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

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BHAN, J.

1. These 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”).

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 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

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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. 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

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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 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

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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  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.

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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

28th of May, 1997 had clearly stated that pens and

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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

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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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