1996(02)LCX0064

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri K.S. Venkataramani, Member (T), G.A. Brahma Deva, Member (J) and Lajja Ram, Member (T)

NIRAJ GRAPHICS (P) LTD.

Versus

COMMISSIONER OF C. EX., AURANGABAD

Final Order Nos. E/57-58/96-B, dated 8-2-1996 in Appeal Nos. E/1454/93-B and E/1226/93-B

CASES CITED

Commissioner v. Wood Craft Product — 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.) — Referred.................. [Para 5]

G.O.I. v. M.R.F. Factory — 1995(05)LCX0131 Eq 1995 (077) ELT 0433 (S.C.) — Referred....................................... [Para 5]

Kasturi & Sons Ltd. v. Collector — 1986(05)LCX0042 Eq 1989 (044) ELT 0488 (Tribunal) — Followed......... [Paras 4, 13]

Advocated By :   Shri V. Lakshmikumaran, Advocate, for the Appellant.

Shri K.K. Jha, SDR, for the Respondent.

[Order per : Lajja Ram, Member (T)]. - These are two appeals filed by M/s. Niraj Graphics (P) Ltd. feeling aggrieved with the two separate orders-in-appeal dt. 10-2-1993 and the other dt. 7-5-1993, both passed by the Collector of Central Excise (Appeals), Pune. Appeal No. E/1226/93-B1 is against the Order-in-Appeal dt. 10-2-1993 and relates to the classification of Micro finished grained aluminium printing plates and the pre-sensitised aluminium printing plates. Appeal No. E/1454/93-B is against the Order-in-Appeal dt. 7-5-1993 and concerned with the demand of Rs. 23,03,094.99 and penalty of Rs. 5,000/-, as a consequence of modification of the classification already decided by the Asstt. Collector of Central Excise, Nasik and confirmed by the Collector of Central Excise (Appeals), Pune, which order is the subject matter of Appeal No. E/1226/93-B1 referred to above. Both the appeals called for decision on similar issue. They were heard together and are being disposed of by this common order.

2. The matter relates to the classification of (i) micro finished grained aluminium printing plates, described in the classification list filed by the appellants as “Aluminium Plates - Roughened, Anodised +ve & -ve, micro finish +ve and -ve” (hereinafter referred to as ‘MGA’ plates) and (ii) pre-sensitised aluminium printing plates described by the appellants in the classification list as “aluminium plates – pre-sensitised +ve & -ve - pre-sensitised (Eco)” (hereinafter referred to as “PA plates”). MGA plates were coated with grains and anodised and in some cases were supplied to the customers with further coating of chemical sensitive to light. PA plates were coated with chemicals sensitive to light and were supplied in light proof packing. They were exposed and developed by the user. The appellants claimed assessment of both the above type of plates under Heading No. 84.42 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the ‘Tariff’). The Revenue classified MGA plates under sub-heading No. 7606.10 of the Tariff and the PA plates under sub-heading No. 3701.90. The Asstt. Collector of Central Excise, Nasik who adjudicated the matter observed with regard to MGA plates that the customers before taking these plates for printing applied coating of chemical sensitive to light and made them pre-sensitive plates for using for printing. With regard to PA plates, he observed that it was only after exposure and development that these plates attained the identity as printing plates and not before that “because nothing can be printed from un-exposed pre-sensitized plates”. He confirmed the classification as proposed in the show cause notice. His order was confirmed by the Collector of Central Excise (Appeals), Pune.

3. Matter was posted for hearing on 1l-9-1995 when Sh. V. Lakshmikumaran, Advocate appeared for the appellants. Shri K.K. Jha, SDR represented the respondent.

4. The ld. Advocate stated that the appellants were purchasing aluminium sheets in running length from the primary producers and were subjecting them to various processes. He referred to the Order-in-Original dt. 16-5-1991 and stated that the process of manufacture had been given at page 4 of the order (page-90 of the paper book in Appeal No. 1226). Both the plates were for printing and were rightly classifiable under Heading No. 84.42 of the Tariff. The ld. Advocate relied upon the Tribunal’s decision in the case of Kasturi & Sons Ltd. v. Collector of Customs - 1986(05)LCX0042 Eq 1989 (044) ELT 0488 (Tribunal). The photographic plates were different from the printing plates and even if photographic principles is used, their plates were not photographic plates. The ld. Advocate referred to the technical literature on record and submitted that after the processes undertaken by them the aluminium plates did not remain simple aluminium plate and were transformed into a new article. Thus, they would not be classified again under heading No. 76.06. They had already paid Central Excise duty under Heading No. 84.42 and even if their arguments are not accepted then their declared prices should be taken as cum duty price. In this connection, he relied upon the Supreme Court’s decision in the case of Govt. of India v. MRF Factory - 1995(05)LCX0131 Eq 1995 (077) ELT 0433 (S.C.).

5. The ld. SDR replied that the processes adopted by the appellants amounted to the processes of manufacture but the goods MGA plates remained classified under Heading No. 76.06 of the Tariff. Their plates were not for engraving and therefore, they were not classifiable under Heading No. 84.42. As the plates had not been exposed or developed, they cannot be said to have been prepared for printing purposes. The ld. SDR submitted that the adjudicating authority had based his conclusions on the Harmonised System of Nomenclature (HSN), which is a useful guide. In this connection, he relied upon the Supreme Court’s decision in the case of C.C.E., Shillong v. Wood Craft Product - 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.). In rejoinder the ld. Advocate stated that their plates were for impressing and both impressing and engraving were referred to in Heading No. 84.42 of the Tariff.

6. We have carefully considered the matter. The two type of plates which are the sub-matter of the present proceedings have been described by the appellants in their reply to the show cause notice dt. 1-8-1990 at pages 81 to 83 of the paper book in Appeal No. 1226 as under :-

“(2) As regards to the product covered under 1 (a) of the classification list i.e. microfinished plates, it is submitted that these plates undergo process of manufacture as under :-

(i) The aluminium plates/sheets in coil form is passed through a treatment tank where a chemical treatment is given at a predet temperature for cleaning the surface of the aluminium. Thereafter the same is rinsed by spraying fresh water.

(ii) The roll so cleaned is then cut into the plates of smaller size. These plates are placed on a vibrating table. On these plates are spread grinding balls and powder alongwith the certain chemicals. Due to vibration of the table the grinding media in the form of balls gets motion and as a result grinding media acts on the surface of the aluminium plate and thus this process create a grained surface on the plate which is called micro finished plate. The grained surface so acquired enables the printing ink to spread uniformly all over the surface which is not possible if the ink is put on an ordinary ungrained aluminium plate. This graining process has converted the basic aluminium plate into a grained aluminium plate called micro finished plate, which is exclusively used for the printing purposes only and it has lost its identity as aluminium plate.

(iii) In order to call a process as a process of manufacture, after the process is carried out something new has to emerge with its name, character and use. In the instant case the aluminium plate has undergone a change and a new product has emerged which is called micro finished plate, with its own character. Though it has lost any identity it might have had as an aluminium plate, and its use is in the printing industry alone. Thus the test of manufacture as has been contemplated under Sec. 2(f) of the Central Excise and Salt Act, 1944 has been complied with and the fact that it is a grained plate, merits its classification as has been categorically and envisaged under sub-heading 8442.00 and thus the micro finished plates are correctly classifiable under heading 8442.00 only.

(3) As regards to the pre-sensitised plates, after the process of clearing as has been mentioned in the case of microfinished plates in para-2(i) above. The aluminium plates in coil form is subjected to the following processes :

(i) Graining process which is a preparatory process for retaining an anodic layer which is a subsequent process.

(ii) Desmutting process where it passes through an acid bath and is then rinsed with fresh water.

(iii) Anodising process where it passes through a solution of certain anodising chemicals at predetermined temperatures and through which a current of predetermined strength is passed and is then rinsed with fresh water.

(iv) Silicating process (where it passes through sodium silicate) and then is rinsed with fresh water.

(v) Drying process and then cut in to required sizes.

The above processes make the plate suitable for printing only and are cleared accordingly. However, in order to call it pre-sensitized +ve plate it is taken out from the process after anodising and before silicating. Whereas for the purpose of making presensitized -ve plate all the processes described above are essential.

At times, these plates are coated with light sensitive coating if so desired by the customer. However, in the absence of this process of light sensitized coating these plates cannot be termed or called as non-printing plates, as this coating is made on the plates at the printer’s end, depending upon the type of printing required to be carried out. Hence department’s contention to the effect that as light sensitive coating is done at the printer’s end, these plates cannot be considered as complete/finished printing plates. The coating of light sensitive chemical is a process by which a plate is made for exposure. Like photographic film roll or plate when it is put in to the camera then only it is exposed and image of the object is formed on the roll or plate, similarly in the case of a printing plate after the coating of light sensitive chemical is imparted on to the plate, then only these plates become ready for exposure. Thus, whether the plates are coated with light sensitive chemical at the manufacture’s end or at printer’s end does not make any difference and the plates are still to be considered as printing plates.”

7. The appellants have claimed the classification of their both type of plates under heading No. 84.42. The Revenue had classified the MGA plates under sub-heading No. 7606.10, and PA plates under sub-heading No. 3701.90. For ease of reference Heading Nos. 84.42, 76.06 & 3701.90 are extracted below :-

8. For better appreciation of the products under consideration, we may briefly refer to the relevant aspects of printing and photographic technology. Photolithography is a photographic and chemical process to make plates for printing by offset lithography. Many kinds of offset plates are used but they fall into three main groups (i) surface plates (ii) deep etch plates (iii) bimetal plates. Surface plates are usually made of a thin sheet of aluminium covered with a light sensitive coating. The plate maker can either apply the coating or use pre-sensitized plates. Pre-sensitized plates are coated (sensitized) when purchased and can be stored in the dark and used when desired. They will generally keep their sensitivity for six months to one year. They consist of a thin film of a light sensitive material usually a diazo compound coated on the specially treated base plate. If the printer coats the plates, they had to be used shortly thereafter because the coatings harden quickly. A hard coating will not take an image. The negative flat is placed on the plate and both are put in a vacuum printing frame. Light from high intensity lamps shines through the negatives, hardening the coating under the transparent parts. The opaque parts of the negatives block the light leaving the coating under them soft. Developing ink is spread over the exposed plate. The plate is then rinsed with the water and the non-printing parts are washed away only the hard ink receptive water repellant images remain.

9. In so far as a photographic plate is concerned, it is a film, in the form of a plate and is to be placed in a camera. Rays of light enter a camera and are focused into an image. The light exposes the film in the camera causing chemical changes on the film’s surface. The exposed film is then treated with certain chemicals in a procedure called developing. Finally light is used to make a print by transferring the image from the film to a sheet of a special paper. On the film, is a coating called an emulsion. The emulsion consists of tiny grains of silver salts held together by gelatin, a jelly like substance. Silver salts are highly sensitive to light and undergo chemical changes when exposed to it. The silver salts on the film react differently to different colours. The chemical changes in the silver salts produce a latent image on the film. Big photographic plates are used for contact printing in which the negatives had to be as large as the intended print.

10. Heading No. 37.01 covers photographic plates and film in the flat, sensitized, un-exposed. As per HSN Explanatory Notes the photographic plates and film in the flat (i.e. not in rolls) are un-exposed and are generally coated with a sensitized photographic emulsion. It has been stated that certain plates which when exposed and processed will be used for printing are not coated with an emulsion but consist wholly or essentially of photo sensitive plastics. They may be affixed to a support of metal or other material. In the case before us, the PA plates are coated with chemical sensitive to light. They were not coated with sensitized photographic emulsion. Some of the plates which were otherwise ready for use were coated with light sensitive coating keeping in view the end use. At this stage the plate was ready for exposure. The Collector of Central Excise, Aurangabad in the appellants’ own case with regard to these plates had held as under :-

“(e) as regards positive and negative PS plates, these are surface worked plates coated with sensitive chemicals and have acquired the characteristics of a printing plate as very clearly defined in the notes to heading No. 84.42 and therefore, I have no hesitation classifying them under heading No. 84.42. In coming to this decision, I refer decision in the case - 1989 (041) ELT 583.”

As regards Heading No. 76.06 it covers aluminium plates, sheets (including circles) and strips of a thickness existing 0.2 mm. Chapter 76 covers aluminium and articles thereof and the Sec. 15 in which the Chapter 76 falls relates to base metals and articles of base metals. In this case the MGA plates were processed from the base aluminium plates. The base aluminium plates had been subjected to the various processes of graining, anodizing, etc. As a consequence of processing on the base aluminium plate with ceramic grinding balls, silica powder, sodium dichromate etc., a grained surface is created on the plate to make them grained aluminium plates. The Collector of Central Excise, Aurangabad in the order dt. 30-11-1993 in the appellants own case had observed with regard to these plates as under :-

“(d) I find that the assessee has done certain specific processes for treatment of the surface for particular end use, cutting the plates to shape and size for eventual end use requirement in printing industry. From the documents submitted at the personal hearing I find that such plates, which are roughened but are not coated are understood as printing plates in common parlance test as laid down by Hon’ Supreme Court and in view of the above argument. I would classify these plates under heading No. 84.42 and not under Heading No. 76.06.”

11. It may be mentioned at this stage that heading No. 84.42 which is based on the HSN Heading No. 84.34 does not rule out the photographic principle for classifying of the goods under that heading. It has been mentioned in the Explanatory notes that in the photo gravure plates, mater to be printed is photographically reproduced. In the case of Lithographic stones, the illustration is either hand drawn or photographically transferred and prepared with acid. It is also mentioned therein that the plates are prepared so as be suitable for engraving or otherwise receiving an image for subsequent use in printing. It has been further stated with regard to plates and dies for relief stamping and printing that they are classifiable under that heading if they have been treated so as to render them suitable for engraving or impressing. At the end of the notes relating to types, plates, blocks, and cylinders it has been stated that the sensitized plates coated with a sensitized photographic emulsion or of a sheet of photo sensitive artificial plastic material whether or not affixed to a support of metal or other material are excluded from that heading and are classifiable under heading No. 37.01. As we have seen above, the plates in this case have not been coated with a sensitized photographic emulsion and they are also of a sheet of the photo sensitive artificial plastic material.

12. In the show cause notice dt. 1-8-1990, it has been mentioned that “the plates duly grained are used for printing purpose after engraving” and that “so long as same is not coated with photo sensitive chemicals the product cannot be used for printing purposes.” In this case, we may refer that most commercial printing today is done by one of the three processes :

(i) Relief printing

(ii) Offset lithography, or

(iii) 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. As the plates in question were for offset lithography there was no question of engraving, which is done in the case of gravure printing wherein the printing surface is below the non-printing surface. As is seen from the technical literature on record a number of preparatory steps have to be taken before the lithographic plate is put to actual use. The various processes to which the plate were subjected to by the appellants were by way of preparation of the said plates for printing purposes. In the circumstances, it cannot be said that they were not covered by Heading No. 84.42 of the Tariff.

13. In the case of Kasturi & Sons v. Collector of Customs - 1986(05)LCX0042 Eq 1989 (044) ELT 0488 (Tribunal) the Tribunal construing the terms photographic plates and the printing plates in the popular sense (the sense in which people conversant with the subject matter with which the statute was dealing could attribute to it), observed that the plates under consideration by them in that case were printing plates. In para-16 of their decision the Tribunal had observed as under :-

“The goods cannot also be denied classification as printing plates merely on the ground that photographic principle is involved in its use or scientifically or technically it may be photographic plates.”

14. As a result, both the type of plates (i) micro finished grained aluminium printing plate and (ii) pre-sensitized aluminium printing plates, are held properly classifiable under Heading No. 84.42 of the Tariff. Both the appeals are disposed of in the above terms.

Equivalent 2001 (137) ELT 1205 (Tri. - Del.)