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Collector of C. Ex. Vs. Emkay Glass Works - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1989)(44)ELT475TriDel
AppellantCollector of C. Ex.
RespondentEmkay Glass Works
.....68 of the central excise tariff (cet for short), giving out that these headlight covers contained optical properties and were specifically designed to be used for motor vehicles. the department, however, took the view that these assertions have not been satisfactorily established and consequently a notice to show cause was issued by the assistant collector of central excise, agra calling upon the respondents to show cause as to why these headlight covers which they claim as falling under t.1.68 be not classified as: 'other glass and glassware', covered by t.i. 23a(4) of the cet and why differential duties be not recovered. this notice was followed by five notices of demand covering different specified periods, which are all indicated in the other five appeals. similar notices of demand.....
1. This appeal and 11 others, as indicated above, all filed directly before the Tribunal under the provisions of Section 35B (2) of the Central Excises & Salt Act, 1944 (hereinafter referred to as the Act), have been taken up together for hearing and disposal because they cover identical issues. The judgment is being recorded in this appeal because it arises out of an order passed on the classification list filed by the respondents herein; namely M/s. Emkay Glass Works, Firozabad; said order, being Order-in-Appeal Nos. 189-194-CE/KNP/82 passed by the Collector of Central Excise, New Delhi on 29-10/11-1982. This order has been made the basis for orders, relating to demands, stemming from dispute as to classification, raised against this party as well as other manufacturers of Firozabad, two of whom are also respondents in these appeals before us. Whereas the Collector (Appeals) disposed of 5 other Orders-in-Original confirming the demand against this party for different periods by that very order, passed on classification issue, the appeals of the other two parties were disposed of by short orders, by reference to his Order-in-Appeal passed in this case.

2. The appeals have been commonly argued by Shri K.D. Tayal, SDR appearing for the Appellant. Shri Harbans Singh represented the respondents in this first group of six appeals, and Shri K.K. Kapoor, Consultant, in the other set of 6 appeals pertaining to two other manufacturers; namely, M/s. Durga Glass Works, and M/s. Advance Glass Works, of Firozabad.

3. The dispute relates to products what are commonly known as headlight covers, but described more precisely as: "glass lenses for automobile headlights". The respondents in this first appeal filed a classification list effective from 10-1-1980 declaring these goods to be classifiable under T.I. 68 of the Central Excise Tariff (CET for short), giving out that these headlight covers contained optical properties and were specifically designed to be used for motor vehicles. The Department, however, took the view that these assertions have not been satisfactorily established and consequently a notice to show cause was issued by the Assistant Collector of Central Excise, Agra calling upon the respondents to show cause as to why these headlight covers which they claim as falling under T.1.68 be not classified as: 'other glass and glassware', covered by T.I. 23A(4) of the CET and why differential duties be not recovered. This notice was followed by five notices of demand covering different specified periods, which are all indicated in the other five appeals. Similar notices of demand were served on the other two parties for varying periods, which are also detailed in the respective appeals.

4. The Assistant Collector confirmed the show cause notice both on the issue of classification as well as the demands made by means of separate notices, holding that the manufacturing process involved in these headlight covers, and all other articles of glassware was similar inasmuch as these articles were manufactured from molten glass, taken out from the furnace, and given desired shape some time by mouth blow process and then pressing it either by manually operated press or by semi automatic press so that the article CETs the shape of respective moulds. According to him, the headlight covers were also being manufactured with the aid of manually operated press or semi-automatic press and there were no other chemical properties involved which could make them different from ordinary glassware and that since the composition of glass remains the same, as of ordinary glassware, the subject goods could not be treated as being vested with any optical properties. He further observed that even if these headlight covers were found to have some optical properties, some were present in other glass or glassware, being produced by these parties, and no chemical was being added for creating additional optical properties. He further held that the parties did not have any laboratory etc. to conduct tests so as to satisfy that these contained optical properties.

5. He accordingly came to the conclusion that T.I. 23A was very wide in its scope, and Clause (4) thereof pertained to "other glass and glassware, including tableware" and that the only exclusions, by virtue of the Explanation appended thereto, were in relation to electrical insulators or electrical insulating fittings with the result that every other article of glass and glassware would be covered by T.I. 23A(4).

The Assistant Collector further held that Notification No. 329/77, dated 26-11-1977 as amended by Notification No. 25/79, dated 1-3-1979 provided concessional rates for certain varieties of glasswares, and Entry No. 3 of the Table annexed to this Notification, covered glassware produced by mouth blown process, as well as by manually operated process by manufacturers having tank furnace, and that all articles of glassware being produced by this process would be covered by this Entry, and since the process in the manufacture of headlight covers was also the same, they would be within the scope of Entry 3 of the said Notification, and that simply because they are used in automobiles, the headlight covers do not cease to be glass and glassware, as no such exception has been created in the Tariff itself.

He further drew a distinction between commercial annealing and optical annealing and held that only glass, which was optically annealed could be said to be containing optical property, and such a glass was manufactured by a different process, and different optical properties were imparted which were absent in the article under dispute, and so they were classifiable under T.I.23A(4) of the CET.6. On appeals being taken up against this order, the Collector (Appeals) passed a detailed order in the matter relating to classification and overruled the Assistant Collector's view by holding oh the basis of Supreme Court judgment in Indo-International Industries v. Commissioner of Sales Tax, U.P. AIR 1981 SC 1078 that in interpreting items in statutes like Excise Act and Sales Tax Act, where primary object was to raise revenue, regard should be had not so much to the technical or scientific terms of expressions used, but to their popular meaning, i.e., the meaning attached to them by those dealing in them. He also had in view a judgment of the Bombay High Court relating to windscreens for motor vehicles, as reported in 1982 E.L.T. 237 (Swadeshi Mills Co. v. Union of India) holding that wind screens could not be classified as : 'glass and glassware', but would be classifiable as motor vehicle parts under the then prevailing Tariff Entry 34A. He opined that, on the same reasoning, the headlight covers could also be not treated as ordinary glass or glassware, but as parts and accessories of motor vehicles, but since the amended Tariff in the corresponding Entry T.I. 34A specifies parts and accessories by name and description, all other parts and accessories of motor vehicles not specifically covered by any other Entry of the CET would fall under the Residuary Item 68. As a result, he set aside the order of the Assistant Collector both on the point of classification as well as confirming the demands against all these parties.

7. This view taken by the Collector (Appeals), does not seem to be acceptable to the Collector of Central Excise, and the present set of appeals has been filed under his directions by Additional Collector of Central Excise, Kanpur. The view of the Collector (Appeals) has been assailed primarily on the ground that optical glass had some special properties which have been specified in Indian Standards Specification (ISI for short); viz., IS: 1400-1960 and also endorsed by the D.G.T.D., and that headlight covers did not possess all such properties, and so could not be treated at par with optical glass, even though it may have been worked optically to develop some of the properties required for optical glass and further that the Collector (Appeals) erred in basing his conclusions on the Bombay High Court Judgment in Mis. Swadeshi Mills Co. case (supra) but it was pleaded that the said case was distinguishable as the main reasoning there was with reference to the Explanatory Notes to the BTN in terms of para 87.06 and in that view of the matter, the wind screens were held to be parts of motor vehicles as having been specifically mentioned in the BTN, but nevertheless it was held that if a particular article of motor vehicle part is specifically included in the particular tariff entry, it will be covered by that specific entry. It was contended that the same test should apply here, and since T.I.23A(4), should cover all articles of glass, these head covers had to be treated as covered by said Entry, which intention was further explicit from the wording of Entry No. 3 of Notification No.329/77, dated 26-11-1977 as amended from time to time, and so have been erroneously held to be falling under T.1.68, and that the original view of the Department as confirmed by the Assistant Collector was the correct one, and the same be restored.

8. Shri K.D. Tayal, SDR appearing for the appellant reiterated these submissions as set out in the Grounds of Appeal, and reproduced above.

On his attention being drawn to the fact that this issue stands already concluded by this Bench in the case of Mis. West Glass Works, Firozabad v. Mis. Auto Glass Industries, Firozabad, Shri Tayal stated that an appeal has been filed before the Supreme Court against the said order, being Order No. 2/84-D, dated 4-1-1984 and Order No. 7/84-D, dated 4-1-1984. He filed a copy of a letter in this regard containing detailed reasoning, forming a basis for action taken by the Central Board of Excise & Customs, in filing an appeal against the judgement of the Tribunal. Shri Tayal stated that he adopted the same arguments, as set forth in this letter, which may be taken on record as part of his submissions. The said letter has accordingly been kept in the file, which incorporates arguments, assailing the view that headlight covers could not be covered by the generic description of glass or glassware, further saying that the ratio of Supreme Court judgment in Indo-International Industries case relating to clinical syringes has been wrongly applied to the present case and that the case decided by the Bombay High Court; namely, Mis. Maharashtra Safety Glass Works Pvt.

Ltd., Poona v. Union of India reported as 1982 E.L.T. 237 was also distinguishable and since these headlight covers did not have any such additional process which could take them to the category of optical glass and that the process of grinding or polishing or final finishing being absent, these could not be treated different from ordinary and plain glassware, and that these were the same as other articles of glass, and that even though some optical properties may have been imparted in the process but still it could not acquire the characteristics of an optical glass as laid down by the D.G.T.D. and the ISI, and that the manufacture process was such as was detailed in Entry No. 3 of Notification No. 329/77-C.E. A further distinction has also sought to be brought out between the present cases as compared to the case decided by Bombay High Court on the footing that windscreens were manufactured from glass which was already duty paid whereas headlight covers were being manufactured from glass in the same factory, that had not paid duty. Shri Tayal summed up his arguments by emphasising that all glass was bound to contain some optical properties, but that alone did not take it to category of optical glass, which, according to him had to be invariably optically worked, involving a special manufacturing process, and since no such process had been adopted, such as grinding or polishing, these headlight covers could not go out of the category of articles of glass covered by the description "other glassware", as contemplated by T.I. 23A(4).

9. The respondents replying through their counsel placed reliance on the previous order of the Bench relating to these very items, and in relation to parties belonging to the same Collectorate, and involving the same manufacturing process and the same raw material. A photo copy of the said order had been supplied in the Paper Book (Appeal No.500/83). It was further pointed out that it was admitted in the Grounds of Appeal itself that these headlight covers contain some optical properties, which fact was conceded even in the Order-in-Original.

10. Shri K.K. Kapoor appearing for two sets of respondents, invited our attention to the expert opinion given by a Glass Technologist in Ferozabad, as well as by National Physical Laboratory, on requisition by the Excise authorities themselves. Shri Harbans Singh, Advocate appearing for the respondent in this appeal, further pointed out that the said opinion bearing the date 1-9-1980 was, in fact, the basis for the order of the Collector (Appeals). That letter figured as page 7 of the Paper Book filed by the respondent herein, clearly intimating the Superintendent, Central Excise, with reference to his letter that although the samples of headlight covers could not be put to test for certain reasons detailed therein but in was certified that - (1) these glasses contain optical properties and are specially designed for use as accessory in the motor headlight (2) They are also finished products intended to be used in headlights.

11. It was further pointed out that there was another report of an expert in Glass Technology which was also produced before the lower authorities, according to which these headlight glasses possess optical properties which was required for light transmission, and distribution, for which they were specially designed. Our attention was drawn to the said opinion at pages 1 & 2 of the Paper Book, particularly later one, which was a very detailed one, specially certifying that "composition of glasses has been set for proper working and pressing viscosity, and setting range for proper annealing, and that they were having required refraction, dispersion and absorption, required and necessary for such glasses within optical range" and were "specially treated so as to control the refractive index".

12. They contended that the Collector (Appeals) had rightly proceeded to hold on the basis of this material, particularly report from the National Physical Laboratory that these headlight covers had certain properties special to them and which made them different from ordinary glassware and that they had been specially designed and manufactured to serve the function as headlight glasses. They assailed the finding of the Assistant Collector which the appellant now wanted to be restored on the ground that it was without reference to any authoritative expert opinion on the subject, and nor had he given any reason, for not going by the or for ignoring the opinion of the National Physical Laboratory, and other Glass Technologists.

13. We have given our careful thought again to the matter in view of the fact that the learned SDR convassed very forcefully the grounds set up in the appeal, in spite of earlier order of the Bench. We have no manner of doubt, on a perusal of the relevant material; particularly the report of the National Physical Laboratory and other Glass Technologist, whose view has not been assailed in any manner nor has been countered by any expert evidence which Department may have or could have procured, that these headlight covers are special types of manufactures from glass, having certain optical properties, which are conceded to be present even in the Ground of Appeal, and the Board's letter for taking up our earlier Order to Supreme Court in appeal, where they have gone to the extent of saying that this might be optically worked. We also find full support for our earlier view, inasmuch as Supreme Court has laid emphasis in the case of M/s.

Indo-International Industries (supra), on the test of trade or commercial, and the meaning attached to a product by the persons normally dealing in them. The same view was enunciated by the Bombay High Court in the case of M/s. Maharashtra Safety Glass Works Pvt. Ltd. (supra).

14. The distinction which is now sought to be highlighted that windscreens were manufactured from duty paid glass, which factor was missing in the present set of cases is not conclusive of the matter. It was only an additional reason, given by High Court of Bombay, for holding the said goods not to be classifiable again under T.I. 23A (4) but there was more fundamental reasoning adopted in that case, and which was that of commercial and trade parlance. We have discussed in detail the import of the said judgment in another case decided by us also relating to windscreens : Collector of Central Excise, Meerut v.Mis Trutuff Safety Glass Industries reported as [1984 (16) E.L.T. 555 (Tribunal)].

15. We are also fully alive to the distinction between ordinary articles of glass of general use, as against the specialised ones, because in yet another case relating to glass mirrors : Collector of Central Excise, New Delhi v. Atul Glass Industries, Faridabad [Tribunal's Order No. 428/84-D, dated 24-7-1984 printed in 1984 (18) E.L.T. 542 (Tribunal)], we have held that items, such as mirrors which are generally obtainable from dealers dealing in glassware, and do not have any specialised significance, utility or usage and were common articles of ordinary every day use, would have to be treated as covered by the description : "Glass and other glassware" as contemplated by T.I. 23A(4) of the CET.16. We have thus ourselves maintained, and recognised the distinction between different articles, and have held in appropriate cases, a party's contention to take them out of the scope of T.I. 23A(4) may not be tenable. In the case of headlight covers, however, we find no reason to differ from our earlier view as represented by Order No. 2/84-D, dated 4-1-1984 printed in 1984 (17) E.L.T. 368 (Tribunal) (Collector of Central Excise, Kanpur v. West Glass Works, Firozabad).

17. We would like to add that the Department has tried to create an artificial distinction by setting up the concept of optical glass but the tariff nowhere indicates that in order to be taken out of T.I.23A(4), it has to be necessarily optical or optically worked glass, as now the learned SDR would like us to hold. Even then, we have gone into this question, and find that the expert opinion on record, which remains uncontroverted by the Department, does indicate possession of some essential optical properties; such as, transmission and dispersion of light, annealing, and also refraction. We further find on a reference to IS : 6917-1973 that these headlight covers have a specific name as "glass lenses for automobile headlights", and have some technical specifications to meet, such as (a) requiring a certain amount of Workmanship and Finish so that the optical characteristics are not effected (para 3.2); (b) Resistance to weathering and solarization (para 3.4) and Resistance to thermal shock (para 3.5); besides annealing, as already indicated (para 3.2.1). We also find emphasis on maintenance of residual strain capacity in the same manner as in the case of optical glass per specification : IS 1400-1960. We, therefore, find no reason to depart from our earlier view, in the light of the material before us. We thus hold that these goods described ordinarily as headlight covers, being specifically meant as parts and accessories of motor vehicles, and having some specialised characteristics and properties, cannot be treated as ordinary glassware within the ambit of T.I. 23A(4) and the view taken by Collector (Appeals) that these would be classifiable under T.I. 68, is unassailable. We accordingly dismiss this appeal, and the other 11 appeals.

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