merely incidental to the primary use fall in Chapter 49; Note 14 (a non-obstante clause) preserves classification in headings for 4811, 4816 or 4820 where such products are intended to be used for further printing or writing. The Circular applies these provisions to specific illustrations and clarifies that answer booklets and passbooks, being bound articles intended for further completion in manuscript or typescript, remain classifiable under heading 4820, while loose sheets/cut-to-size items and printed forms/leaflets whose printing is not merely incidental fall under headings in Chapter 49. The Tribunal applied these tests to the manufacturing process and product characteristics: university answer booklets and bank passbooks are produced as bound articles with blank spaces for subsequent entries and thus are intended for further writing; other items like loose application forms, challans and leaflets are cut-to-size or printed matter whose printing gives them essential character and are covered by Chapter 4901/4911 as per the Circular and HSN notes.Conclusion: Partly in favour of Revenue (bank passbooks and university answer booklets classified under Chapter sub-heading 4820) and partly in favour of the Respondent/Assessee (remaining items classified under Chapter sub-headings 4901/4911).Issue (ii): Whether paper scrap/end-cuttings generated during manufacture of the aforesaid items are dutiable.Analysis: The Tribunal considered the nature of the scrap as end-cuttings produced incidentally during the manufacture of printed/bound articles and relied on precedents (Wimco Ltd. and following decisions) holding similar waste not dutiable where the appellant is not a paper manufacturer and no separate manufacturing of paper from pulp occurs. The factual finding on the process (cutting, stitching, folding producing end-cuttings) supports treatment of such waste as non-dutiable.Conclusion: In favour of the Respondent/Assessee - paper scrap arising as end-cuttings during manufacture is not dutiable.Final Conclusion: The Tribunal modified the impugned order, held that university answer booklets and bank passbooks are classifiable under Chapter sub-heading 4820 and the other listed items are classifiable under Chapter sub-headings 4901/4911, remanded the matter to the adjudicating authority to re-quantify demands accordingly (leaving limitation and penal provisions open for decision), and confirmed that paper scrap end-cuttings are not dutiable; the departmental Circular is binding and was to be followed.Ratio Decidendi: Where paper or paper products of headings 4811, 4816 or 4820 are bound articles intended for further printing or writing, Chapter Note 14 preserves their classification under heading 4820 despite printing; loose sheets/cut-to-size items or printed forms whose printing is not merely incidental fall under Chapter 49 in accordance with Chapter Note 12 and the General Rules of interpretation.