1978 (11) TMI 77 - HC - Central Excise

Glass or glassware - Dutiability of Cell-O-Therm - Appellate and Revisionary orders - Statute - Ambiguity - Classification

Summary

Issues Involved:
1. Classification of the product "Cell-O-Therm" for excise duty purposes.
2. Interpretation of the terms "glass" and "glassware" under Item 23A of the Central Excises and Salt Act, 1944.
3. Validity of the orders passed by the Assistant Collector, Collector of Central Excise, and Joint Secretary to the Government of India.

Detailed Analysis:

1. Classification of the Product "Cell-O-Therm" for Excise Duty Purposes:
The petitioners' company manufactured "Cell-O-Therm," a thermal insulation product made from broken glass mixed with certain chemicals and processed through heating and annealing. The primary issue was whether "Cell-O-Therm" could be classified as "glass" or "glassware" under Item 23A of the Central Excises and Salt Act, 1944, which would subject it to excise duty. The Assistant Collector, Collector of Central Excise, and Joint Secretary to the Government of India had all classified "Cell-O-Therm" as "glass" or "glassware," making it liable for excise duty under Tariff Item 23A(4).

2. Interpretation of the Terms "Glass" and "Glassware" under Item 23A:
The court examined the ordinary and scientific meanings of "glass" and "glassware." "Glass" is typically understood as a transparent, lustrous, hard, and brittle substance produced by fusing sand with soda or potash. "Glassware" refers to articles made from such glass. The court cited several precedents where the term "glassware" was given a wide interpretation to include all items made of glass. However, the court emphasized that "Cell-O-Therm," despite being made from glass, did not fit the ordinary understanding of "glass" or "glassware" due to its appearance and properties. The court agreed with the observations of the Orissa High Court in State of Orissa v. Janata Medical Stores, which held that specialized materials should not be classified under general terms like "glassware."

3. Validity of the Orders Passed by the Authorities:
The court found the orders of the Assistant Collector and Collector of Central Excise unsatisfactory and lacking in proper understanding of their appellate functions. The revisional order by the Joint Secretary, though less vulnerable, was also criticized for its lack of care and caution. The court held that the authorities had given a strained interpretation of the terms "glass" and "glassware," which was not warranted by settled rules of interpretation. The court emphasized that where a fiscal provision is ambiguous, the benefit must go to the subject, not the Revenue. However, in this case, the court found no ambiguity in Item 23A and concluded that the authorities' interpretation was perverse and improper.

Conclusion:
The court ruled that "Cell-O-Therm" could not be classified as "glass" or "glassware" under Item 23A of the Central Excises and Salt Act, 1944. The decisions of the Assistant Collector, Collector of Central Excise, and Joint Secretary were deemed perverse and improper. The court made the rule absolute in terms of prayers (a) and (b) of the petition and ordered the respondents to pay the petitioners' costs, quantified at Rs. 500.