Full Judgment Text
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PETITIONER:
ATUL GLASS INDUSTRIES (PVT) LTD. ETC.
Vs.
RESPONDENT:
COLLECTOR OF CENTRAL EXCISE, ETC.
DATE OF JUDGMENT10/07/1986
BENCH:
PATHAK, R.S.
BENCH:
PATHAK, R.S.
MUKHARJI, SABYASACHI (J)
CITATION:
1986 AIR 1730 1986 SCR (3) 126
1986 SCC (3) 480 JT 1986 41
1986 SCALE (2)15
CITATOR INFO :
RF 1991 SC 999 (14)
ACT:
Central Excises and Salt Act, 1944-First Schedule,
Tariff Item Nos. 23A(4), 34A and 68-’Glass Or Glass ware’-
Interpretation of-Glass mirrors-Glass Screens used in motor
Vehicles-Classificaton of.
HEADNOTE:
The appellant carries on the business of manufacturing
and selling glass mirrors. Before March 1, 1979 glass
mirrors were treated as exempt from duty as they were
manufactured from duty paid glass. This exemption was
cancelled from March 1, 1979 and in Tariff Item 23A(4) the
words ’other glass and glass ware’ were substituted for the
words ’other glass ware’.
On January 28,1980, the Excise Authorities issued a
notice calling upon the appellant to take out an L-4 Licence
on the ground that glass mirrors were classifiable as ’other
glass’ within the meaning of Tariff Entry No. 23A(4) of the
First Schedule to the Central Excises and Salt Act, 1944, as
a product dutiable from March 1, 1979.
The appellant filed a writ petition in the High Court
and simultaneously preferred an appeal before the Collector
(Appeals). The High Court disposed of the writ petition with
the observation that the appellant should pursue its appeal
before the Collector (Appeals). The appeal was allowed by
the Collector (Appeals) holding that Tariff Item No. 68
applied to glass mirrors.
On appeal by the Revenue, the Customs, Excise and Gold
(Control) Appellate Tribunal reversed the decision of the
Collector (Appeals)and held that Tariff Item No. 23A(4) was
attracted, and that the glass mirrors should be classified
as ’glass ware’.
In the transferred cases, the manufacturers of motor
vehicles place orders with the petitioner for the
manufacture of screens for fitting in motor vehicles,
commonly known as wind screens, rear
127
screens, door screens, and these were to be manufactured
according to the specific shapes and measurements indicated
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in the orders for the different vehicles.
The Superintendent of Central Excise called upon the
petitioner to pay excise duty on the basis that these
screens fell under Tariff Item No. 23A(4) relating to ’glass
and glass ware’. The petitioner filed writ petitions in the
High Court challenging the view taken by the Excise
Authorities.
On the questions: "Whether glass mirrors fall under
Tariff Item No. 23A(4) or Tariff Item No. 68 and whether
glass screens fitted in motor vehicles as wind screen, rear
screens and window screens fall under Tariff Item No. 23A(4)
or Tariff Item No. 34A or Tariff Item No. 68 of the First
Schedule to the Central Excises and Salt Act 1944", allowing
the Appeal and the Writ Petitions in the transferred cases,
the Court,
^
HELD: (1) Glass mirrors cannot be classified as ’other
glass and glass ware’ set forth in Tariff Item No. 23A(4),
and must therefore fall under the residuary Tariff Item No.
68. [132F-G]
(2) The original glass sheet undergoes a complete
transformation when it emerges as a glass mirror. What was a
piece of glass simpliciter has now become a commercial
product with a reflecting surface. Into the process of
transformation have gone successive stages of processing.
The evolved product is completely different from the
original glass sheet. What was once a glass piece in its
basic character has no longer remained so. It has been
reduced to a mere medium. That is clear if regard is had to
the fundamental function and qualities of a glass mirror.
The power to reflect an image is a power derived not from
the glass piece but principally from the silvering and other
processes applied to the glass medium. If any part of the
coating is scratched and removed, that particular area of
the glass mirror will cease to be glass mirror. That simple
test demonstrates the major importance attributable to the
chemical deposit and coating which constitute a material
component of a glass mirror. It is not mandatory that a
mirror employed for the purpose of reflecting an image
should have a glass base. Copper mirrors have been known
from the dawn of history. Now acrylic sheets are sometimes
used instead of glass for manufacturing mirrors. Therefore,
a glass mirror cannot be regarded as a glass. For the same
reason, it cannot be classified as a ’glass ware’, for
’glass ware’
128
means merchandise made of glass and understood in its
primary sense as a glass article. A glass bowl, a glass
vase, a glass tumbler, a glass table top and so on are all
articles in which the primary component is glass. They are
nothing more and nothing less. Any treatment of an
ornamental nature applied to such articles does not derogate
from their fundamental character as glass articles. It is
quite the contrary in the case of a glass mirror. [132H;
133A-F]
(3) It is a matter of common experience that the
identity of an article is associated with its primary
function. It is only logical that it should be so. When a
consumer buys it, it is because it performs a specific
function for him. There is a mental association in the mind
of the consumer between the article and the need it supplies
in his life. It is the functional character of the article
which identifies it in his mind. In the case of a glass
mirror, the consumer recalls primarily the reflective
function of the article more than anything else. It is a
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mirror, an article which reflects images. It is referred to
as a glass mirror only because the word glass is descriptive
of the mirror in that glass has been used as a medium for
manufacturing the mirror. The basic or fundamental character
of the article lies in its being a mirror. [134C-E]
State of Uttar Pradesh v. M/s. Kores (India) Ltd.
[1977] (1) S.C.R. 837, Porritts and Spencers (Asia) Ltd. v.
State of Haryana [1978] (42) S.T.C. 433, Commissioner of
Sales Tax U.P. v. Macneill & Barry Ltd. Kanpur, [1985] (2)
SCALE 1093, Delhi Cloth and General Mills Co. Ltd. v. State
of Rajasthan & Ors. [1980] (3) S.C.R.1109, Geep Flashlight
Industries Ltd. v. Union of India and Others [1985] (22)
E.L.T.3, Indian Aluminium Cables Ltd. v. Union of India and
Others. (1985) 3 S.C.C. 284 and Indo International
Industries v. Commissioner of Sales Tax. Uttar Pradesh,
[1981] (3) S.C.R. 294 relied upon.
State of Orissa v. Gestetner Duplicators (P) Ltd.
[1974] (33) S.T.C. 333 and State of Orissa v. Janta Medical
Stores [1976] (37) S.T.C. 33 approved.
Commissioner of Sales Tax, U.P. v. Banaras Bead
Manufacturing Co. [1970] (25) S.T.C. 100 distinguished.
(4) Classification of glass mirrors as ’glass and glass
ware’ in Chapter 70 of the Brussels Tariff Nomenclature,
does not advance the case of the Revenue, because the First
Schedule to the Central Excises
129
and Salt Act was not modelled on the Brussels Tariff
Nomenclature. There is nothing to show that the Tariff Items
were classified in the Schedule on the basis of the Brussels
Tariff Nomenclature. It was when the Customs Tariff Act,
1975 was enacted that the First Schedule to that Act was
framed in accordance with the Brussels Tariff Nomenclature.
The glass mirrors were still not specifically mentioned
under the Customs Tariff Act 1975. They are now being
brought in as such by the Customs Tariff Bill 1985. [135E-H]
(5) Classification of glass mirrors by the Indian
Standards Institution as "glass and glass ware" in its
glossary of terms furnishes a piece of evidence only as to
the manner in which the product has been treated for the
purpose of the specifications laid down by the Indian
Standard Institution. [136A-B]
(6) The screens used in motor vehicles cannot be
described as "glass or glass wares" under Tariff Item No.
23A(4). No one dealing in or using the screens would
consider them as "glass or glass ware". They can only be
considered as motor vehicle parts. Even if it is assumed
that they could fall under Tariff Item No. 23A(4) relating
to "glass and glass ware" also, in as much as Tariff Item
No. 34A is a special entry and Tariff Item No. 23A(4) is a
general entry, the special must exclude the general and
therefore also it is Tariff Item No. 34A which prevails and
is attracted. [138F-H]
(7) After the amendment of Tariff Item No. 34A by the
Finance Act 1979 the scope of that Tariff Item is restricted
to the 15 commodities specified therein. That being so the
screens manufactured by the petitioner merit classification
in the residuary Tariff Item No. 68. [138H; 139A-B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3435 of
1984 etc.
From the Order dated 24.7.1984 of the Customs, Excise
and Gold (Control) Appellate Tribunal, New Delhi in Appeal
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No. ED/SB/A.664/84-D.
K.K. Venugopal, Soli J. Sorabji, Bishambar Lal, H.K.
Kochar I.L. Beri, P.K. Chatterjee, Rajesh Agarwal and Arun
Kr Sinha for the Appellants.
G. Das, A. Subhashini, P.P. Singh, C.V. Subba Rao and
Sushma Ratha for the Respondents.
130
The Judgment of the Court was delivered by
PATHAK, J. The question raised in the appeal filed by
Atul Glass Industries (Pvt.) Ltd. (C.A. No. 3435 of 1984)
under s. 35L(b) of the Central Excises and Salt Act, 1944 is
whether glass mirrors fall under Tariff Item No. 23A(4) or
Tariff Item No. 68 of the First Schedule to the Central
Excises and Salt Act.
That is also the question raised in the Transferred
Cases Nos. 349, 350 and 355 of 1983 filed by the Hindustan
Safety Glass Works Ltd., with an additional question whether
the glass screens fitted in motor vehicles as wind screens,
rear screens and window screens fall under Tariff Item No.
23A(4) or Tariff Item No. 34A or Tariff Item No. 68.
The Appellant, Atul Glass Industries (Pvt.) Ltd.,
carries on the business of manufacturing and selling glass
mirrors. It purchases duty paid glass sheets from the
manufacturers of glass, and either in their original size or
after reducing them to smaller sizes puts the glass sheets
through a process of treatment. The glass pieces are buffed
with the aid of buffing machines in order to improve the
surface of the glass and prepare it for mirror processing.
The glass is fed into an automatic silvering conveyor line
where it passes through a stage of mechanical cleaning and
polishing with the aid of nylon bristle brushes so that the
glass surface is rendered free of scratches, dust particles
and carbohydrates. The glass is then washed mechanically
with the aid of cylindrical brushes using distilled water as
a washing medium. Thereafter the glass surface is sensitised
by chemical compounds such as stannous chloride, and rinsed
with distilled or demineralised water to remove excess of
chemicals. The sensitised glass is passed through a chamber
where silver in liquid form with the aid of reducing
solutions is applied as a very thin and uniform adherent
reflective film on the surface of the glass. The silver
coating, being of malleable metal, is protected by a coating
of copper in the form of a thin metal deposit with the aid
of an electromagnetic spray system. The excess of copper and
acidic solutions are rinsed away with the distilled or
demineralised water. Subsequently hot air is employed for
the purpose of drying, and the humidity is removed
completely with the aid of an infra-red heating system.
After thorough drying, the silver and copper coatings are
protected with four coats of special mirror backing paint
applied with the aid of a roller coating machine in four
stages. The paint is baked in the baking conveyor after
thorough drying. The other side of the mirror is
131
mechanically cleaned. The mirror thus produced is finally
sent for quality control inspection. Cut glass is employed
in the case of decorative mirrors. The cut glass is shaped
with the aid of cutting lathemachines before subjecting it
to the silver process. Edge grinding or bevelling and hole-
drilling is done, if required, after the mirror has been
manufactured.
Before the budget of 1979, Tariff Item No. 23 relating
to ’glass and glass-ware’ prescribed the different rates of
duty in respect of (1) sheet glass and plate glass, (2)
laboratory glass-ware, (3) glass shells, glass globes and
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chimney for lamps and lantern, and (4) ’other glassware
including table-ware’. During the period following the
budget of 1979 which is the period which concerns us, Tariff
Item No. 23A relating to glass and glass-ware specified the
rates of duty in respect of (1) flat glass, which included
sheet glass, wired glass and rolled glass whether in the
form of plate glass, figured glass or in any other form, (2)
laboratorty glass-ware, (3) glass shells, glass globes and
chimney for lamps and lantern and (4) ’other glass and
glass-ware including table-ware’. Tariff Item No. 68 is of
residuary character and relates to "all other goods not
elsewhere specified," but excluding alcohol, opium and
certain other goods specified therein. The rate of duty is
higher if the product falls under Tariff Item No. 23A(4)
than if it fell under Tariff Item No. 68. The appellant
submitted a classification list showing glass mirror as
covered by duty under Item No. 68. Before March 1, 1979
glass mirrors were treated as exempt from duty as they were
manufactured from duty paid glass. The exemption was
cancelled from March 1, 1979. Simultaneously Tariff Item No.
23A(4) underwent an amendment, as mentioned earlier, by the
substitution of words ’other glass and glass-ware’ for the
words ’other glass-ware’.
On January 28, 1980 the Excise Authorities issued a
notice calling upon the appellant to take out an L-4 Licence
on the ground that glass mirrors were classifiable as ’other
glass’ within the meaning of Tariff Entry No. 23A(4) as a
product now dutiable from March 1, 1979. The appellant filed
a writ petition in the Delhi High Court and simultaneously
preferred an appeal before the Collector (Appeals). The High
Court disposed of the writ petition without deciding the
question of liability to duty on its merits, observing that
the appellant should pursue its appeal before the Collector
(Appeals). On January 24, 1984 the appeal was allowed by the
Collector (Appeals). He held that Tariff Item No. 68 applied
to glass mirrors. The Revenue appealed to the Customs,
Excise and Gold (Control) Appellate Tribunal.
132
The Appellate Tribunal allowed the appeal and reversed the
decision of the Collector (Appeals) holding that Tariff Item
No. 23A(4) was attracted. The Appellate Tribunal held that
glass mirrors should be classified as ’glass ware’. And now
this appeal.
It appears from the record before us that the true
classification of glass mirrors has been the subject of
fluctuating opinion among the higher echelons of the
Revenue. Opinion has varied from time to time. Tariff Advice
No. 60 of 1979 dated December 18, 1979 issued by the Central
Board of Excise and Customs took the stand that glass
mirrors could be described as glass ware and therefore,
merited classification under Tariff Item No. 23A(4).
Subsequently on doubts being raised regarding such
classification, the Central Board of Excise and Customs
considered the matter further, and by Tariff Advice No. 61
of 1980 dated September 27, 1980 opined that glass mirrors
would fall under Tariff Item No. 68 in as much as while
glass sheets were used as raw material the subsequent
processing applied thereto gave rise to a different
commercial product altogether, the utility of the glass
being reduced to a mere medium. This was, of course, subject
to the condition that the glass sheets, out of which the
glass mirrors were prepared, had paid appropriate duty under
Tariff Item No. 23A before being employed in the manufacture
of mirrors. The controversy was re-opened later, and the
Central Board of Excise and Customs reverted to its original
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understanding of the classification for the product. By
Tariff Item No. 41 of 1981 dated May 7, 1981 it pointed out
that glass mirrors had been classified under the Brussels
Tariff Nomenclature as "glass and glass-ware" and taking the
view that after undergoing silvering a glass mirror still
remained glass it advised that glass mirrors should be
treated as liable to excise duty under Tariff Item No.
23A(4) as ’other glass and glass-ware’. It has been noticed
that the Superintendent of Central Excise called upon the
appellant to take out an L-4 Licence on the footing that
glass mirrors fell under Tariff Item No. 23A(4), that on
appeal, the Collector (Appeals) reached the conclusion that
it was not open to such classification but fell under the
residuary Tariff Item No. 68, and that the Appellate
Tribunal thereafter reversed the Collector (Appeals) and
upheld the Superintendent of Central Excise. It is in this
uncertain climate of opinion that the question calls for
decision by this Court.
A broad description of the process through which a
glass sheet passes has been detailed earlier. It indicates
clearly to our mind that the original glass sheet undergoes
a complete transformation when it
133
emerges as a glass mirror. What was a piece of glass
simpliciter has now become a commercial product with a
reflecting surface. Into the process of transformation have
gone successive stages of processing with the aid of
chemicals such as stannous chloride, silver nitrate and
copper coating besides an entire range of physical
proscesses involving polishing, washing, coating, drying,
varnishing, evaporation and cooling. The evolved product is
completely different from the original glass sheet. What was
once a glass piece in its basic character has no longer
remained so. It has been reduced to a mere medium. That is
clear if regard is had to the fundamental function and
qualities of a glass mirror. The power to reflect an image
is a power derived not from the glass piece but principally
from the silvering and other processes applied to the glass
medium. If any part of the coating is scratched and removed,
that particular area of the glass mirror will cease to be
glass mirror. That simple test demonstrates the major
importance attributable to the chemical deposit and coating
which constitute a material component of a glass mirror. It
is not mandatory that a mirror employed for the purpose of
reflecting an image should have a glass base. Copper mirrors
have been known from the dawn of history. In the modern age,
acrylic sheets are sometimes used instead of glass for
manufacturing mirrors. It is apparent, therefore, that a
glass mirror cannot be regarded as a glass. For the same
reason, it cannot be classified as ’glass ware’, for ’glass
ware’ means merchandise made of glass and understood in its
primary sense as a glass article. A glass bowl, a glass
vase, a glass tumbler, a glass table-top and so on are all
articles in which the primary component is glass. They are
nothing more and nothing less. Any treatment of an
ornamental nature applied to such articles does not derogate
from their fundamental character as glass articles. It is
quite the contrary in the case of a glass mirror. The case
is more akin to that of carbon paper. A sheet of paper with
a carbon coating thereon is employed for the purpose of
producing copies of the original. The paper is a mere base
while the function is performed by the carbon coating. This
Court held in State of Uttar Pradesh v. M/s Kores (India)
Ltd. [1977] (1) S.C.R. 837, that carbon paper could not be
described as paper. It referred to the functional difference
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between the two, and pointed out that while paper would be
understood as meaning a substance which was used for writing
or printing or drawing on or for packing or decorating or
covering the walls, carbon paper, which is manufactured by
coating the tissue paper with a thermosetting ink based
mainly on wax, non drying oils, pigments and dyes could not
be so described.
134
The test commonly applied to such cases is: How is the
product identified by the class or section of people dealing
with or using the product? That is a test which is attracted
whenever the statute does not contain any definition.
Porritts and Spencer (Asia) Ltd. v. State of Haryana [1978]
(42) S.T.C. 433. It is generally by its functional character
that a product is so identified. In Commissioner of Sales
Tax, U.P. v. Macneill & Barry Ltd., Kanpur [1985] (2) SCALE
1093. This Court expressed the view that ammonia paper and
ferro paper, used for obtaining prints and sketches of site
plans could not be described as paper as that word was used
in common parlance. On the same basis the Orissa High Court
held in State of Orissa v. Gestetner Dluplicators (P) Ltd.
[1974] (33) S.T.C. 333 that stencil paper could not be
classified as paper for the purposes of the Orissa Sales Tax
Act. It is a matter of common experience that the identity
of an article is associated with its primary function. It is
only logical that it should be so. When a consumer buys an
article, he buys it because it performs a specific function
for him. There is a mental association in the mind of the
consumer between the article and the need it supplies in his
life. It is the functional character of the article which
identified it in his mind. In the case of a glass mirror,
the consumer recalls primarily the reflective function of
the article more than anything else. It is a mirror, an
article which reflects images. It is referred to as a glass
mirror only because the word glass is descriptive of the
mirror in that glass has been used as a medium for
manufacturing the mirror. The basic or fundamental character
of the article lies in its being a mirror. It was observed
by this Court in Delhi Cloth and General Mills Co. Ltd. v.
State of Rajasthan & Ors. [1980] (3) S.C.R. 1109. Which was
a case under the Sales Tax law:
"In determining the meaning or connotation of
words and expressions describing an article or
commodity the turnover of which is taxed in a
sales tax enactment, if there is one principle
fairly well-settled it is that the words or
expression must be construed in the sense in which
they are understood in the trade, by the dealer
and the consumer. It is they who are concerned
with it, and it is the sense in which they
understand it that consitutes the definitive index
of the legislative intention when the statute was
enacted."
That was also the view expressed in Geep Flashlight
Industries Ltd. v. Union of India and Others. [1985]) (22)
E.L.T. 3. Where the goods are not marketable that principle
of construction is not attract-
135
ed. Indian Aluminium Cables Ltd.v. Union of India and
Others. [1985]) (3) S.C.C. 284. The question whether
thermometers, lactometers, syringes, eye-wash glasses and
measuring glasses could be described as ’glass ware’ for the
purpose of the Orissa Sales Tax Act, 1947 was answered by
the Orissa High Court in State of Orissa v. Janta Medical
Stores [1976]) (37) S.T.C. 33. In the negative. To the same
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effect is the decision of this Court in Indo International
Industries v. Commissioner of Sales Tax, Uttar Pradesh,
[1981] (3) S.C.R. 294. Where hypodermic clinical syringes
were regarded as falling more accurately under the entry
relating to "hospital equipment and apparatus" rather than
under the entry which related to "glass wares" in the U.P.
Sales Tax Act.
Reliance was placed by the Revenue on Commissioner of
Sales Tax, U.P. v. Banaras Bead Manufacturing Co.
[1970])(25) S.T.C. 100. Where the Allahabad High Court held
that glass beads could be described as ’glass ware for the
purpose of a Notification issued under the U.P. Sales Tax
Act. The decision of the High Court rested on the manner in
which the contextual setting was altered in successive and
different Notifications promulgated under the U.P. Sales Tax
Act, indicating the content of the expression as developed
through successive Notifications.
Our attention has been drawn on behalf of the Revenue
to the circumstance that glass mirrors have been classified
as ’glass and glass ware’ in Chapter 70 of the Brussels
Tariff Nomenclature. It seems to us that this circumstance
can hardly advance the case of the Revenue, because the
First Schedule to the Central Execises and Salt Act does not
appear to have been modelled on the Brussels Tariff
Nomenclature. There is nothing to show that the Tariff Items
were classified in the Schedule on the basis of the Brussels
Tariff Nomenclature. It was when the Customs Tariff Act,
1975 was enacted that the First Schedule to that Act was
framed in accordance with the Brussels Tariff Nomenclature,
evidently because the progress made in industrial growth and
economic development, and the substantial changes in the
composition and pattern of India’s external trade called for
the need to modernise and rationalise the nomenclature of
India’s Tariff in line with contemporary conditions. The
glass mirrors were still not specifically mentioned under
the Customs Tariff Act, 1975. They are now being brought in
as such by the Customs Tariff Bill, 1985.
136
It is pointed out that glass mirrors have been
classified by the Indian Standards Institution as "glass and
glass ware" in the glossary of terms prepared by it in
respect of that classification. That, to our mind, furnishes
a piece of evidence only as to the manner in which the
product has been treated for the purpose of the
specifications laid down by the Indian Standards
Institution. It was a test employed by this Court in Union
of India v. Delhi Cloth & General Mills, [1963] Supp. (1)
S.C.R. 586, but was regarded as supportive material only of
the expert opinion furnished by way of evidence in that
case. The considerations to which we have adverted should,
in our opinion, have greatly weighed in deciding the
question raised in this appeal. So also in Union Carbide Co.
Ltd. v. Assistant Collector of Central Excise and Others,
[1978] E.L.T. 180, the description set forth in the
publications of the Indian Standards Institution was
regarded as a piece of evidence only. There were other more
tangible considerations which weighed with the Court in
reaching its conclusions.
We are firmly of the view that glass mirrors cannot be
classified as ’other glass and glass ware’ set forth in
Tariff Item No. 23A(4), and must therefore fall under the
residuary Tariff Item No. 69.
An additional point arises in M/s Hindustan Safety
Glass Works Ltd. (Transfer Cases Nos. 349, 350 and 355 of
1983). The manufacturers of motor vehicles place orders with
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the appellant for the manufacture of screens for fitting in
motor vehicles. They are commonly known as wind screens,
rear screens and door screens. The screens are manufactured
according to the specific shape and measurements indicated
in the orders, for different vehicles require screens of
different shapes and measurements. The screen is
manufactured from sheet glass. It is first given shape and
size according to the specifications contained in the order
and thereafter subjected to the process of toughening. It is
a fabricated article.
The Superintendent of Central Excise called upon the
petitioner to pay excise duty on the basis that the screens
fell under Tariff Item No. 23A(4) relating to ’glass and
glass ware’. The petitioner filed writ petitions in the
Allahabad High Court challenging the view taken by the
Excise authorities. The question in these cases is whether
the screens manufactured by the petitioners can be
classified under Tariff Item No. 23A(4) or Tariff Item No.
34A or Tariff Item No. 68.
Prior to February 28, 1979 Tariff Item No. 34A, which
was
137
headed Item No. 34A-Motor Vehicle Parts, related to "Parts
and accessories not elsewhere specified, of Motor vehicles
and Tractors, including Trailers", and the rate of duty
prescribed was 20% ad valorem. Under Rule 8 of the Central
Excises and Salt Rules, the Central Government issued
Notification No. M.F. (D.R.I) 99/71 dated May 29, 1971, as
amended by a subsequent Notification, exempting parts and
accessories of motor vehicles and tractors falling under
Tariff Item No. 34A other than those specified in the
Schedule annexed to the Notification, from the whole of the
duty of excise leviable thereon. The Schedule annexed to the
Notification did not mention the screens manufactured for
motor vehicles. The parts and accessories specifically
mentioned in the Notification to the Schedule were covered
by a Notification No. 101/71 C.E. dated May 29, 1971 as
amended subsequently, by which the Central Government
exempted under Rule 8 parts and accessories of motor
vehicles, provided it was establishd to the satisfaction of
the Collector of Central Excise that the parts were intended
to be used as original equipment parts by the manufacturers
of motor vehicles and tractors falling under Tariff Item No.
34A. The Finance Bill of 1979 introduced changes in Tariff
Item No. 34A. Tariff Item No. 34A now spoke of ’parts and
accessories of motor vehciles and tractors, including
trailers, the folowing namely’.-and here followed 15 parts
and accessories. The screens manufactured by the petitioner
did not figure in that list. Until the enactment of the
Finance Bill of 1979, the commodities manufactured by the
petitioner would have fallen within the ambit of Tariff Item
No. 34A. But after the introduction of the Finance Bill 1979
the Central Government issued Notification No. 76 of 1979
C.E. dated March 1, 1979 under Rule 9, whereby parts and
accessories of motor vehicles and tractors which had not
been specified in Tariff Item No. 34A but which fell under
that Tariff Item were exempted from so much duty of excise
leviable thereon as was in excess of 8% ad valorem. Two more
Notifications were issued, No. 74/79 C.E. dated March, 1
1979 and No. 75/79 C.E. dated March 1, 1979. By these
Notifications parts and accessories of motor vehicles and
tractors falling under Tariff Item No. 34A were exempted
from the whole of the duty of excise leviable thereon
provided the said parts or accessories were intended to be
used in the manufacture of assembled components of motor
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vehicles and tractors and such assembled components were
used as original equipment parts by the manufacturers of
those vehicles and such parts and accessories which were
intended to be used as original equipment parts by such
manufacturers. On the enforcement of the Finance Act 1979
the ambit of Tariff Item No. 34A became restricted to the 15
specified commodities. The
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commodities manufactured by the petitioner did not fall
within the ambit of Tariff Item No. 34A.
It is case of the petitioner that the commodities
manufactured by it fall within the ambit of the residuary
Item No. 68 of the First Schedule to the Central Excises and
Salt Act. Prior to the enforcement of the Finance Act, 1979
the Central Government had, under Rule 8, issued
Notification No. 166 C.E. dated April 19, 1979 whereby all
excisable goods on which the duty of excise was payable and
in the manufacture of which parts and accessories of motor
vehicles falling under Item No. 34A had been used were
exempted from so much of the duty of the excise leviable
thereon as was equivalent to the duty of excise paid by the
said parts and accessories. Another Notification No. 167/79
dated April 19, 1979 was issued under Rule 3 whereby parts
and accessories of motor vehicles falling under Item No. 34A
and intended for use in further manufacture of excisable
goods were exempted from the whole of duty leviable thereon
provided that the intended use was in a factory of a
manufacturer different from the factory in which the said
parts and accessories had been manufactured. The
Notifications did not apply to the 15 specified items.
Subsequently the two Notifications were amended by
Notification No. 187/79 C.E. dated May 10, 1979 by deleting
the reference to Tariff Item No. 34A and substituting for it
Tariff Item No. 68. According to the petitioner the result
of these successive Notifications is that the parts and
accessories of motor vehicles fall under Tariff Item No. 34A
prior to the enforcement of Finance Act 1979 and after the
enforcement of that Act they fall under Tariff Item No. 68
provided that the parts and accessories of motor vehicles do
not find mention in Tariff Item No. 34A as amended by the
Finance Act, 1979.
Upon the tests and having regard to the foregoing
considerations which have appealed to us when considering
the proper classification of glass mirrors, we have no
hesitation in holding that the screens cannot be described
as "glass or glass wares" under Tariff Item No. 23A(4). No
one dealing in or using the screens would consider them as
"glass or glass ware". They can only be considered as motor
vehicle parts. Even if we assume that they could fall under
Tariff Item No. 23A(4) relating to ’glass and glass ware’
also, inasmuch as Tariff Item No. 34A is a special entry and
Tariff Item No. 23A(4) is a general entry, the special must
exclude the general and therefore also it is Tariff Item No.
34A which prevails and is attracted.
It is clear, however, that after the amendment of
Tariff Item No.
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34A by the Finance Act 1979 the scope of that Tariff Item is
restricted to the 15 commodities specified therein. That
being so the screens manufactured by the petitioner merit
classification in the residuary Tariff Item No. 68.
In the result, Civil Appeal No. 3435 of 1984 is
allowed, the order dated July 24, 1984 of the Customs,
Excise and Gold (Control) Appellate Tribunal is set aside
and the Order dated January 24, 1984 of the Collector
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(Appeals) is restored. In the Transfer Cases, we allow the
writ petitions and direct that the glass mirrors and screens
manufactured by the petitioner be treated to excise duty in
the light of the observations made by us. The parties shall
bear their own costs.
A.P.J. Appeal and Petitions allowed.
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