1995(03)LCX0173
IN THE CEGAT, SPECIAL BENCH, `B1’, NEW DELHI
Ms. Jyoti Balasundaram, Member (J), S/Shri Lajja Ram, Member (T) and
G.R. Sharma, Member (T)
CHANDRA LAKSHMI LAMINATED SAFETY GLASS LTD.
Versus
C.C.E., NEW DELHI
Order No. E/76/95-B1, dated 10-3-1995 in Appeal No. E/3174/93-B1
Cases Quoted
Atul Glass Industries Ltd. v. Collector — 1986(07)LCX0018 Eq 1986 (025) ELT 0473 (S.C.) [Paras 4, 5, 11]
Maharashtra Safety Glass Works Pvt. Ltd. v. UOI — 1981(12)LCX0008 Eq 1982 (010) ELT 0237 (Bom.) [Paras 4, 12]
Partap Rajasthan Copper Foils & Laminates Ltd. v. Collector —
1989(08)LCX0073 Eq 1989 (044) ELT 0775 (Tribunal) [Para 5]
Bharat Forge & Press Industries Pvt. Ltd. v. Collector — 1990(01)LCX0072 Eq 1990 (045) ELT 0525 (S.C.) [Paras 6, 10]
Meteor Satellite Ltd. v. Collector — 1989(11)LCX0066 Eq 1990 (045) ELT 0697 (Tribunal) [Paras 6, 13]
Collector v. Fuse Base Eltoto Ltd. — 1993(07)LCX0044 Eq 1993 (067) ELT 0030 (S.C.) [Para 10]
Porritts & Spencer (Asia) Ltd. v. State of Haryana — 1978(09)LCX0018 Eq 1983 (013) ELT 1607 (S.C.) [Para 10]
Indian Aluminium Cables Ltd. v. UOI — 1985(05)LCX0012 Eq 1985 (021) ELT 0003 (S.C.) [Para 10]
Good Year India Ltd. v. State of Haryana — AIR 1990 S.C. 781 [Para 11]
Oswal Agro Mills Ltd. v. Collector — 1993(04)LCX0046 Eq 1993 (066) ELT 0037 (S.C.) [Para 12]
Indian Tool Mfrs. v. Assistant Collector — 1994(09)LCX0084 Eq 1994 (074) ELT 0012 (S.C.) [Para 14]
Kwality Sales Corpn. v. Collector — 1985(09)LCX0004 Eq 1986 (023) ELT 0137 (Tribunal) [Para 15]
Advocated By : Shri V. Sridharan, Advocate, for the Appellant.
Shri K.K. Jha, SDR, for the Respondent.
[Order per : Lajja Ram, Member (T)]. - M/s. Chandra Lakshmi Laminated Safety Glass Limited have filed the present appeal, being aggrieved with the Order-in-Appeal No. 326/CE/DLH/93, dated 27-9-1993, passed by the Collector, Central Excise (Appeals), New Delhi.
2. The point for consideration in this appeal is the classification of the product laminated safety wind shield glass, whether under sub-heading No. 7004.20, or sub-heading No. 8708.00 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the `Tariff’). The appellants have sought classification of the product manufactured by them under sub-heading No. 7004.20, of the Tariff as Laminated Safety Glass, while the Revenue had classified the goods as parts and accessories of the motor vehicles under sub-heading No. 8708.00 of the Tariff.
3. The matter was posted for hearing on 24-11-1994, when Shri V. Sridharan, Advocate appeared for the appellants. Shri K.K. Jha, S.D.R. represented the respondent.
4. Shri V. Sridharan, the ld. Advocate stated that under the New Central Excise Tariff, the goods under consideration were correctly classifiable as Laminated Safety Glass, under sub-heading No. 7004.20 of the Tariff. While he agreed that the goods under consideration had only one use in the motor vehicles, he submitted that the `use’ was not a criteria for classification under sub-heading No. 7004.20. He added that some minor working had to be done with regard to the Wind Screen Glass before it is incorporated in the vehicle. In this connection, he referred to the affidavit of the Commercial Manager of the appellant company. He pleaded that the goods should be classified as Laminated Safety Glass. He referred to the Supreme Court’s decision in the case of Atul Glass Industries Limited v. Collector of Central Excise, 1986(07)LCX0018 Eq 1986 (025) ELT 0473 (S.C.), and the Bombay High Court’s decision in the case of Maharashtra Safety Glass Works Pvt. Limited, Pune v. Union of India, 1981(12)LCX0008 Eq 1982 (010) ELT 0237 (Bom.) = 1982 ECR 271 `D’ Bombay, and submitted that these decisions were rendered under the old Central Excise Tariff, and that classification at present had to be decided in terms of the new Central Excise Tariff, with its interpretative rules, explanatory Section notes and Chapter notes.
5. Shri S.K. Jha, the ld. SDR replied that the decision of the Hon’ble Supreme Court in the case of Atul Glass Industries Limited is applicable to the facts of the case, and that as the tariff entry relating to the parts and accessories of the motor vehicles was self explanatory, there was no need to go to the explanatory notes under the Tariff. He referred to the Tribunal’s decision in the case of Partap Rajasthan Copper Foils and Laminates Limited v. C.C.E., 1989(08)LCX0073 Eq 1989 (044) ELT 0775 (Tribunal) to say that change in tariff will not change the nature of the goods. He added that even as per trade parlance test, the goods were motor vehicle parts. They were sold by the dealers of the motor vehicle parts. While the laminated glass has other uses, in the form the goods under consideration are cleared, they were definitely motor vehicle parts.
6. In rejoinder the ld. Advocate referred to the rules of Interpretation, and stated that the coverage under Chapter 70 of the new tariff was wider than the coverage under the relevant entries in the old tariff, and that the existing entries were not pari materia with the old tariff. He pleaded that all the goods produced by the appellants should be assessed as laminated safety glass. Among others, he referred to Supreme Court’s decision in the case of Bharat Forge and Press Industries Private Ltd. v. Collector of Central Excise, 1990(01)LCX0072 Eq 1990 (045) ELT 0525 (S.C.), and the Tribunal’s decision in the case of Meteor Satellite Limited v. C.C.E. 1990 (045) ELT 0697 (Tribunal).
7. We have carefully considered the matter. M/s. Chandra Lakshmi Laminated Safety Glass Ltd., the appellant, were engaged in the manufacture of laminated safety glass. Laminated safety glass is a type of speciality glass. It is a `sandwich’ made by combining alternate layers of plastic material, and flat glass. The outside layer of glass may break when struck by a flying object, but the plastic layer is elastic, and stretches. This holds the broken pieces of glass together and keeps them from flying. The laminated glass is used where broken glass might cause serious injuries. It is used for various purposes - in motor vehicles, military tanks, air crafts, banks, for high security platforms, enclosures etc. By law enforcement agencies, it is being used for various security purposes. In the case before us, a part of the production of the laminated safety glass was cleared as such, while a part of the production of such laminated safety glass was cleared in the curved form and in special shape and sizes for use in the motor vehicles. In the classification list, effective from 2-3-1992, the assessees had declared their product as laminated safety glass 5 mm to 25 mm thick. In the show cause notice dated 2-1-1992, it had been mentioned that the assessees were engaged in the manufacture of laminated safety wind shield glass, and laminated safety glass, falling under sub-heading No. 8708.00 and sub-heading No. 7004.20 of the Tariff, respectively. The goods under consideration were supplied to TELCO Ltd., Automobile Corporation, Coach Builders, vehicle factory etc. It was alleged in the show cause notice that the goods were classifiable under sub-heading No. 8708.00 of the Tariff. The Assistant Collector of the Central Excise, Rohtak who had adjudicated the matter, held them classifiable under sub-heading No. 7004.20 of the Tariff. The order passed by the Assistant Collector of Central Excise was reviewed, and an appeal was filed with the Collector, Central Excise (Appeals), New Delhi, who observed that the goods under consideration were manufactured on specification by and for the motor vehicle manufacturers, and were sold to them only. Further, they were clearly identifiable as parts/accessories of a particular type of motor vehicle - say a particular model of the motor vehicle viz. Fiat Car, Maruti or Ambassador, a truck or a bus, and so on. He held that they were parts and accessories of the motor vehicles of Heading No. 87.01 to 87.05, and were correctly classifiable under Chapter Heading No. 87.08.
8. The Chapter Heading/sub-heading No. 70.02, 70.03, 70.04 and 70.06 are extracted below :-
* * * * *
For ease of reference, Item No. 23A of the erstwhile Schedule to the Central Excises and Salt Act, 1944 (old Tariff) is also extracted below :-
* * * * *
9. A study of the Chapter 70 of the Tariff shows that its coverage is wider than that of the erstwhile, Item No. 23A of the old Tariff. The goods such as glass mirrors, which earlier were not classifiable under Item No. 23A, have been specifically included therein. From the process of manufacture as supplied by the assessee, it appears that sheet glass of Heading No. 70.02 is cut to shape and size. As per Chapter Note 2(b) under Chapter 70, for the purposes of Heading No. 70.02, cutting to shape does not affect the classification of glass in sheets. Thereafter, the sheets in specific shape and sizes are imparted the desired curvature on a mould in a midi oven heater. Heading No. 70.03 covers, among others, the bent glass sheets; and Chapter Note 3 under Chapter 70 provides that the products referred to in Heading No. 70.03 remain classified in that heading whether or not they have the character of articles. Thereafter, the polyvinyl butryl (PVB) foil is placed between the two bent/curved glass sheets, and the air particles in the PVB foil (placed between the sheets) are removed by making use of the vacuuming/pre-pressing machines. After the above de-airing process, the layers of the sheet (with inter leafing of PVB foil) are bonded to make it a laminated sheet, in the auto-clave machine at a temperature of 135oC. Sub-heading No. 7004.20 covers laminated safety glass. Shape or size of the laminated safety glass does not appear to be relevant for classification under sub-heading No. 7004.20. The laminated safety glass has many uses, and is a highly useful product. The appellant supplied the laminated sheets in the required shape, size and with curvature for specific use in a particular motor vehicle, to the manufacturers, traders or users, for use in motor vehicles as wind shields. In a motor vehicle, it is used for its transparency, strength and safety.
10. In the case of Collector, Central Excise v. Fuse Base Eltoto Limited 1993(07)LCX0044 Eq 1993 (067) ELT 0030 (S.C.) the Hon’ble Supreme Court in para 7 of their judgment have this to say :-
“The identity of an article is associated with its primary function and utility. The names of certain products have functional association in the mind of the customers. There is a mental association in the mind of the customer in respect of certain products keeping in view the utility of the product and also the reputation the name of the product has acquired in the market and among the consumers.”
When the passenger sits in the vehicle, his concept of the wind shield is one of safety. Its primary function and utility is to shield the driver and the passengers from the elements of nature, and to make the driving and the travel safe and secure. It enables the driver to see the road ahead without being exposed to the rush of air caused by the forward movement of the vehicle. The way the tariff entry under sub-heading No. 7004.20 is worded, it is not the use which determines its character. With reference to the product dryer felts, and the question whether they were textiles, the Hon’ble Supreme Court in the case of Porritts and Spencer (Asia) Limited v. State of Haryana, 1978(09)LCX0018 Eq 1983 (013) ELT 1607 (S.C.) observed that “the character of a fabric or material as textile does not depend upon the use to which it may be put.” (Para 7). In para 6 of their judgment, the Hon’ble Supreme Court has stated as under :-
“The use to which it may be put is also immaterial and does not bear on its character as a textile. It may be used for making wearing apparel, or it may be used as a covering of bed-sheet or it may be used as tapestry or upholstery or as duster for cleaning or as towel for drying the body. A textile may have diverse uses and it is not the use which determines its character as textile.”
In the case of Indian Aluminium Cables Limited v. Union of India, 1985(05)LCX0012 Eq 1985 (021) ELT 0003 (S.C.), the Hon’ble Supreme Court in para 13 of their judgment had held that “the process of manufacture of a product and the end use to which it is put cannot necessarily be determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff”. The Hon’ble Supreme Court had cited this judgment with approval in the case of Bharat Forge and Press Industries Pvt. Ltd. v. C.C.E. reported in 1990(01)LCX0072 Eq 1990 (045) ELT 0525 (S.C.), and had added as under :-
“The position is somewhat similar in the present case. As explained above, the goods described in the tariff, namely, pipes and tubes are designed to meet various types of requirements. Normally pipes and tubes are produced as long and straight pieces. But by themselves they cannot fulfil all the needs or the end use for which they are intended. To get the maximum use out of the pipes and tubes, it is necessary not only to produce long and straight pipes and tubes but also to turn out pipes and tubes of smaller dimensions and of different shapes and curves such as bends, elbows, `T’ pieces, `Y’ pieces, plugs, caps, flanges, joint, unions, collars and so on. This is done by a process of forging, welding, hammering and so on applied to the longer tubes but basically the items remain the same and the use also remains the same. The tariff entry calls for no distinction between pipes and tubes manufactured out of sheets, rods, bars, plates or billets and those turned out from larger pipes and tubes. In these circumstances it is difficult to say that pipe fittings, though they may have a distinctive name or badge of identification in the market, are not pipes and tubes. It is true that all pipes and tubes cannot be described as pipe fittings. But it would not be correct to say that pipe fittings are not pipes and tubes. They are only a species of pipes and tubes. The use of the words ”all sorts" and the reference to the various processes by which the excisable item could be manufactured set out in the tariff entry are comprehensive enough to sweep within their fold the goods presently under consideration."
11. As will be noted from the extracts of the Tariff entries with regard to glass and glass-ware as appearing in the old Central Excise Tariff, and as appearing now in the present Tariff, coverage under the new Tariff is much wider and comprehensive. Further, read with the rules of interpretation and the Section notes/Chapter notes, the classification as under the old Central Excise Tariff may not be valid for the purposes of the present Tariff. Under the old Central Excise Tariff, the Hon’ble Supreme Court had occasion to deal with the classification of Wind Screens, rear screens and door screens for fitting in motor vehicles, in the case of Atul Glass Industries Limited and Others v. C.C.E., 1986(07)LCX0018 Eq 1986 (025) ELT 0473 (S.C.). The Hon’ble Supreme Court noted that :-
“the screens are manufactured according to the specific shape and measurements indicated in the orders, for different vehicles require screens of different shapes and measurements. The screen is manufactured from sheet glass. It is first given shape and size according to the specifications contained in the order and thereafter subjected to the process of toughening. It is a fabricated article.”
The point for consideration before the Supreme Court was whether the screens manufactured by the petitioners could be classified under Tariff Item No. 23A(4), as `other glass’ or Tariff Item No. 34A, as parts of vehicles, or Tariff Item No. 68 as goods not elsewhere specified. After discussing the tariff structure in para 8 of their judgment, the Hon’ble Supreme Court dealt with the considerations for the proper classification of the product, and held that the screens could not be described as glass or glass ware under Item No. 23A(4); no one dealing in or using the screens would consider them as glass or glass ware, and that they could only be considered as motor vehicle parts. The Hon’ble Supreme Court added that :-
“even if we assume that they could fall under T.I. 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.”
This judgment of the Hon’ble Supreme Court was delivered on the basis of the considerations for the proper classification of the product, and the tariff structure then in force. At that time the Tariff Entry No. 23A was restricted, Item No. 34A covered only the specified parts, and there was a residuary entry under Item No. 68 which covered, among others, the unspecified parts of motor vehicles. The case was not argued on the basis of the Tariff presently in force. In the case of Good Year India Limited v. State of Haryana, AIR 1990 S.C. 781 (para 23) the Hon’ble Supreme Court had ruled that a case cannot be precedented for a preposition not argued. The Hon’ble Supreme Court in the above case of Atul Glass Industries Limited and Others had held that the glass mirrors could not be classified as `other glass and glass ware’ set forth in Tariff Item No. 23A(4), and fall under the residuary Item No. 68 (Para 12). Under the present Tariff, glass mirrors are specifically included under Heading No. 70.06 of Chapter 70 relating to Glass and Glass ware. In the new Central Excise Tariff introduced under the Central Excise Tariff Act, 1985, the Central Excise Tariff Items have been made comprehensive in accordance with the international trade practice with a view to “reduce disputes on account of tariff classification.” The tariff “has been made more detailed and comprehensive thus obviating the need for having a residuary tariff item. Goods of the same class have been grouped together to enable parity in treatment” (refer statement of objects and reasons while introducing the Bill).
12. In the case of Maharashtra Safety Glass Works, Pvt Ltd. Poona v. Union of India, 1981(12)LCX0008 Eq 1982 (010) ELT 0237 (Bom.) = 1982 ECR 271D (Bom.) the two competing entries before the Bombay High Court for classification of automobile wind screens serving as parts and accessories of motor vehicles, were Item No. 23A(4) which included other glass, and the Item No. 34A which covered the parts and accessories of motor vehicles. By an exemption notification the effective duty was restricted to certain specified parts and accessories of motor vehicles. The assessee in that case was receiving the glass which was flattened or curved and cut into size, suitable for wind screens, and then toughened. At that time, there was no specific entry to cover laminated safety glass or tempered safety glass. Flat glass was covered by Item No. 23A(1), and other glass was covered by Item No. 23A(4). The High Court observed in para 9 of their judgment that :-
“in commercial parlance, wind screen is an entirely different commercial commodity identified independently from glass or glass ware.”
They held that the wind screen was a motor part, and that it could not be said that the Entry No. 23A(4) specifically provided for motor wind screens (paras 10 and 11). Various commodities are grouped in a heading or a sub-heading mainly on consideration of the rate of duty. As clarified in the statement of objects and reasons, while introducing the Central Excise Tariff Bill, 1985, the goods of the same class have been grouped together to enable parity in treatment. The grouping could cover a single or a large variety of goods. In fact in different heads/sub-heads there are residuary entries to cover `other’/`others’; obviously they may cover within their fold more than one commodity. In between, whether there is a process of manufacture and whether a new commodity with a distinct name, character and use, had emerged is to be determined on the basis of the well laid down principles in various authoritative judicial pronouncements, and the facts of each case. While applying the doctrine of Ejusdem Generis or Noscitur A sociss “the context and setting in which the words came to be used or associated in the statute or the statutory rule”, had to be kept in view. [refer para 6 of the Supreme Court’s decision in the case of Oswal Agro Mills Limited v. C.C.E., 1993(04)LCX0046 Eq 1993 (066) ELT 0037 (S.C.) = 1993 AIR SCW 1782]. Since the judgment of the Hon’ble Bombay High Court, the Central Excise Tariff had undergone a change. Now there is a specific entry for laminated safety glass, and for interpretation of the Central Excise Tariff there are rules of interpretation, Section notes, chapter notes with explanations, illustrations, inclusions, exclusions etc., built in the Tariff itself. While it could be argued that the changes in the tariff may not be changing the character and nature of the goods, it is also true that “to find the appropriate classification, description employed in the tariff nomenclature should be appreciated having regard to the terms of the headings, read with the relevant provisions on statutory rules of interpretation put up thereon.” (refer para 3 of the Supreme Court’s decision in the case of M/s. Oswal Agro Mills Limited and Others v. C.C.E. (supra).
13. In the case of Meteor Satellite Limited v. C.C.E. - 1989(11)LCX0066 Eq 1990 (045) ELT 0697 (T), the Tribunal after noting that the Central Excise Tariff Act, 1985 is aligned to the harmonised commodity description and coding system (HSN), had observed that a reference to the explanatory notes to HSN will be appropriate as an aid to the classification of items under the Central Excise Tariff Act, 1985. Proceeding on this basis, we find that the laminated safety glass of size and shape suitable for incorporation in vehicles, aircraft, space craft or vessels is classifiable under Heading No. 70.07, which covers safety glass consisting of toughened (tempered) or laminated glass - the same description as under Heading No. 70.04 of the Central Excise Tariff [which also covers safety glass consisting of toughened (tempered) or laminated glass]. Sub-heading Nos. 7007.11 and 7007.19 of the HSN have been clubbed under sub-heading No. 7007.10 of the Central Excise Tariff; and similarly sub-heading No. 7007.21 and 7007.29 of the HSN have been clubbed under sub-heading No. 7004.20 of the Central Excise Tariff. It has been explained in the HSN that the laminated glass are used in motor car wind screens and windows in doors, and that the heading makes no distinction between un-shaped and shaped (bent or curved) glass. Although it has been mentioned that “safety glass incorporated in other articles and thus, in the form of parts of machines, appliances or vehicles is classifiable with these machines, appliances or vehicles”; this is applicable only when assessment is of the machine, appliance or vehicle, and not that of laminated glass. This will not be applicable in excise matters where assessment has to be made only of the laminated safety glass. Reference has also been made by the appellants to the explanatory notes - Note IV under interpretative rule 3(a) - explanatory notes III(c)(8) to Section XVII (Chapter 87), Alphabetical index to the HSN Volume 2 etc., which leave no scope for any doubt that the curved unframed laminated safety glass of any shape or size for vehicles is covered by the description of laminated safety glass for the purposes of sub-heading No. 7004.20 of the Central Excise Tariff.
14. Motor vehicle is a product of different and diverse components, parts and fittings. All of them do not belong to the same family. Before their fitting, they are to be assessed as presented for assessment. If they are not specifically classifiable under any other heading, then alone their classification as part or accessory of the motor vehicle under sub-heading No. 8708.00 (which is in the nature of left over entry), has to be considered. Further, as held by the Supreme Court in the case of Indian Tool Manufacturers v. Assistant Collector of Central Excise, Nasik, 1994(09)LCX0084 Eq 1994 (074) ELT 0012 (S.C.) in para 13 of their judgment “if there is a general heading for the purpose of levy of excise duty then every variety of goods falling under that general heading will have to be taxed under that heading. The fact that a particular variety is known by a particular name in the market, will not take it out of the general heading”. With regard to the classification of the product `throw away inserts’, the Supreme Court observed that “to decide the question whether throw away inserts are tool tips, nature and function of inserts will have to be examined. The form or size of the inserts are quite immaterial for this purpose.”
15. In the case of Kwality Sales Corporation, Ludhiana v. C.C.E., Chandigarh, 1985(09)LCX0004 Eq 1986 (023) ELT 0137 (T), the Tribunal, with reference to Axle Stud which were used in the motor vehicles, had held that as they were specifically mentioned in the explanation below Item No. 52, they were classifiable under Item No. 52, notwithstanding its use in motor vehicles for fastening purposes. Para 16 of that order is extracted below :-
16. The fact that the studs are used in the motor vehicles is also not material in view of the judgment of the Supreme Court in the case of Dunlop India Ltd. v. Union of India - 1975(10)LCX0016 Eq 1983 (013) ELT 1566 (S.C.) = AIR 1977 SC 597 wherein it was observed that where a Tariff Entry does not contain a reference to the use or adaptation of the article, the end use of the article is not relevant. The goods in the present case are screw studs which are referred to in the Explanation below Tariff Item 52 and there is no reference to end-use in the item."
16. In the light of the above discussion, there appears to be no doubt that the product laminated safety wind shield glass, manufactured by the appellants, as per the process of manufacture mentioned above, is classifiable under sub-heading No. 7004.20 of the Tariff. According, we set aside the impugned Order-in-Appeal, and allow this appeal.
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Equivalent 1995 (77) ELT 877 (Tribunal)