Classification of Clear Float Glass: CTH 7005 1090 or CTH 7005 2990?

[Somesh Jain]

The Board has recently issued Circular No. 23/2024-Customs dated 14.11.2024 on the issue as to whether Clear Float Glass (CFG) is classifiable under CTH 7005 1090 or CTH 7005 2990.

The dispute becomes relevant in the context of Notification No. 46-Cus, dated 01.06.2011 which grants exemption of customs duty on import of goods from ASEAN Countries under AIFTA. Serial No. 934 of the notification levies basic customs duty @ 0% for goods having classification between CTH 7001 0020 to 70051090 whereas Serial No. 935 of the notification levies basic customs duty @ 5% for goods having classification between CTH 700521 to 700530.

Thus, if CFG is classified under CTH 7005 1090 it will attract Nil duty and if it is classified under CTH 7005 2990 it will attract 5% duty.

For the sake of convenience, the relevant extract of Heading 7005 in First Schedule is reproduced as under:

Tariff Item		Description	Unit	Rate of Duty
7005		FLOAT GLASS AND SURFACE GROUND OR POLISHED GLASS, IN SHEETS, WHETHER OR NOT HAVING AN ABSORBENT, REFLECTING OR NON-REFLECTING LAYER, BUT NOT OTHERWISE WORKED
700510	-	Non-wired glass, having an absorbent, reflecting or non-reflecting layer :
70051010	---	Tinted	m2	10%
70051090	---	Other	m2	10%
	-	Other non- wired glass :
700521	--	Coloured throughout the mass (body tinted), opacified, flashed or merely surface ground :
70052110	---	Tinted	m2	10%
70052190	---	Other	m2	10%
700529	--	Other :
70052910	---	Tinted	m2	10%
70052990	---	Other	m2	10%
700530	-	Wired glass :
70053010	---	Tinted	m2	10%
70053090	---	Other	m2	10%

 

Float Glass Manufacturing Process

Float Glass is manufactured by float process, a process invented by Sir Alastair Pilkington in 1952. Various raw materials viz., sand, lime, dolomite, soda and sulphate are melted in a furnace at a very high temperature and the raw materials melt into a molten liquid which would be allowed to pass through a shallow bath of a molten tin. Such molten glass, when fed and passed through such float bath of the molten tin, the glass acquires perfect flatness of the liquid pool and later retains the smooth finish of the liquid surface. In the process it also gets imbibed with the layer of such molten tin. Thus, during the process of manufacture of CFG itself, one side of the glass will have a resultant metal coating of tin. Thereafter, such molten glass having the molten tin layer on one side would reach the end of the bath where it would be cooled and hard rolled through an annealing process.

Clarification by Circular

As per the Circular No. 23/2024-Customs dated 14.11.2024, CFG is classifiable under CTH 7005 2990. The reasoning given in the circular is that the final product always has a tin layer on one side by default due to floating of glass on the molten tin to achieve a flat, smooth surface. Getting 'tin layer' on the one side of the glass by default does not mean that it satisfies the condition under Note 2(C) of Chapter 70 which reads as follows:

“2. For the purposes of headings 7003, 7004 and 7005 :

(a) glass is not regarded as “worked” by reason of any process it has undergone before annealing;

(b) cutting to shape does not affect the classification of glass in sheets;

(c) the expression “absorbent, reflecting or non-reflecting layer” means a microscopically thin coating of metal or of a chemical compound (for example, metal oxide) which absorbs, for example, infra-red light or improves the reflecting qualities of the glass while still allowing it to retain a degree of transparency or translucency; or which prevents light from being reflected on the surface of the glass.”

As per above, chapter note, the expression “absorbent, reflecting or non-reflecting layer” means “a microscopically thin coating of metal or of a chemical compound (for e.g. metal oxide)”. The layer of tin present on the final product is not the result of applying any coating on the CFG but because of a natural phenomenon in the manufacture of CFG which inevitably introduces tin by thermal diffusion into one side of the glass. There has to be a metal layer on “air side” of CFG to be classifiable under CTH 7005 1090.

Decision of Tribunal in favour of Assessee

The issue of classification of CFG has been considered by Hon’ble CESTAT, Kolkata in M/S. BAGRECHA ENTERPRISES LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI - 2024 (5) TMI 943 - CESTAT CHENNAI. The Hon’ble Tribunal allowed the appeal of the assessee holding that CFG will be classifiable under CTH 7005 1090.

The Hon’ble Tribunal narrowed down the dispute by holding that it is evident from the manufacturing process that the CFG has a microscopically thin coating of metal layer, namely tin on one side, which is known as "Tin Side". Further it is an undisputed fact that CFG are non-wired and non-tinted. Thus, the narrow issue which remains is whether such microscopically thin Tin Coating appearing on the tin side is an absorbent, reflecting or non- reflecting layer to get classified under Tariff item 7005 1090.

The entire issue has arisen because of objection raised by Customs Revenue Audit. In such case, as per Para 5 of Circular No. 1023/11/2016-CX dated 08.04.2016, it is mandated that the adjudication of demand be made after reply is given by the Ministry on the audit para. In this case, the Ministry has replied both scientifically as well as legally justifying the classification of CFG under CTH 7005 1090 in its Action Taken Note.

Thus, the Hon’ble Tribunal concluded that on reading of the Tariff heading and relevant chapter note, there is no legal prescription as to which side of the CFG should have such an absorbent, reflective/non-reflective layer. It merely requires that there should be a microscopically thin coating of metal, which is admittedly present on the tin side of CFG.

Further, the Hon’ble Tribunal has in a series of cases consistently held that CFG is classifiable under CTH 7005 1090.

Decision challenged before the Hon’ble Supreme Court

The decision of the Hon’ble Tribunal in Bagrecha Enterprises (supra) and other decisions are challenged by the revenue before the Hon’ble Supreme Court (Civil Appeal Diary No(s). 43050/2024, Civil Appeal Diary No. 28721 of 2024).

The explanatory notes to Heading 7005 reads as “The glass of this heading may be coloured or opacified in the mass, or flashed with glass of another colour during manufacture or may be coated with an absorbent, reflecting or non reflecting layer.” This may be relied by the revenue to contend that there has to be a separate coating which is not inherent in the manufacturing process, otherwise the words “whether or not having an absorbent…layer” in Heading 7005 will become redundant as there will be no CFG which will not have an absorbent layer (tin layer). There is also scientific literature which suggests that there is process called Chemical Vapour Deposition (CVD), by which a metal layer can be coated on the air side of CFG prior to the annealing process (cooling process) to ensure that the glass remains unworked.

The above reasoning may seemingly appear to be correct; however, on a deeper understanding it is not sustainable. The words of Sub-heading 7005 10 merely states that Float Glass “having an absorbent … layer” is classifiable thereunder. Thus, mere presence of absorbent layer is enough for Float Glass to be classified under Sub-heading 7005 10, irrespective of it being arising during the manufacturing process. Further, the explanatory note applies to entire Heading 7005 and provides no guidance on interpretation of Sub-heading 7005 10. On the aspect of the words “whether or not having an absorbent…layer” being redundant, there is also scientific literature which provides a mechanism for even removing the tin layer from “tin side” by treating it with a gaseous reagent comprising chlorine, to vaporize the tin content from the glass surface while it is still hot. Such Float Glass will not be having any absorbent layer and will be classifiable under CTH 7005 2990. However, a Float Glass which is not so treated as has a tin layer present will be classifiable under CTH 7005 1090.

Since, the appeals have been filed by the revenue against the favourable decisions of the Tribunal, the issue will be ultimately settled by the Hon’ble Supreme Court.