Atul Glass Industries (Pvt) Ltd. Vs.
Collector of Central Excise [1986] INSC 126 (10 July 1986)
PATHAK, R.S.
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 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 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]
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 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 CentralExcises 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 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 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 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 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 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
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 138
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. 139 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 (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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