REPORTABLE

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 ...Respondent(s)

WITH

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)

J U D G M E N T

1

BHAN, J.

1.These three sets of appeals arise from a common

judgment and order dated 30

th

April, 2002 passed by

the Customs, Excise & Gold (Control) Appellate

Tribunal, Western Zonal Bench at Mumbai (for short

“the Tribunal”).

2.The 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.

3.The 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:-

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No.NAME OF THE INKS INGREDIENTS

1.99-MARKER INKS i) KETONIC SOLVENT

ii) SOLVENT DYES

iii) BINDERS

2. 100–CAMEL FOUNT

DRAWING INK

i) CARBON BLACK (PIGMENT)

ii) SHELLAC BINDER

iii)WATER & PRESERVATIVES

3.07-CAMEL

WATERPROOF DRAWING

INK

i) CARBON BLACK (PIGMENT)

ii) SHELLAC BINDER

iii)WATER & PRESERVATIVES

4. 09–CAMEL SPL.

DRAWING INK BLACK

i) CARBON BLACK (PIGMENT)

ii) SHELLAC BINDER

iii)WATER & PRESERVATIVES

5.98- CAMEL

RAPIDUGRAPH INK

BLACK

i) CARBON BLACK (PIGMENT)

ii) SHELLAC BINDER

iii)WATER & PRESERVATIVES

6. 75- DESIGNERS’

INDIAN INK BLACK

i) CARBON BLACK (PIGMENT)

ii) SHELLAC BINDER

iii)WATER & PRESERVATIVES

7. 75A- DESIGNERS’

INDIAN INK BLACK

i) CARBON BLACK (PIGMENT)

ii) SHELLAC BINDER

iii)WATER & PRESERVATIVES

8.75B – DESIGNERS’

INDIAN INK BLACK

i) CARBON BLACK (PIGMENT)

ii) SHELLAC BINDER

iii)WATER & PRESERVATIVES

9.SKETCHING PEN INKi) 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

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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.

Subsequently, the revenue challenged the said

approved classification list.

6.The assessee manufactures various kinds of

marker pens and sketch pen sets. As per the CBEC

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Trade Notice reported in (39) ELT-T6, it has been

clarified that “marker pens”, Hi-liter pens, up-

liners were “all” different categories of pens.

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%.

Subsequently, w.e.f. 1

st

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

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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 28

th

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 28

th

of

6

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.

Accordingly Fountain 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.

Seeing the 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

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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-

ink.”

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.

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12.Aggrieved by the said Order dated 29

th

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 30

th

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.

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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:-

“EXTRACT OF 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 functional properties.

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(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 point pens.

(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).

(6)Prepared 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.”

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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”

contain Silver Nitrate.

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

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writing inks are considered same and together can

also be seen from the aforesaid letter of the

Finance Minister and the trade notices referred to.

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

writing inks.

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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

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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 INKS”

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

28

th

of May, 1997 had clearly stated that pens and

15

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

16

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 appeals.

....................J.

(ASHOK BHAN)

...................J.

New Delhi; (V.S. SIRPURKAR)

September 03, 2008

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