1986 (7) TMI 90 - SC - VAT / Sales Tax

Glass mirrors and screens in motor vehicles are vehicle parts, not glassware, taxable under Tariff Item No. 68

The SC held that glass mirrors/screens fitted in motor vehicles are motor-vehicle parts, not glass or glassware, and therefore do not fall under Tariff ... Classification of goods by functional identity - residuary tariff entry - special entry excludes general entry (lex specialis) - transformation test - whether raw material remains the product - identification by trade/consumer understandingClassification of goods by functional identity - transformation test - whether raw material remains the product - residuary tariff entry - identification by trade/consumer understanding - Whether glass mirrors fall under Tariff Item No. 23A(4) or Tariff Item No. 68 - HELD THAT: - The Court held that mirrors undergo a complete transformation from a plain glass sheet into a commercial product whose primary function is reflection, a function derived from the applied coatings (silvering, coppering and backing) and not from the glass base. The silver/copper deposits and protective coatings are material components; removal of coating destroys the mirror function. Applying the test of identification by those who deal with or use the product, a consumer perceives the article by its reflective function rather than as an article primarily of glass. Earlier authorities treating similarly coated or coated-paper products as not falling under the base-material entry were applied. Reliance on external classifications (Brussels Nomenclature, Indian Standards Institution) was regarded as only supportive and not determinative. On these grounds the Court concluded that glass mirrors are not 'other glass and glassware' under Tariff Item No. 23A(4) and instead fall under the residuary Tariff Item No. 68. [Paras 7, 8, 10, 11, 12]Glass mirrors are not classifiable under Tariff Item No. 23A(4) and must be treated under the residuary Tariff Item No. 68.Classification of goods by functional identity - special entry excludes general entry (lex specialis) - residuary tariff entry - Whether motor-vehicle glass screens (windscreens, rear and door screens) fall under Tariff Item No. 23A(4), Tariff Item No. 34A, or Tariff Item No. 68 - HELD THAT: - The Court observed that vehicle screens are fabricated to vehicle-specific shapes and undergo toughening; persons dealing with them regard them as motor-vehicle parts rather than as 'glass or glassware'. Where a special tariff entry exists for motor-vehicle parts (Tariff Item No. 34A) it would prevail over a general entry for glass (Tariff Item No. 23A(4)). However, after the Finance Act, 1979 the scope of Tariff Item No. 34A was restricted to 15 specified commodities and the petitioner's screens are not among them. Given that restriction, and applying the same identification and functional tests as for mirrors, the Court held that the screens cannot be described as 'glass or glassware' and, with the special entry no longer covering them, they fall within the residuary Tariff Item No. 68. [Paras 13, 15, 16, 17, 18]Motor-vehicle glass screens are not classifiable as 'glass or glassware' and, in view of the narrowed scope of Tariff Item No. 34A after the Finance Act, 1979, are classifiable under the residuary Tariff Item No. 68.Final Conclusion: The appeal by Atul Glass Industries is allowed; the Tribunal's order is set aside and the Collector (Appeals) order restored. Glass mirrors and motor-vehicle screens are not classifiable under Tariff Item No. 23A(4) and, having regard to the restriction of Tariff Item No. 34A, are to be treated under the residuary Tariff Item No. 68; parties to bear their own costs. Issues Involved:1. Classification of glass mirrors under Tariff Item No. 23A(4) or Tariff Item No. 68 of the Central Excises and Salt Act, 1944.2. Classification of glass screens fitted in motor vehicles under Tariff Item No. 23A(4), Tariff Item No. 34A, or Tariff Item No. 68.Issue-wise Detailed Analysis:1. Classification of Glass MirrorsThe primary issue in the appeal by Atul Glass Industries (Pvt.) Ltd. was whether glass mirrors should be classified under Tariff Item No. 23A(4) or Tariff Item No. 68 of the Central Excises and Salt Act, 1944. The appellant manufactures glass mirrors from duty-paid glass sheets, which undergo a series of processes including buffing, silvering, copper coating, and painting, transforming them into mirrors.Before the 1979 Budget, Tariff Item No. 23 included 'other glassware' under sub-item (4). Post-Budget, it was amended to 'other glass and glassware.' Tariff Item No. 68 is a residuary category for goods not specified elsewhere. The appellant initially classified glass mirrors under Item No. 68, but the Excise Authorities later demanded classification under Item No. 23A(4).The Tribunal reversed the Collector (Appeals) decision, classifying glass mirrors under Item No. 23A(4) as 'glassware.' However, the Supreme Court observed that the transformation from glass sheet to mirror involves significant processing, resulting in a product fundamentally different from the original glass sheet. The reflective function of the mirror, derived from the silvering process, is not inherent to the glass itself. Therefore, glass mirrors cannot be classified as 'glassware' because their primary function is reflection, not the properties of glass.The Court applied the test of common parlance and functional character, concluding that glass mirrors are identified by their reflective function rather than their glass medium. Hence, glass mirrors should fall under the residuary Tariff Item No. 68.2. Classification of Glass Screens for Motor VehiclesThe additional issue in the transferred cases by Hindustan Safety Glass Works Ltd. was the classification of glass screens (wind screens, rear screens, and door screens) fitted in motor vehicles. These screens are manufactured from sheet glass, shaped, and toughened according to vehicle specifications.Before February 28, 1979, Tariff Item No. 34A covered 'parts and accessories not elsewhere specified, of Motor vehicles and Tractors.' Post-amendment, the scope of Item No. 34A was restricted to 15 specified parts and accessories. The screens in question did not fall within these specified items.The petitioner argued that the screens should be classified under the residuary Item No. 68. The Court agreed, noting that the screens are not commonly understood as 'glass or glassware' but as motor vehicle parts. Even if they could be classified under Item No. 23A(4), the specific entry of Item No. 34A (pre-amendment) would prevail over the general entry of Item No. 23A(4).After the 1979 amendment, the screens no longer fell within the restricted scope of Item No. 34A and thus merited classification under the residuary Tariff Item No. 68.Judgment Summary:The Supreme Court allowed Civil Appeal No. 3435 of 1984, setting aside the Tribunal's order and restoring the Collector (Appeals) decision that glass mirrors fall under Tariff Item No. 68. In the transferred cases, the Court directed that glass mirrors and screens manufactured by the petitioner be treated to excise duty under Tariff Item No. 68, with each party bearing its own costs.