1978 (11) TMI 71 - HC - Central Excise

Court rules on classification of glass types under Tariff Item 23A(1)

The court ruled in favor of the petitioner-company in the case concerning the classification of different types of glass under Tariff Item 23A(1) of the ... Classification of goods for excise - test of common parlance - construction of tariff entries and headings - use of authoritative trade glossary/standards in classification - residuary tariff entryClassification of goods for excise - test of common parlance - use of authoritative trade glossary/standards in classification - Figured glass, wired glass, rolled glass, coloured figured glass, coolex figured glass and coolex wired glass are not covered by the phrase sheet glass in Tariff Item 23A(1). - HELD THAT: - The Court applied the established test of how a commodity is known in ordinary commercial parlance by buyers, sellers and users, relying on the Indian Standards glossary (February 1962) which treats 'flat glass' as a genus and identifies 'figured glass', 'rolled glass' and 'wired glass' as distinct forms, and on unchallenged market evidence of persons conversant with the trade (notably the deposition of K.D. Shah). The departmental authorities disregarded that evidence without cross-examination or rebuttal, and failed to apply the correct commonparlance test. The Court further accepted the petitioner's evidence that each disputed variety is produced by distinct manufacturing processes and has characteristic physical properties distinguishing it from sheet or plate glass. A wide heading alone cannot assimilate these distinct products into 'sheet glass' where the body of the tariff item confines the description to sheet and plate glass. Applying these principles, the Court held the disputed goods do not fall within Item 23A(1). [Paras 14, 15, 16, 17, 30]The disputed varieties of glass are not 'sheet glass' within Tariff Item 23A(1).Residuary tariff entry - construction of tariff entries and headings - The disputed goods fall under the residuary Item No. 68 of the First Schedule and not under Item 23A; consequential relief was directed. - HELD THAT: - Having held that the disputed goods are not sheet glass under Item 23A(1), the Court determined that they belong to the residuary entry (Item No. 68) and directed quashing of the departmental orders that treated them under Item 23A. The Court ordered revision of relevant assessments from 20-2-1976 onwards, refund of excess excise duty collected on the wrong classification, and remand of assessment computation to the respondents to treat the goods under the residuary entry. [Paras 30, 32, 33]The impugned departmental orders are quashed; respondents directed to treat the goods under residuary Item No. 68, revise assessments from 20-2-1976 onwards and refund excess duty collected.Final Conclusion: Writ petition allowed: departmental classification of the petitioner's disputed glass products as 'sheet glass' under Tariff Item 23A(1) set aside; goods held to fall under residuary Item No. 68; orders quashed and assessments to be revised with refunds directed for the period from 20-2-1976 onwards; application for leave to appeal refused. Issues Involved:1. Classification of different types of glass under Tariff Item 23A(1) of the Central Excise and Salt Act, 1944.2. Applicability of common parlance test for classification.3. Distinct manufacturing processes and characteristics of different types of glass.4. Interpretation of the scope of Tariff Item 23A.5. Validity of departmental authorities' decisions based on evidence.Detailed Analysis:1. Classification of Different Types of Glass:The primary issue was whether the goods manufactured by the petitioner-company, namely, wired glass, figured glass, rolled glass, coloured figured glass, coolex figured glass, and coolex wired glass, belong to the category of sheet glass and are liable to excise duty under Tariff Item 23A(1) of the Central Excise and Salt Act, 1944. The petitioner contended that these items are distinct from sheet glass and plate glass and are not recognized as such in the commercial market.2. Applicability of Common Parlance Test:The court emphasized the importance of the common parlance test, which involves determining how the goods are recognized in the market by those who deal with them. Evidence from witnesses like K.D. Shah, who had extensive experience in the glass business, indicated that the disputed items were known by different names and had distinct characteristics, uses, and prices. The court found that the departmental authorities had ignored this evidence, which was crucial for applying the correct test.3. Distinct Manufacturing Processes and Characteristics:The petitioner argued that the manufacturing processes for sheet glass and other types of glass, such as wired glass or figured glass, are entirely different. Each type of glass emerges as a finished product through a separate process, and the furnaces used for manufacturing these types are also different. The court accepted this argument, noting that sheet glass does not undergo further transformation to become other types of glass.4. Interpretation of the Scope of Tariff Item 23A:The respondents contended that the title of Entry 23A, which mentions 'glass and glassware,' should cover all types of glass. However, the court noted that only sheet and plate glass are specifically mentioned in sub-item (1), and the rest are categorized as glassware. The court concluded that merely mentioning the word 'glass' in the title does not imply that all types of glass are covered under Item 23A.5. Validity of Departmental Authorities' Decisions:The court found that the departmental authorities had not applied the correct test and had ignored relevant evidence. The Assistant Collector's decision to dismiss the evidence as 'off the rail' and the appellate authorities' failure to consider it rendered their findings legally flawed. The court held that the disputed items could not be classified under Item 23A(i) as sheet glass but should fall under the residuary Item No. 68.Conclusion:The court allowed the petition, quashing the impugned orders of the departmental authorities and directing them to levy excise duty on the disputed items under residuary Item No. 68. The respondents were also ordered to revise the relevant assessments and refund the excess excise duty collected from 20-2-1976. The application for leave to appeal to the Supreme Court was rejected, as no substantial question of law of public importance was involved.