1. This Review Notice now being treated as an appeal, was issued by the Central Government on 8th October, 1982, invoking provisions of Section 36(2) of the Central Excises and Salt Act, 1944 as it then existed, calling upon the respondent herein to show cause as to why the order passed by the Central Board of Excise & Customs (hereinafter referred to as the Board) dated 16-4-1982 allowing their appeal against the order of the Collector of Central Excise, Meerut, be not set aside.
2. The facts giving rise to these proceedings are to the effect that the respondent, a partnership firm under the name and style : M/s Trutuff Safety Glass Industries, Noida, Ghaziabad, manufactures wind screens, side screens, vents and back screens of toughened safety glass, and have been treating the same, during the relevant period (1-4-1979 to 4-3-1980), as falling under Tariff Item 68, but effected clearances without payment of Central Excise duty considering the goods as exempt from excise duty, by virtue of Notification No. 77/79 C.E. as amended from time to time and also thought them to be not subject to licensing control and other formalities by virtue of Notification No.111/78. They accordingly never applied for any excise licence, nor submitted classification and price lists.
3. On the matter coming to notice of the concerned excise authorities, the respondents were served with a show cause notice, by invoking provisions of rules 9 and 173Q of the Central Excise Rules, 1944 (hereinafter referred to as the Rules), and duty amount of Rs. 97,790.70 was demanded on the view that the goods manufactured and cleared by them fell under T.I. 23A(4) of the Central Excise Tariff (hereinafter referred to as the CET). This demand was confirmed by Order passed by the Collector of Central Excise, Meerut dated the August 1981 (actual date not indicated) holding that the goods manufactured by the respondent before him as items of glass, fell within the category of goods, as contemplated by sub-item (4) of Tariff Entry 23A of the CET, further holding that it was a case of suppression and clandestine removal of goods without payment of requisite excise duty, and without observing prescribed excise formalities. A personal penalty of Rs. 10,000 was thus imposed, in addition.
4. On this order being assailed, by means of an appeal before the Board, the same was set aside on the view that the products in dispute were, "wind screens or a sheet of glass made from glass, which is processed in a 'product-oriented fashion', by toughening it by carrying out certain functions on it meant for use when.it reached the stage of the end product". It was further observed by the Board in the impugned order that these goods were specifically designed to have specifications as prescribed by a competent technical authority; namely, the Indian Standards Institution (ISI for short) and that such a product could only be used as a part or ancillary of an automobile in view of its specific shape, design and quality. Party's appeal was accordingly accepted holding that such type of toughened wind-screen glass could not be brought within the ambit of Entry 23A(4) of the CET, and not being specified anywhere else, was classifiable under T.I. 68.
They were also held entitled to the benefit of relevant notifications and thus exempt from payment of excise duty as well as other licencing control and formalities such as obtaining of licences and submission of classification and price lists as well as maintenance of accounts. As a result, the appeal on the point of classification was allowed and demand of duty set aside but holding that it was not open to the party on its own to decide the question of classification and determine their entitlement to exemption from duty; the proper course in the Board's view being to have applied for Central Excise licence, and obtain decision of the concerned authorities, on such matters as relating to availability of Notification No, 111/78, the Board recorded the view that appellants therein were liable to some penal action and considering all the circumstances, it was felt that ends of justice would be met if the amount of penalty imposed upon them was reduced from Rs. 10,000 to Rs. 2,000. It was ordered accordingly.
5. The Central Government, however, tentatively disagreed with the view held by the Board, and initiated proceedings, by way of this Review Notice, which stands transferred to the Tribunal to be treated and disposed of as an appeal, by virtue of provisions of Section 35P(2) of the Central Excises and Salt Act. Accordingly, the Central Government is being treated as an appellant in these proceedings whereas the manufacturers, namely, M/s. Trutuff Safety Glass Industries as the respondents.
6. The grounds as enunciated in this appeal proceed on the assumption that the party having admitted that they had manufactured toughened glass and observing that technology adopted for the manufacture thereof being similar to other glass technology, and the manufacturers even style themselves as "Safety Glass Industries", and that the goods were popularly known as safety toughened glass, which could be put to various uses, and for purposes of various items, and were not necessarily restricted to parts of motor vehicles alone, and as such the Board had gone wrong in accepting the party's contention that the goods manufactured by them were parts/accessories of motor vehicles, and not covered by the generic entry of T.I. 23A(4) which related to "Glass or Glassware".
7. A detailed reply was filed by the party to this Review Notice issued by the Central Government, asserting that what they manufactured were specific parts of motor vehicles, like wind screens, vents, door screens and back screens, and not only that they were fit to be used only in automobiles, but even in specified vehicles, according to the given shape or size. The process of manufacture was explained in detail inasmuch as that they start with ordinary glass sheet which had already been manufactured and cleared alter payment of duty and then those glass sheets were cut to specific shapes and sizes and thereafter their edges were grounded, cavities were marked, holes drilled so as to make them suitable for being used in a specified part of a particular make of a motor vehicle. They further pointed out that technically, manufacture of ordinary glass sheet was different from that of toughened glass; inasmuch as the former was prepared only by melting of more than one chemicals (normally silica and soda ash) in a melting furnace and the molten material is then given desired form by different processes viz., casting or blowing or drawing, and that the process used in the manufacture of ordinary glass sheets is that, of drawing; and the products of the respondent, used this ordinary glass as raw material, and after subjecting them to the processes detailed above, the sheets so grounded were subjected to toughening process in an electrically operated furnace, and then rapidly cooled in a blast of air, so as to develop such special characteristics which can make them fit for use as wind screens, etc. They further emphasised that after undergoing the toughening process, the shapes and sizes become unalterable so much so that even a hole could not be drilled therein, and that physical characteristics of the two products; namely ordinary glass and toughened glass were quite different, inasmuch as the ordinary glass sheet could be cut into any shape and size and breaks into undefined and irregular splinters with sharp edges whereas the toughened glass breaks into polygonal crystals with rounded edges into a very large number of pieces in a given area (the number of such pieces in one square meter area normally being more than 25,000); the object being that in the event of being struck by a heavy object it should break into thousands of fragments so as not to cause any injury to the occupants or driver of the vehicle.
8. It was thus asserted that the finished goods cease to be "glass or glassware", on any account whatever as understood in the ordinary sense. Reference was also made to the standards laid down for these products by the ISI, reference being to IS : 2553-1971, which standard, according to them lays down specification of thickness, uniformity and fragmentation test, and optical requirements which, in turn, was adopted from British Standards Institution, meant for different models of land transport vehicles. They asserted that the finished wind screens, etc manufactured by them strictly conform to the specifications laid by the ISI and this fact alone, according to them, ought to rule out any doubt as to their exclusive use in land transport vehicles. Stress was also laid on the ordinary commercial meaning attached to these articles and as to how the trading community dealing therewith understood them to be. They placed reliance on certain affidavits, in this regard, annexed with the reply to Show Cause Notice, and collectively marked as Annexure 11, as well as some copies of Orders received by them (Annexure III, and some invoices (Annexure VI), in support of their contention that these goods are always described as automobile/motor vehicle parts. Reference was also made to certain judicial authorities laying emphasis on the fact that while interpreting taxing statutes, and for terms which were not defined in the relevant tariffs, or schedules, recourse should be had to the ordinary trade understanding, relating to such goods.
9. The respondent also pointed out that even the Collector of Central Excise, while passing the order, which was reversed by the Board, conceded that the use of those types of toughened glass goods prepared by them, was as an accessories of motor vehicle parts, but their contention was that the Collector erred in holding that they do not become, as such, parts of an automobile, labouring under the erroneous impression that T.I. 34A of the CET covered only parts of vehicles, and not accessories thereof. They pleaded that so long the Collector accepted that the goods were accessories of motor vehicles, and inasmuch, as they were not specified under T.I. 34A, the only appropriate classification could be T.I. 68. They placed reliance, in support of this contention, on a judgment of Bombay High Court, cited as Swadeshi Mills Company Ltd. v. Union of India and Ors. reported as 1982 E.L.T. 237.
10. During the hearing, Shri K.D. Tayal, SDR appearing for the Central Government as appellant, reiterated what was set out in the Review Notice, now appeal, laying stress on the fact that the concept had changed after amendment of T.I. 23A in 1979 when "Glass" has also been included in T.I. 23A(4) of the CEF, contending that these wind screens etc., manufactured by the respondent though not 'glassware' in the accepted sense of the term, could still be treated as glass. He could not specifically state as to whether these products were sought to be treated as "glass" or "articles of glass", but on his attention being drawn to the fact that the Collector in the Original Order had described them as "item of glass", and the Review Notice also nowhere clearly indicated as to whether they were to be treated as glass or articles of glass, he could not offer further comments but repeated the contention that the position had changed after amendment of T.I. 23A(4) as well as 34A, both having been affected in 1979, and that the case cited by the respondent relating to wind screens as decided by Bombay High Court related to the pre-amendment period and as such was not directly applicable.
11. Shri Daya Sagar, Consultant for the respondent at the outset, brought on record that correct title of the Bombay case was "Maharashtra Safety Glass Works" and for that he gave reference of 1982 ELT 237, and pointed out that the discussion in that case clearly showed that the Hon'ble High Court had the amended tariff very much in view, and after considering all the aspects held that such types of specified items, prepared to given specifications, and having special properties, could be neither plain glass nor glass sheets. He highlighted the discussion in para 11 of the said judgment where reference was made to number of other cases on the subject decided by the Supreme Court and other High Courts laying stress on the fact that while interpreting fiscal statutes, regard should be had to ordinary trade parlance and understanding of the commercial community and the Courts or concerned authorities should not go by technical or scientific works on the subject.
12. He also pointed out, with reference to the papers filed by him, that some products involving much simpler process than the wind screens etc. prepared from toughened glass were specifically treated as motor vehicle parts or accessories in the T.I. 34A itself; the most conspicuous example being, that of 'gudgeon pin', drawing whereof was given as Annexurc IV, which shows that it is a steel rod, cut to a specific shape and size, and then heat-treated, and thereafter grounded. Shri Daya Sagar urged that, nevertheless, these were treated as motor vehicle parts, and not steel or steel rods, and contended that by the same analogy the wind screen prepared in accordance with a given technology and to meet specific requirements could never be treated as "glass" or "glassware". He explained at length that the manufacturing process, which was not disputed, indicated that this toughened glass could not be put to any other use, once it had been cut to shape and size, so much so that even holes had to be drilled and cavities made before the toughening process, and this process made them distinct from ordinary glass which can be put to any use and cut to any size and shape at any stage. He cited another case, enunciating the same principles, decided by the Supreme Court, reported as 1981 E L.T.325(SC)in catelnao-International Industries v. Commissioner of Sales Tax, U.P., holding that although according to ordinary dictionary meaning, the expression 'glassware' meant "articles made of glass'', but in commercial sense 'glassware would not consist of articles like clinical syringes, thermomeiers, lactometers and the like which have special significance and utility, emphasising that regard had to be had to popular parlance and not to technical dictionary meaning.
13. From a careful consideration of the matter, we have no hesitation in holding that the review proceedings initiated by the Government were misconceived, and Board's finding holding the wind screen, etc. as falling under T.I. 68 was unassailable. We come to this view in view of the categorical finding of a Division Bench of Bombay High Court in an identical cabe relating to wind screens, where all the aspects of the controversy have been considered at length. On a reading of this authority; namely, Maharashtra Safety Glass Works Pvt. Ltd., Poona v.The Union of India and Ors.-1982 ELT 237 (Bombay), we do not think that much turns on the distinction sought to be brought out by the learned SDR in the two entries as they read respectively before the amendment in 1979, and after the same, because the Bombay High Court had in focus both the entries and also the classifications indicated by the BTN on which the Collector in this case had also placed much reliance and had come to the clear finding that even the Brussels Nomenclature indicated that these wind screens did fall within the category of "motor vehicle parts". We reproduce in this connection, following portion from the judgment which is part of para 10 thereof, while discussing para 87.06 of the BTN (P. 1500), " ... It is mentioned in sub-para B that parts of bodies and associated accessories are classified in the present heading of parts and accessories of the motor vehicles and the parts and accessories which are enumerated by way of illustration include wind screens. It is thus clear that even according to the Brussels Nomenclature windscreen cannot be anything but a motor part." 14. Their Lordships of the Bombay High Court also highlighted the fallacy under which the excise authorities were labouring in the case before them by observing that "glass is raw material which is processed into an entirely different commercial commodity by the company and it is this different commercial commodity which is to be subjected to excise duty and this was something manifestly different from raw material from which it was manufactured and that the Departmental reasoning was palpably erroneous inasmuch as the raw material from which the final product was manufactured had been equated with the final product itself, (para 8) 15. It was further pointed out, in that case, where identical goods were under consideration, that if the Department's view was to be accepted, then the glass sheet or flat glass which had already paid duty under the same Tariff Item; namely, T.I. 23A and at the same rate, would again be subjected to excise duty under that very tariff entry, on the finished products, which preposterous results, could never have been intended by the legislature 16. In the above quoted authority, reliance was placed entirely on the commercial meaning and for that purpose, reference was made to certain affidavits, to pin point the clear understanding of the trade, which the High Court accepted because they had gone unrebutted.
17. We find that in this case also, certain affidavits, Orders and Invoices were annexed with the reply itself, submitted by the party to the show Cause Notice, which unequivocally indicate that these were being treated as automobile parts, (Annexure II, III and VI), but we do not find any rebuttal, although the Government has had ample opportunity to rebut the same, they having been made part of the Reply to the Show Cause Notice.
18. We, therefore, do not think that any further discussion is necessary in this appeal to examine the correctness of the stand taken by the Board, as no substantial material has been placed on record or shown during arguments, in support of the stand, to justify setting aside the Board s orders, which we find on the facts of this case, to be wholly justified and not open to challange, and squarely covered by judgment of Bombay High Court, referred to above. We accordingly do not find any merit in this appeal and the same is rejected.