2025 (4) TMI 1695 - AT - Customs

Imported clear float glass with absorbent layer classifiable under CTH 70051090; NIL basic customs duty under Sl.934 Notification No.46/2011-Cus

CESTAT CHENNAI held the imported clear float glass with an absorbent layer is classifiable under CTH 70051090 and qualifies for NIL basic customs duty ... Classification of imported Clear Float Glass with an absorbent layer - classifiable under CTH 70051090 or under CTH 70052990? - eligibility for NIL rate of BCD as per sl.no.934 of N/N. 46/2011 dated 01.06.2011 - HELD THAT:- Reliance placed in the cases of Bagrecha Enterprises Ltd. [2024 (5) TMI 943 - CESTAT CHENNAI], Float Glass Centre Vs. Commissioner of Customs, Chennai [2024 (7) TMI 1685 - CESTAT CHENNAI], M/s. Enviro Safety Glass Vs. Commissioner of Customs, Audit, Chennai [2024 (7) TMI 1689 - CESTAT CHENNAI], M/s. Rider Glass Industries Pvt. Ltd. Vs. Commissioner of Customs, Chennai [2024 (8) TMI 1346 - CESTAT CHENNAI], where it was held that 'we confirm the classification of the imported CFG under tariff item 7005 1090 and consequently, the appellants are rightly entitled for the benefit of Sl.No. 934 of Notification No. 46/2011-cus., as claimed by them subject to fulfilment of production of valid Customs Tariff Rules, 2009'. - The ratio of the above decisions is clearly applicable to the facts in these appeals also. Thus, the imported Clear Float Glass is more appropriately classifiable under Customs Tariff Heading 7005 1090 of the Customs Tariff Act, 1975 and thus is eligible for the exemption benefit of the Notification No. 46/2011-Cus. dated 01.06.2011 (Sl.No. 934). The impugned order is set aside - appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the imported clear float glass (CFG) is classifiable under Customs Tariff Heading (CTH) 7005 10 90 (non-wired glass having an absorbent, reflecting or non-reflecting layer) or under CTH 7005 29 90 (other non-wired glass) for purposes of tariff and duty. 2. Whether, if classifiable under CTH 7005 10 90, the importer is thereby entitled to preferential/FTA relief under the relevant exemption notification subject to fulfilment of origin documentation. ISSUE-WISE DETAILED ANALYSIS - Issue 1: Classification of Clear Float Glass (CTH 7005 10 90 v. 7005 29 90) Legal framework: Classification is determined by the terms of the headings and any relevant section or chapter notes and General Rules of Interpretation (GRI) (Rule 1 and Rule 3(a) specifically invoked). Chapter Note 2(c) to Chapter 70 defines 'absorbent, reflecting or non-reflecting layer' as a microscopically thin coating of metal or chemical compound that absorbs/reflects light while retaining transparency. Precedent treatment: The Tribunal considered earlier coordinate decisions (including orders of other benches) and several advance rulings and appellate findings that addressed identical factual and legal questions. The Tribunal relied on recent decisions holding that the presence of a tin layer (observed on one side of float glass and found to be absorbent/non-reflective by government testing agencies) satisfies Note 2(c) and supports classification under 7005 10 90. The Department's contrary position (that tin introduced by the float process is inherent and not a coating within Note 2(c)) and related audit objections were considered and distinguished. Interpretation and reasoning: The Tribunal applied GRI and Chapter Note 2(c) literally and purposively. It accepted government laboratory test reports (CSIR-CGCRI) showing a microscopically thin tin layer on one side that is fluorescent under UV and characterized as absorbent/non-reflective. The Tribunal rejected the Department's contention that (a) the tin layer must be the result of a separate deliberate 'coating' process distinct from the float process; and (b) the layer must be on a particular side (air side) to qualify. The Tribunal held that neither the tariff language nor the chapter note requires the layer to be produced by a specified process or to be present on a prescribed side; the only requirement is that an absorbent/reflective/non-reflective layer exist as defined in Note 2(c). Rule 3(a) (preference for the most specific heading) supports applying 7005 10 90 where the defined layer exists. Treatment of departmental materials and audit: The Tribunal noted an apparent inconsistency in the Department's positions - while the Department had replied to audit observations accepting that test reports evidenced a tin absorbent layer (thus supporting classification under 7005 10 90), it later relied on the audit objection to reclassify imports to 7005 29 90. The Tribunal found the audit's generalized objection (that all float glass inherently contains tin and cannot be treated as 'coated') unsupported by authoritative reasoning, and it placed weight on the specific laboratory findings and chapter note language. Burden of proof and evidentiary weight: The Tribunal reiterated that classification must be decided by reference to tariff terms, chapter notes and GRI; objective technical evidence (here, test reports from a notified government agency) demonstrating the presence of an absorbent tin layer was decisive. The Tribunal found that subsequent technical reports and advance rulings (and domestic manufacturers' practice) substantiate the importers' classification claim. Precedent vs. departmental circulars: The Tribunal prioritized judicial precedents and advance rulings that interpreted the chapter note to include the tin layer as an absorbent layer over internal departmental circulars offering a contrary view; it emphasized judicial discipline in following coordinate Tribunal decisions unless overruled by a higher court. Ratio vs. obiter: The core ratio adopted is that where CFG is non-wired/non-tinted and a microscopically thin metallic tin layer (absorbent/non-reflective as per Note 2(c)) is present, the most specific tariff description is CTH 7005 10 90 (7005 10 90), and classification under 7005 29 90 is not sustainable. Observations about the Department's inconsistent positions and comments on audit methodology are ancillary (obiter) but relevant to evidentiary assessment. Conclusion on Issue 1: The Tribunal held that, on a conjoint reading of the tariff heading, Chapter Note 2(c), manufacturing process and authoritative test reports, the imported CFG is correctly classifiable under CTH 7005 10 90 (7005 10 90). The impugned assessment/classification under 7005 29 90 was set aside. ISSUE-WISE DETAILED ANALYSIS - Issue 2: Entitlement to Preferential/FTA Relief Legal framework: Eligibility for the exemption notification (FTA benefit) depends on correct tariff classification and satisfaction of origin rules and documentary conditions under the Customs Tariff (Determination of Origin under ASEAN-India PTA) Rules, 2009 and the specific exemption notification's terms. Precedent treatment and administrative rulings: Advance Ruling authorities and appellate decisions canvassed in the record held that CFG classifiable under 7005 10 90 would be eligible for the exemption subject to production of valid origin documentation; such rulings also treated discrepancies between COO tariff codes and domestic classification as not determinative of classification under domestic law. Interpretation and reasoning: Having determined the proper tariff classification as 7005 10 90, the Tribunal observed that entitlement to the exemption follows, subject to fulfilment of the origin/documentary conditions prescribed by the exemption and origin-determination rules. The Tribunal rejected the proposition that the COO's stated HS code is conclusive for domestic classification; GRIs and chapter notes govern classification, and origin certification requirements remain separate documentary conditions to be verified. Ratio vs. obiter: Ratio - Correct classification under 7005 10 90 entitles the importer to the exemption benefit under the stated notification, provided the importer produces valid origin documentation as required by the notification and origin rules. Ancillary observations about COO inconsistencies and the Department's inability to displace technical evidence are obiter to the extent they explain the basis for allowing relief. Conclusion on Issue 2: The Tribunal held that importers of CFG, when correctly classified under 7005 10 90 and upon production of valid origin documentation in accordance with applicable origin rules and the exemption notification, are entitled to the FTA/notification benefit; consequential relief was directed if statutory conditions are satisfied. OVERALL CONCLUSION AND ORDER EFFECT The Tribunal concluded that the impugned appellate orders confirming classification under 7005 29 90 were unsustainable; it set those orders aside, confirmed classification under 7005 10 90, and directed that the appellants are entitled to the exemption benefit subject to production of valid origin documentation, with consequential relief as per law.