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

ATUL GLASS INDUSTRIES LTD. Versus COLLECTOR OF CENTRAL EXCISE

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 glass mirrors - glass screens fitted in motor vehicles as wind screens, rear screens and window screens - Tariff Item No. 23A(4) or Tariff Item No. 68 of the First Schedule to the Central Excises and Salt Act - ​​​​​​​Held that:- It is pointed out that glass mirrors have been classified by the Indian Standards Institution as 'glass and glassware' 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 [1962 (10) TMI 1 - SUPREME COURT], but was regarded as supportive material only of the expert opinion furnished by way of evidence in that case. It is the 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 8 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 Notification 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 glasswares' under Tariff Item No. 23A(4). No one dealing in or using the screens would consider them as 'glass or glassware'. 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 glassware' 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. 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 Appeal is allowed. 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.