Camlin Ltd. Vs.
Commnr. of Central Excise, Mumbai  INSC 1493 (3 September 2008)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS.4507-4508 of 2002 Camlin
Limited ...Appellant(s) - Versus - Commnr. of Central Excise, Mumbai
CIVIL APPEAL NOS. 1692-1693 of 2003 Commnr. of Central Excise, Mumbai
...Appellant(s) - Versus - Camlin Limited ...Respondent(s) AND CIVIL APPEAL NO.
978 of 2005 Camlin Limited ...Appellant(s) - Versus - Commnr. of Central
Excise, Mumbai ...Respondent(s)
three sets of appeals arise from a common judgment and order dated 30th April,
2002 passed by the Customs, Excise & Gold (Control) Appellate Tribunal,
Western Zonal Bench at Mumbai (for short "the Tribunal").
first set of appeals being C.A. Nos. 4507- 4508 of 2002 has been filed by M/s.
Camlin Limited (hereinafter referred to as "the Assessee"), whereas
the remaining two sets of appeals being C.A. Nos. 1692-1693 of 2003 & C.A.
No. 978 of 2005 have been filed by the Revenue.
issues in these appeals are regarding the classification of the "writing
inks" being manufactured and captively consumed by the assessee and
consequent demand of duty thereon. The inks with their constituents are:- No.
NAME OF THE INKS INGREDIENTS
1. 99-MARKER INKS i)
KETONIC SOLVENT ii) SOLVENT DYES iii) BINDERS
2. 100-CAMEL FOUNT i)
CARBON BLACK (PIGMENT) DRAWING INK ii) SHELLAC BINDER iii)WATER &
3. 07-CAMEL i) CARBON
BLACK (PIGMENT) WATERPROOF DRAWING ii) SHELLAC BINDER INK iii)WATER &
4. 09-CAMEL SPL. i)
CARBON BLACK (PIGMENT) DRAWING INK BLACK ii) SHELLAC BINDER iii)WATER &
5. 98- CAMEL i)
CARBON BLACK (PIGMENT) RAPIDUGRAPH INK ii) SHELLAC BINDER BLACK iii)WATER &
6. 75- DESIGNERS' i)
CARBON BLACK (PIGMENT) INDIAN INK BLACK ii) SHELLAC BINDER iii)WATER &
7. 75A- DESIGNERS' i)
CARBON BLACK (PIGMENT) INDIAN INK BLACK ii) SHELLAC BINDER iii)WATER &
8. 75B - DESIGNERS'
i) CARBON BLACK (PIGMENT) INDIAN INK BLACK ii) SHELLAC BINDER iii)WATER &
9. SKETCHING PEN INK
i) ACID DYES ii) BASIC DYES iii)FOOD COLOURS iv) WATER v) HYGROSCOPIC AGENTS
(such as GLYCOLS)
4. The finding of the
Tribunal qua items mentioned at serial nos. 2 to 9 in the above chart is that
they are "writing inks" and, therefore, exigible to nil rate of duty.
With regard to the item at serial no. 1, i.e., "marker ink", the
Tribunal has held that the same are not "writing inks" and,
therefore, would be covered by Chapter sub-heading 3215.90 and, consequently,
exigible to 16% of excise duty. Chapter heading 32.15 reads as under:-
"32.15 Printing ink, writing or drawing ink and other inks, whether or not
concentrated or solid.
3215.10 - Writing ink
Nil 3215.90 - Other 16%"
5. Initially, the
department had approved the classification list submitted by the assessee.
According to the
assessee, as the classification of the inks manufactured by the assessee had
been approved by the revenue, it neither collected any duty from its customers
nor claimed any Modvat.
revenue challenged the said approved classification list.
6. The assessee
manufactures various kinds of marker pens and sketch pen sets. As per the CBEC
Trade Notice reported in (39) ELT-T6, it has been clarified that "marker
pens", Hi-liter pens, up- liners were "all" different categories
According to the
assessee, since various types of inks mentioned aforesaid are used in one or
other types of pens which are instruments for writing such inks are to be
considered as "writing inks".
7. It is submitted
that initially all types of inks falling under the aforesaid Chapter Heading
no. 32.15 were chargeable to duty @ 20%.
1st March, 1997, Chapter Heading no. 32.15 has been revised and accordingly
"writing ink" is now classifiable under CSH 3215.10 chargeable to
duty at nil rate and all varieties of ink other than "writing inks"
are classifiable under CSH no. 3215.90 chargeable to duty @ 16%.
8. According to the
assessee, the legislative intent of the aforesaid amendment was that the units
manufacturing pens which are assessed to nil rate of duty should not be paying
duty on the inks filled/used in the pens. As the pens manufactured by the
assessee are assessed at nil rate, the submission is that the writing inks
which are used in these pens are not exigible to the levy of duty.
This submission is
made on the basis of the letter dated 28th May, 1997 written by the then Finance
Minister of India. The relevant extracts of the letter is as follows:- "I
have had the matter examined. The general rate applicable to products falling
under Chapter 32 of the Central Excise Tariff is 18% which is also the rate
applicable to artists' and students' colours. However, pens and parts of pens
have remained exempted from duty for a long time. A demand was made that
writing inks which fall in the same category of goods, may also be exempted
from duty. It was also argued that a factory producing pens is required to pay
excise duty on writing inks which is anomalous. On examining these requests, we
had decided to exempt writing inks also from excise duty."
9. The aforesaid
contentions of the assessee which were taken in appeal were accepted by the
Commissioner (Appeals) vide his Order dated 28th of March, 1999. After
referring to the numerous dictionaries to ascertain the meaning of various
terms, it was held that: - "In view of the above definition of the words
"write" and "writing" it reveals that the method by which
the ideas are transformed into symbols, characters, letters or words on any
surface including paper is to be considered as writing.
pens, Marker Pens, Croquill Lettering Pens, Sketch Pens etc.
are the instruments
which are being used for transforming the ideas into symbols, characters,
letters or words on paper and in that sense these are definitely the
instruments of writing.
Even if we see the
uses of these instruments, we noticed that they are of multipurpose uses viz.
Marker Pens are used for bold writing on notice board, packages, files,
envelopes, charts etc. as well the same can be used in drawing also.
The same case is with
sketch pens, croquill lettering pens also. It can be used for writing purposes
also. Apart it is also important to note here that in the C.Ex Tariff
description under heading 3215.00. It is mentioned that Printing inks, Writing
or Drawing ink and other inks. The word "or" used in between Writing
Ink and Drawing Ink itself indicates that both types of inks are synonymous and
they are one and the same.
ingredients of both these types of inks also made it clear that they are same.
It is not the case of the Department that the ink claimed by the appellants are
printing ink or copying and Lectrographic Ink or inks for duplicating machine
or 7 making ink. It only suspects that, it is used in the instruments for
colouring, hiliting, sketching etc. which ultimately figuring its possible
classifications as drawing ink. As discussed above even if we accept it as
"Drawing Ink" it ultimately falls in the same category of writing-
10. The Commissioner
(Appeals) accepted the contention of the assessee that pens are not writing
instruments. He further classified all nine types of Inks manufactured by the
assessee as "writing ink". He also recorded in his order that he has
referred to HSN Chapter 32.15 and Circulars of the Department for the purposes
of passing the said Order.
11. Aggrieved by the
said order, the respondent- Department filed an Appeal before the Tribunal. The
Tribunal partly set aside the aforesaid Order by relying on HSN and held that
two inks out of nine manufactured by the assessee being "marker inks and
camiligraph (rapidograph) ink" will be assessed to duty under CSH 3215.90.
12. Aggrieved by the
said Order dated 29th September, 2000 of the Tribunal, assessee filed Civil
Appeal No. 387/2001 in this Court whereby this Court remanded the case to the
Tribunal for a fresh decision.
13. Tribunal vide its
impugned order dated 30th April, 2002, decided that eight out of nine inks
manufactured by the assessee will be considered as writing inks and rate of
duty will be Nil. While for one ink being "marker ink", it held
against the assessee. It was held that "marker inks" have to be
classified under residual entry CSH 3215.90 and is liable to pay duty at the
rate of 16%. The Tribunal relied on HSN to reach the said conclusion.
14. Aggrieved against
the Order of the Tribunal, three sets of appeals have been filed, one by the
assessee and two by the Revenue.
15. The Counsel for
the parties have been heard at length.
16. The Indian
Central Excise Tariff creates two categories of "writing ink" and
residuary entry of "other". The HSN on the other hand creates
categories for "printing ink", "other" and then residuary
entry of "other". For convenience, the relevant extract of HSN is
reproduced herein below:-
CHAPTER HEADING 32.15
32.15 - PRINTINK INK,
WRITING OR DRAWING INK AND OTHER INKS, WHETHER OR NOT CONCENTRATED OR SOLID.
- Printing Ink:
3215.11 - Black
3215.19 - Other 3215.90 - Other (A) Printing inks (or colours) are pastes of
varying consistency, obtained by mixing a finely divided black or coloured
pigment with a vehicle. The pigment is usually carbon black for black inks and
may be organic or inorganic for coloured inks.
The vehicle consists
of either natural resins or synthetic polymers, dispersed in oils or dissolved
in solvents, and contains a small quantity of additives to impart desired
(B) Ordinary writing
or drawing inks are solutions or suspensions of a black or coloured material in
water, usually with the addition of gum and other products (e.g.
preservatives). These includes inks based on iron salts, inks based on logwood
extracts or on synthetic organic colours.
Indian ink, used
mainly for drawing, consists usually of carbon black in suspension in water
(with the addition of gum Arabic, shellac, etc.) or in certain animal glues.
(C) Other inks in
this heading include:
(1) Copying and
hectographic inks (ordinary inks thickened with glycerol, sugar, etc.).
(2) Inks for ball
(3) Inks for
duplicating machines or for impregnating ink-pads or typewriter ribbons.
(4) Marking inks
(e.g. based on silver nitrate).
(5) Metallic inks
(finely divided metals or alloys in suspension in a solution of gum, e.g.,
gold, silver or bronze inks).
sympathetic or invisible inks (e.g. based on credit chloride).
These products are
generally in the form of liquids or pastes, but they are also included in this
heading when concentrated or solid (i.e. powders, tablets, sticks, etc.) to be
used as inks after simple dilution or dispersion."
17. From the reading
of the extract of Chapter Heading 32.15 of the HSN, it is evident that the
scheme and entry of HSN is completely different from Indian Tariff Entry. It is
settled law that when the entries in the HSN and the said Tariff are not
aligned, reliance cannot be placed upon HSN for the purpose of classification
of goods under the said Tariff.
18. The assessee has
produced/filed the chemical composition of its products before the Tribunal as
directed. As can be seen from the above, the marking inks mentioned in HSN in Category
C (4) are based on Silver Nitrate. The marker ink manufactured by assessee
admittedly "does not"
19. Further, HSN only
described "ordinary" writing or drawing inks in Category B. Even inks
for ball point pens are classified under residuary entry "other". The
Indian Tariff classification puts "all" writing inks together. The
fact that all writing inks are considered same and together can also be seen
from the aforesaid letter of the Finance Minister and the trade notices referred
20. As per scheme of
HSN, "printing inks" are classifiable under specific Chapter Sub
Headings 3215.11 and 3215.19 of the HSN and are described under Note
"A". All the rest of the inks are covered in residuary heading
3215.90 and are described under Note "B" "ordinary writing or
drawing inks" and Note "C" "other inks". It may be
noted that scheme of Indian Excise Tariff entry is completely opposite and
"printing inks" will fall under residuary entry of CSH 3215.90 and
"writing or drawing inks" fall under specific entry 3215.10.
21. The basic
contention of the respondent- Department for all practical purposes is that
pens are not writing instruments, because if the pens are writing instruments
then obviously the inks used in such pens manufactured by the assessee are
22. The Tribunal took
an extreme example of paint being used as graffiti. The essential function of
paint is to provide a protective covering for building structures and use in
graffiti is incidental. While markers are described as pens by the Notification
of the Department itself and marker inks are used in the said pens - writing
instruments, therefore, should be classified as writing inks.
23. Insofar as the
inks other than marker inks are concerned, the Tribunal while deciding the same
in favour of the assessee has recorded the following findings: - "We find
no reasons and approve the ground taken by the revenue that the understanding
of the word "Writing Ink"
has to be restricted
and the common parlance understanding of the same has to be considered, while
applying to classification under 32.1510. Therefore, when we find that the law
is well settled, that HSN notes, have more than persuasive value especially
when the headings are full aligned with Central Excise Tariff, we have no
hesitation to consider that the 14 Sub classification of ink under 32.15
should be based on constituent material.
Material and evidence
of end use and on "Writing Instruments", "pens etc." relied
upon on both sides are found to be not relevant. Classification in the sub
headings is to be made on the basis that "Writing Ink" as per the HSN
Head Notes under 32.15, extracted herein supra, which indicate that ordinarily
such inks, are based on water. On considering the admitted position that except
for the ink type, named as "99-MARKER INKS" in the list of impugned
inks before us, extracted in sub-para (a) above, all other inks listed and
under consideration, are acqua or water based which would render them to be
eligible for classification under sub- heading 32.1510, except "99-MARKER
which not being water
based would fall under residuary Head 32.1590."
24. We agree with the
findings recorded by the Tribunal insofar as the inks other than marker inks
are concerned and confirm the same. Insofar as, marker inks are concerned, we
are of the opinion that the marker inks would fall under CSH 3215.10 as the
same are used in marker pens which are exempt from the payment of excise duty.
25. The then Finance
Minister in his letter dated 28th of May, 1997 had clearly stated that pens and
parts of pens have remained exempted from duty for a long time.
26. In our considered
view, the Tribunal erred in relying upon the HSN for the purpose of marker inks
in classifying them under Chapter Sub-Heading 3215.90 of the said Tariff. The
Tribunal failed to appreciate that the entries under the HSN and the entries
under the said Tariff are completely different. As mentioned above, it is
settled law that when the entries in the HSN and the said Tariff are not aligned,
reliance cannot be placed upon HSN for the purpose of classification of goods
under the said Tariff. One of the factors on which the Tribunal based its
conclusion is the entries in the HSN. The said conclusion in the Order of the
Tribunal is, therefore, vitiated and, accordingly, set aside. We agree with the
findings recorded by the Commissioner (Appeals).
27. For the reasons
stated above, we dismiss the appeals filed by the Revenue and accept the
appeals filed by the assessee. The Order of the Tribunal is confirmed insofar
as inks other than marker inks are concerned. Whereas the Order of the Tribunal
insofar as it has come to the conclusion that marker inks are exigible to pay
duty would fall under Chapter Sub-Heading 3215.90, is set aside.
The marker inks would
be classifiable under CSH 3215.10. Parties to bear their own costs in all the