M/S. HOLOSTICK INDIA LTD.versusCOMMISSIONER OF CENTRAL EXCISE, NOIDA

                       [2015] 4 S.C.R. 576


A               , MIS. HOLOSTICK INDIA LTD.

                                v.

        COMMISSIONER OF CENTRAL EXCISE, NOIDA

B             (Civil Appeal Nos.2729-2730 of 2004)

                        MARCH 30, 2015

             [A.K. SIKRI AND R. F. NARIMAN, JJ.]
c      Central Excise Tariff Act, 1985: Tariff Entry 39.19149.01
  - Classification of security holograms - Embossing of
  coated metallised film and post embossing, there is
  adhesive coating and release coating which results in
  holograms which ultimately is cut to size and utilized by
0
  customers of the appellant for security purposes - Held: By
  virtue of Note 2 to Entry 49, the security hologram part of
  the product is primary and the self adhesive part only
  incidental insofar as the user of the said goods is concerned
E - Hence, product is classifiable u!TE 49.01.

        Allowing the appeals, the Court

       HELD: 1. The original coated metallised film that has
  been used by the appellant has already been classified
F under sub-Heading 3920.36 as a flexible metallised film
  of plastic. The fact that it got laminated later would not
  take it out of this particular sub-Heading. On a cursory
  reading of entry 39.19, it becomes clear that it is part of
  a general scheme dealing with various items of plastics
G and must be read together with 39.20 as 39.20 begins
  with the expression "Other plates ....... ". So read, it is
  clear that what is important is that various sheets, films,
  etc. of plastic should become "self adhesive" in order
H                              576
  M/S. HOLOSTICK INDIA LTD. v. COMM. OF CENTRAL 577
                  EXCISE, NOIDA

to attract 39.19. If, in addition, there is printed matter on A
such sheets, films etc., the question is whether the end
product is properly classifiable under 49.01 which refers
to other products of the printing industry or whether it
falls within self adhesive sheets, films, etc. [Paras 7, 8]
(595-B-E]                                                     B

     2. The first thing to be noticed about tariff entry
49.01 is that it refers to printed books, newspapers and
pictures. The printed books, newspapers and pictures,
manuscripts, typescripts, maps and plans of all kinds, C
are included within this entry whether they further the
public interest in knowledge being disseminated or not.
In fact, it becomes clear from a reading of the
Explanatory Notes to "HSN" that this Heading would
include a large number of "obvious products" which
are set out in this Explanatory Note. On a reading of D
the various products outlined in the Explanatory Note,
it is obvious that they include a large number of
products which have absolutely nothing to do with
disseminating knowledge. [Paras 9, 10, 11] [583-F, H]
[584-A, BJ [585-C]                                       E

     Holographic Security Marking Systems Pvt. Ltd. v.
C. C.E., Mumbai 2003 (151) E.L.T. 470; Collector of Central
Excise, Shillong v. Wood Craft Products Ltd. 1995 (77)
E.L.T. 23 (S.C.) - referred to.                             F

     3. There is no genus in the expressions "printed
books, newspapers, pictures". Indeed, it is clear that the
expressions "manuscripts, typescripts and plans"
which are also part of the Heading also do not reveal
that there is any one genus to which all these items can G
be attributed. All these expressions speak of printed
matter. Newspapers, which are included within entry
49.01 are obviously products of the newspaper industry
and not of the printing industry. The printing industry
would therefore, refer to products of various industries H
578        SUPREME COURT REPORTS                [2015] 4 S.C.R.


A other than the printing industry stricto senso, which has
  printed material on them. Thus, construed, it is clear,
  that Tariff entry 49.01 would also be attracted on the
  facts of this case. Note No. 2 to Entry 49 states that
  except "Except for the goods of Heading No. 39.18 or
B 39.19, plastics, rubber and articles thereof, printed with
  motifs, chan:icters of pictorial representations, which are
  not merely incidental to the primary use of the goods,
  fall in Chapter 49." It is clear therefore, that the question
  resolves itself into whether printing is only incidental to
C the primary use of the goods or is something more than
  something merely incidental. The primary use of the
  product is security and not the quality of being
  adhesive. The factor of adhesiveness is incidental to
  the primary use to which the goods are put, namely, that
0
  they are to be used for security purposes. [Paras 13 to
  16] [585-E-H] [586-A, B, D-G]

          Collector of Central Excise, Shillong v. Wood Craft
      Products Ltd. 1995 (77) E.L.T. 23 (S.C.) - relied on.
 E
                        Case Law Reference

        2003 (151) E.L.T. 470          referred to. Para 5

        1995 (77) E.L.T. 23 {S.C.)     referred to. Para 5
 F
        1995 (77) E.L.T. 23 {S.C.)      relied on.   Para 16

         CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
      2729-2730 of 2004.
 G
           From the Judgment and Order dated 19.12.2003 of the
      Customs Excise & Service Tax Appellate Tribunal, New Delhi
      in Appeal Nos. E/896-897/2002-NB(B).

          V. Lakshmikumaran, M. P. Devanath, Vivek Sharma, L.
 H
      M/S. HOLOSTICK INDIA LTD. v. COMM. OF CENTRAL 579
                      EXCISE, NOIDA

    Charanaya, Aditya Bhattacharya, R. Ramachandran, Hemant A
    Bajaj, Ambarish Pandey, Anurag Kapur, Anandh K for the
    Appellant.

        K. Radhakrishnan, Surender Kumar Gupta, Arijit Prasad,
    Disha Singh, B. Krishna Prasad for the Respondent.                B

         The Judgment of the Court was delivered by

         R. F. NARIMAN, J. 1. The present case concerns itself
    with a classification issue. The facts necessary to appreciate
    the controversy are as follows: -                              C

        2. The appellant manufactures security holograms. At
    the very beginning of the manufacturing process, they use
    coated metallised film which we are informed is classified
    under Tariff entry 39.20.36 after which the said film is          D
    embossed. Post embossing, there is adhesive coating and

         release coating which results in a hologram which
    ultimately is cut to size and utilised by customers of the
    appellant for security purposes. In the show cause notice         E
    dated 04.02.2000, the Department sought to classify the
    security hologram under Tariff entry 39.19 of the Central
    Excise Tariff 1999-2000. In the reply dated 15.05.2000, the
    appellant disputed this and stated that, in fact, the holograms
    ought to be classified under Tariff entry 49.01.                  F

          The Commissioner, Central Excise, by an order dated
     01.01.2002 agreed with the Department's classification and
    ·classified the said goods under Tariff entry 39.19. An appeal
     to the Customs, Excise & Service Tax Appellate Tribunal          G
     (hereinafter referred to as 'CESTAT') by the appellant was
     dismissed. The Tribunal by the impugned judgment dated
     19.12.2003, agreed with the learned Commissioner and
     added reasoning of its own to which we shall advert to
                                                                      H

-
580            SUPREME COURT REPORTS                    [2015] 4 S.C.R.


A     later.

           At this stage, it is important to set out the relevant tariff
      entries: -

           "39.19
B
           3919.00     Self-adhesive plates, sheets, film, foil, tape,
           strip and other flat shapes, of plastics, whether or not in
           rolls.

C          39.20 Other plates, sheets, film, foil and strip, of
           plastics, non- cellular, whether lacquered or metallised
           or laminated, supported or similarly combined with other
           materials or not.

o                            Of polymers of vinyl chloride:

                 3920.11          Rigid, plain

                 3920.12          Flexible, plain

E                3920.13          Rigid, lacquered

                 3920.14          Flexible, lacquered

                 3920.15          Rigid, metallised

F                3920.16          Flexible, metallised

                 3920.17          Rigid, laminated

                 3920.18          Flexible, laminated
G                3920.19          Other

                           Of regenerated cellulose:

                 3920.21     --   Film, plain
H
                                                                           -
M/S. HOLOSTICK INDIA LTD. v. COMM. OF CENTRAL                  581
        EXCISE, NOIDA [R. F. NARIMAN, J.]

      3920.22          Film, lacquered                          A

      3920.23          Film, metallised

      3920.24          Film, laminated

      3920.25          Sheet, plain                             B

      3920.26          Sheet, lacquered

      3920.27          Sheet, metallised

      3920.28         Sheet, laminated                          c
      3920.29          Other

                      Of other plastics:
                                                                D
      3920.31          Rigid, plain

      3920.32          Flexible, plain

      3920.33          Rigid, lacquered
                                                                E
      3920.34          Flexible, lacquered

      3920.35          Rigid, metallised

      3920.36          Flexible, metallised
                                                                F
     3920.37          Rigid, laminated

      3920.38          Flexible, laminated

      3920.39          Other
                                                                G
 49.01 Printed books, newspapers, pictures and other
 products of the printing industry; manuscripts, typescripts
 and plans

 4901.10     -   Transfers (decalcomanias)                      H
582         SUPREME COURT REPORTS                  [2015] 4 S.C.R.


A         4901.20 - Maps and hydrographic or similar charts
      of all kinds including atlases, wall maps, topographical plans
      and globes, printed

          4901.90         Other"
B
           Shri V. Lakshmikumaran, learned counsel appearing
      for the appellant, has raised a number of arguments before
      us. According to him, a reference to the Rules for
      Interpretation of the First Schedule to Central Excise Tariff
c     Act, 1985, when properly read, would necessarily yield the
      result that the said goods would fall only under Entry 49.01.
      In the course of the argument, he also referred to the
      Harmonised System of Nomenclature (called 'HSN')
      Explanatory Notes to which we shall advert a little later.
D
         He also cited before us a decision of the Tribunal
  in 'Holographic Security Marking Systems Pvt. Ltd. v.
  C.C.E., Mumbai [2003 (151) E.L.T. 470]. an appeal from
  which was dismissed by the Supreme Court In addition, he
E cited a judgment of this Court reported in 'Collector of
  Central Excise, Shillong v. Wood Craft Products Ltd.' [1995
  (77) E.L.T. 23 (S.C.)] in support of the proposition that HSN
  Explanatory Notes can be relied upon under certain
  circumstances.
F
        Shri K.Radhakrishnan, learned senior counsel
  appearing on behalf of the Department, countered these
  submissions and sought to impress upon us that the Tribunal
  judgment should be sustained. Apart from the reasoning
G of the Tribunal, according to him, entry 49.01 would not at
  all apply if the ejusdem generis Rule is applied to the various
  items contained therein. Another argument was that viewed
  at from any angle Tariff entry 39.19 is a specific entry
  dealing with self-adhesive items of plastic, and printing on
H such items. being merely incidental to such products would
  M/S. HOLOSTICK INDIA LTD. v. COMM. OF CENTRAL 583
          EXCISE, NOIDA [R. F. NARIMAN, J.]

require us to maintain the classification post entry 39.20 A
under entry 39.19 and not under entry 49.01.

        We have heard learned counsel for the parties.
The first important thing to notice is that the original coated
metallised film that has been used by the appellant has B
already been classified under sub- Heading 3920.36 as a
flexible metallised film of plastic. The fact that it got laminated
later would not take it out of this particular sub-Heading.
The only question which arises is, after such classification,
which is not disputed by the appellant, whether the relevant C
tariff entry would be 39.19 or 49.01.

     On a cursory reading of entry 39.19, it becomes clear
that it is part of a general scheme dealing with various items
of plastics and must be read together with 39.20 as 39.20 o
begins with the expression "Other plates .... ". So read, it is
clear that what is important is that various sheets, films, etc.
of plastic should become "self adhesive" in order to attract
39.19. If, in addition, there is printed matter on such sheets,
films etc., the question is whether the end product is E
properly classifiable under 49.01 which refers to other
products of the printing industry or whether it falls within self
adhesive sheets, films, etc.

         The first thing to be noticed about tariff entry 49.01 is F
that it refers to printed books, newspapers and pictures. Mr.
K. Radhakrishnan sought to project before us that since
printed books, newspapers and pictures are of general
public utility in that they are all knowledge based items, the
idea of this Tariff entry is to have knowledge based products G
of the printing industry which alone would come under 49.01.

      We are afraid we are not able to agree with
the said submission. It is clear that printed books,
newspapers and pictures, manuscripts, typescripts, maps           H
584       SUPREME COURT REPORTS                  [2015] 4 S.C.R.


A and plans of all kinds, are included within this entry whether
  they further the public interest in knowledge being
  disseminated or not. In fact, it becomes clear from a
  reading of the Explanatory Notes to "HSN" that this Heading
  would include a large number of "obvious products" which
B are set out in this Explanatory Note as follows: -

         "The heading includes the following in addition to the
         more obvious products:

c        (1)   Advertising matter (including posters), year
         books and similar publications devoted essentially to
         advertising, trade catalogues of all kinds (including
         book or music publishers' lists, and catalogues of
         works of art) and tourist propaganda. Newspapers,
D        periodicals and journals, whether or not containing
         advertising material, are however excluded (heading
         49.01 or 49.02, as appropriate).

         (2) Brochures containing the programme of a circus,
E        sporting event, opera, play or similar presentation.

         (3) Printed calendar backs with or without illustrations.

         (4) Schematic maps.

F        (5) Anatomical, botanical, etc., instructional charts and
         diagrams.

         (6) Cinema, theatre, concert, railway and other tickets.

        (7) Microcopies on opaque bases of the articles of this
G       Chapter.

        (8) Screens made by printing a film of plastics with
        letters or symbols to be cut out for use in design work.

H       Such screens simply prif}ted with       dots,   lines or
  M/S. HOLOSTICK INDIA LTD. v. COMM. OF CENTRAL                    585
          EXCISE, NOIDA [R. F. NARIMAN, J.]

     squares are excluded (Chapter 39)                              A

     (9) Maximum cards and illustrated first-day covers not
     bearing postage stamps (see also Part (D) of the
     Explanatory Note to heading 97.04).
                                                                    B
     ( 10) Self-adhesive printed stickers designed to be
     used, for example, for publicity, advertising or mere
     decoration, e.g., "comic stickers" and "window
     stickers".

     On a reading of the various products outlined herein,          C
it is obvious that they include a large number of products
which have absolutely nothing to do with disseminating
knowledge.

    The other argument of Shri Radhakrishnan is that the            D
expression "other products of the printing industry" should be
read ejusdem generis with the three expressions preceding
these words, namely, "printed books, newspapers, pictures".

     We do not find any genus in any of these expressions.          E
Indeed, it is clear that the expressions "manuscripts,
typescripts and plans" which are also part of the Heading also
do not reveal that there is any one genus to which all these
items can be attributed. All these expressions speak of
printed matter.                                                     F

     The other argument, namely, that the expression
"printing industry" that is referred to hereinabove, which would
refer to an industry which includes printing presses and
nothing beyond, is also in our opinion not correct. A simple        G
example will suffice. Newspapers, which are included
within entry 49.01 are obviously products of the
newspaper industry and not of the printing industry as is
contended by Shri Radhakrishnan in the narrow sense noted
above. The printing industry would therefore, refer to              H
586         SUPREME COURT REPORTS                   [2015] 4 S.C.R.


A products of various industries other than the printing industry
  stricto senso, which has printed material on them. Thus,
  construed, it is clear, that Tariff entry 49.01 would also be
  attracted on the facts of this case. One other interesting thing
  needs to be noted. In the Explanatory Notes of HSN which
B have already been referred to, Item 1O refers to self
  adhesive printed stickers. It is clear that if Shri
  Radhakrishnan were right, such stickers not being products
  of the printing industry as narrowly understood and not being
  "other products" if one were to apply the ejusdem generis
C rule, would obviously be outside this entry. The fact that Item
  No. 10 in the Explanatory Notes to HSN exists is also an
  important pointer to the construction of entry 49.01 which we
  have just given above.

D          The real question, therefore, in this appeal is the
      application of Note No. 2 to entry 49, which reads as follows:


           "Except for the goods of Heading No. 39.18 or 39.19,
E          plastics, rubber and articles thereof, printed with motifs,
           characters of pictorial representations, which are not
           merely incidental to the primary use of the goods, fall
           in Chapter 49."

F      It is clear therefore, that the question resolves itself into
  whether printing is only incidental to the primary use of the
  goods or is something more than something merely
  incidental. We have already referred to the process
  hereinabove and the final product which emerges is a product
G which is used for security purposes. It is important to
  remember therefore, that the primary use of the product is
  security and not the quality of being adhesive. Here again,
  a simple example will suffice. Take an adhesive tape with
  a monogram printed upon it. The primary use of such tape
H is by virtue of its adhesiveness to bind and package
  M/S. HOLOSTICK INDIA LTD. v. COMM. OF CENTRAL 587
          EXCISE, NOIDA [R. F. NARIMAN, J.]

  containers in which goods are to be stored and transported. A
  Obviously, in such an example, the printed monogram of
  such adhesive tape would be incidental to the primary use
· of the said goods - the adhesive tape. By way of contrast,
  in the present case, the factor of adhesiveness is
  incidental to the primary use to which the goods are put, B
  namely, that they are to be used for security purposes.
  Also, the HSN Explanatory Notes are relevant, which
  according to the judgment of this Court reported in 'Collector
  of Central Excise, Shillong v. Wood Craft Products Ltd.'
  [1995 (77) E.L.T. 23 (S.C.)] in para 12 are a safe guide in C
  case of doubt: -

      "12. It is significant, as expressly stated, in the
      Statement of Objects and Reasons, that the Central
      Excise Tariffs are based on the HSN and the                  D
      internationally accepted nomenclature was taken into
      account to "reduce disputes on account of tariff
      classification". Accordingly, for resolving any dispute
      relating to tariff classification, a safe guide is the
      internationally accepted nomenclature emerging from          E
      the HSN. This being the expressly acknowledged
      basis of the structure of Central Excise Tariff in the Act
      and the tariff classification made therein, in case of any
      doubt the HSN is a safe guide for ascertaining the true      F
      meaning of any expression used in the Act. The ISi
      Glossary of Terms has a different purpose and,
      therefore, the specific purpose of tariff classification
      for which the internationally accepted nomenclature in
      HSN has been adopted, for enacting the Central Excise        G
      Tariff Act, 1985, must be preferred, in case of any
      difference between the meaning of the expression given
      in the HSN and the meaning of that term given in the
      Glossary of Terms of the ISi."
                                                                   H
588        SUPREME COURT REPORTS                  [2015] 4 S.C.R.


A      When one goes to the HSN Explanatory Notes to 'other
  printed matter', Item No. 10 which has already been referred
  to hereinabove states that 'self adhesive printed stickers
  designed to be used, for example, for publicity, advertising
  or mere decoration, e.g. "comic stickers" and "window
B stickers"' would be included.

        It also goes on to say that goods of entry 39.19 (inter
  alia) because they are merely incidental to the primary use
  of the products, would not be so included. This test again
C provides a useful application of what is includable and what
  is left out by applying the "primary" and "incidental" test
  outlined in Note 2 above. Obviously, a comic sticker would
  have as its primary use the "comic part", the adhesive or
  sticker part being only incidental to its primary use. Similarly,
D in the facts of the present case, a security hologram sticker
  would have as its primary part, the security hologram, the
  sticker part or adhesive part only being incidental to the
  primary use of the said goods.

E         One other submission of Shri Radhakrishnan needs to
      be dealt with. He placed before us two circulars of the
      Department one dated 14.08.1995 and the other dated
      21.06.1996. These circulars reads as follows: -

F         Circular No. 142/53/95-CX, dated 14.08.1995

           "I am directed to say that certain doubts have been
          expressed regarding the correct classification of Photo
          Identity Cards and Holograms - whether these should
G         be classified under Chapter 39 as articles of
          plastics or under Chapter 49 as products of printing
          industry.

          2.   The production of photo-identity cards involves
          videography of the person, computerised capture of
H
M/S. HOLOSTICK INDIA LTD. v. COMM. OF CENTRAL 589
        EXCISE, NOIDA [R. F. NARIMAN, J.]

  the videographed image, merging of the image with A
  the date of the person already entered in the computer
  and the computerised printing out of the merged data
  and image through a laser printer. This print out is
  verified, validated and pasted with the Holograms of
  the State emblem and then cut, folded and laminated B
  before issue to the person.

  3. The Board has carefully considered the matter. It
  is felt that photo identity cards get their distinctive
  character and identity because of the date imprinted C
  on them and not because of the material they are made
  of or because of their shape and size. Thus, photo-
  identity cards are a distinct product as compared to
  other identifiable articles of plastic.
                                                          D
  4. Section Note(2) of Section VII of Central Excise
  Tariff also clearly excludes photo identity cards from
  the purview of Chapter 39 and places them squarely
  under Chapter 49.
                                                          E
  5. On the other hand, Chapter Note (2) of Chapter
  49 states that printing also means reproduced by
  means of a duplicating machine, produced under the
  control of a computer, embossed, photographed,
  photo-copied, thermocopied or typewritten. Further, as F
  per general explanatory notes to HSN - page 691, with
  the few exceptions as referred to in these notes,
  Chapter 49 covers all printed matter of which the
  essential nature and use is determined by the fact of
  its being printed with motifs, characters or pictorial G
  representations.

  6. Keeping in view the distinctive character, process
  of manufacture, relevant tariff headings, Section notes,
  Chapter notes and HSN notes, the Board is of the           H
590    SUPREME COURT REPORTS                 [2015] 4 S. C.R.


A     view that photoidentity cards and holograms merit
      classification under sub-heading 4901.90 of the
      Schedule to the Central Excise & Tariff Act, 1985.

      7. All pending disputes may be finalized in view of the
B     above guidelines. Field formations and trade may be
      informed accordingly."

      Circular No. 35/96-Cus., dated 21.06.1996

      Subject     Classification of holograms under First
c     Schedule, CTA 1975 - Regarding.

       "Doubts have been raised regarding classification
      of "embossed holograms" under First Schedule to the
      Customs Tariff Act, 1975 (Customs Tariff), in the
D     context of the Boards Circular No. 141152/95-CX.4
      dated 14. 08.1995 stating the "photo identify cards
      and holograms" are classifiable under sub-heading
      4901.90 of the Central Excise Tariff. Subsequently it
      has been clarified that the hologram, as such, would
E     be classified keeping in view the manufacturing process
      and end use etc.

      2.    The issue has been examined. It is observed
      that "embossed holograms" presently are made by
F     embossing plastic films with mechanical dies and are
      self adhesive, however in some cases, the possibility
      such holograms being other than self adhesive is also
      not ruled out.

G     3. Self-adhesive plates, sheets, film, foil, tape, strip
      and other flat shapes, of plastic are classifiable under
      Heading 39.19 of the Customs Tariff. As per Note 2
      to Section VII, read with Explanatory Notes to
      Heading 39.19, this heading also includes articles
H     printed with motifs, characters or. pictorial
  M/S. HOLOSTICK INDIA LTD. v. COMM. OF CENTRAL 591
          EXCISE, NOIDA [R. F. NARI MAN, J.]

     representations, which are not merely incidental to the A
     primary use of the goods. In view of this, self-
     adhesive embossed holograms will fall under Heading
     3919.90 of the Customs Tariff. However embossed
     plastic holograms, which are not self-adhesive, will fall
     under Heading 49.11, in view of Note 2 to Chapter 49." B

     It will be seen that under Para 3 of the second circular
self adhesive embossed holograms will now fall under
Heading 39.19, whereas embossed plastic holograms which
are not self adhesive alone will fall under entry 49. This C
is said to be in view of Note 2 to Chapter 49. We are
afraid that the second circular which has been quoted
hereinabove does not set out the law correctly. It is clear that
merely because a particular embossed hologram is self
adhesive, therefore in all cases, it will attract entry 39 is not D
correct. What is to be seen, as has been pointed out
above, is whether the self adhesive part of the product is of
primary use or the printed matter is of primary use. It cannot
be that invariably in all cases, the moment a hologram is
self adhesive it will fall within entry 39 without more. To this E
extent, it is clear that the circular as has been noted above,
does not lay down the correct law.

   We will now come to the impugned judgment. The
CESTAT in the impugned judgment states as under: -               F

     "It is thus apparent that even if printing is of essential
     nature, the product of 39.19 would remain classifiable
     under Heading 39.19 and will not be regarded as "a
     product of printing industry". This view is further G
     strengthened by the Explanatory Notes of HSN below
     Heading 39.19 which reads as under:

     "It should be noted that this heading includes articles
     printed with motifs, character or pictorial                 H
592       SUPREME COURT REPORTS                    [2015] 4 S.C.R.


A        representations which are not merely incidental to
         the primary use of the goods (See Note 2 to Section
         VII)".

         General Explanatory Notes of HSN below Chapter 49
B        clearly mentions that "Goods of Heading 39.18, 39.19,
         48.14 or 48.21 are also excluded from this Chapter,
         even if they are printed with motifs, characters or
         pictorial representations, which are merely incidental to
         the primary use of the goods." For this reason "self-
c        adhesive printed stickers designed to be used, for
         example, for publicity, advertising or mere decoration,
         eg. "comic stickers" and "window stickers" mention in
         HSN Notes below Heading 49 .11 would not cover the
         products of Heading 39.19. In view of this, the
D        decisions relied upon by the learned Advocate are not
         applicable to the facts of the present matters. In
         Holographic Security Marking Systems case the
         product involved was "stamping foils" falling under
         Heading 32.12 of the Tariff which was classified under
E        Heading 49.01 after the hologram was printed thereon.
         The Tribunal observed that "until the product became
         transformed because of the printing of the material on
         it, it continued to be stamping foil..". In the present case
         even after printing, because of Note 2 to Section VII,
F
         the product continues to remain classified under
         Heading 39.19 of the Tariff. We thus hold the
         classification of the impugned product under Heading
         39.19 of the Tariff."
G     It is clear that the aforesaid reasoning is flawed in more
  than one respect. After setting out the Explanatory Notes
  to HSN and the conclusion of such Note that products such
  as "comic stickers" would not fall within entry 39, the
H CESTAT arrives at the exactly opposite result without telling
  MIS. HOLOSTICK INDIA LTD. v. COMM. OF CENTRAL                 593
          EXCISE, NOIDA [R. F. NARIMAN, J.]

us why. Secondly, we are again left guessing as to how the       A
self adhesive aspect of the product is more important than
the security aspect of the said product. Equally, there is no
reasoning so far as this aspect is concerned. We therefore
find that the CESTAT is not correct in the finding reached
above and the judgment dated 19.12.2003 of the CESTAT            B
is, therefore, set aside.

      Only one further thing remains. Various arguments were
made by both sides on the Rules of Interpretation of the
First Schedule to the Central Excise Tariff Act, 1985. Shri C
Radhakrishnan referred to and relied upon Rule 1 and Shri
Lakshmikumaran referred to and relied upon Rule 3. We do
not think it necessary to go into any of these Rules for the
purposes of this judgment inasmuch as we have found as a
fact, in accordance with Note 2 to entry 49, that the security D
hologram part of the product in question is primary and the
self adhesive part only incidental insofar as the user of the
said goods is concerned. With the above observations, the
appeals are allowed. There will be no orders as to costs. We
are informed, that the appellant has paid the duty during the E
pendency of these appeals. He will be entitled to a refund
of the same in accordance with law.
Devika Gujral                                 Appeal allowed.
                                                                 F