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TMI Blog1985 (6) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the manufacture of `FRIT are quartz, borax, potassium nitrate, soda, zirconia, alumina, titanium dioxide, lithium carbonate, and cobalt oxide etc. The manufacturing process, briefly stated, is that the mixture of the above raw materials is well ground and then heated. in a rotary furnace for about 3 to 5 hours at a temperature of 1000 to 1200oC. After it is melted, the material is dropped in a tub containing water for quenching. Small bits of blue shaped pieces are formed which are termed as `FRIT . The FRIT is used for glass lining of low carbon steel surface of reaction vessels. The Assistant Collector of Central Excise, Anand, by his order dated 9-1-1981, classified the product `FRIT (enamel) under Item No. 68 CET. On examination of the record of the case by the Collector of Central Excise, Baroda, for the purpose of satisfying himself as to the correctness, legality or propriety of the said order, the Collector felt that having regard to the amendments made to Tariff Item No. 23-A CET by the Budget of 1979 (which took effect from 1-3-1979) and having regard to certain technical authorities relied upon by him, the product `FRIT correctly fell for classification under It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as verified by the Excise authorities and approved by the Asstt. Collector. The Collector, in re-classifying the product under Item No. 23-A(4) CET, has relied on technical parlance in perference to trade and commercial parlance. This approach was not correct particularly in the absence of any definition in the tariff entry which would have helped in determining the classification of `FRIT . Shri Khosla submitted that there were many judicial pronouncements laying down that in interpreting entries in taxing statutes, resort should be had not to the scientific or technical meaning but to the meaning attached to them by those dealing in them in the commercial sense. The words of the item must be understood in the popular sense, i.e., the sense which people conversant with the subject matter with which the statute is dealing would attribute to them for the obvious reason that fiscal statute affects manufacturers, producers, wholesalers, retailers and consumers. In this connection, the following case-law was cited :- (1) Dunlop India Ltd. v. Union of India (77) ASE 50097. (2) Sales Tax Commissioner v. S.N. Brothers 1973 ASE 78, 80. (3) Nirlon Synthetics v. Audim, decided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1981 E.L.T. 958. Therefore, Shri Khosla concluded that differential duty could not be recovered in respect of even six months prior to the date of the Review Order or Review Notice. 7. Appearing on behalf of Revenue, Shri K.V. Kunhikrishnan submitted that the manufacturers own pamphlets described the product as glass. Once it was re-classified by a competent authority under Item No. 23A(4) CET, the position was that was the correct classification even in the past period and there should be no bar against recovery of the differential duty. On the issue of classification, Shri K.V. Kunhikrishnan, submitted that there were different products known as `FRIT , glass, enamel `FRIT , FRIT glaze, of which some are glass. What the Appellants were manufacturing was used for glass lining of reaction vessels and, therefore, the product manufactured by them was glass. The raw materials used by the appellants for manufacture of `FRIT were the same as those used for manufacture of ordinary glass. Referring to Indian Standard Specifications 2717 : 1979, 2781 : 1975 and 1382 : 1961 and Encyclopaedia of Chemistry III Edition, edited by Clifford A. Hampel Gessner G. Hawley (P. 502-503), Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al base, making the glasslined equipment as tough as steel but inert as glass. The literature goes on to say that glass-lined equipment is a combination of two materials : glass and steel. Thus it is clear that the product glass frit or glass enamel is used to impart glass lining to reaction vessels, etc. where resistance to acids and alkalies is desired. 10. The question is whether such glass frit or glass enamel would come within the scope of the tariff entry other glass and glassware including tableware appearing as sub-item (4) of Item 23-A CET. It is relevant to note in this context that, prior to the Finance Bill, 1979, which brought about a change in the nomenclature of the said sub-item (4), it read as other glassware including tableware . Apparently, special products like glass frit or glass enamel are not goods of the type which are stocked and sold by dealers in glassware. Glassware , according to the Chambers Twentieth Century Dictionary means articles made of glass . The appellants have filed affidavits from certain dealers in glass and glassware to the effect that frit is not known as glass and glassware in trade parlance and that they have not dealt with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pso facto detract from the position that it is a glass. Reference may also be made to the affidavit filed by Dr. Jayaraman, Manager, Research Development Division in the appellants firm wherein he has averred that frit in the condition in which it is manufactured and marketed by the appellants is not glass and glassware either in name or usage, that the product frit has to be mixed with other ingredients for further processing before it is used for glasslining steel vessels and that it cannot be used by itself for the said purpose, and that in the entire course of process of glasslining of vessels with frit glass and glassware is not produced at any stage as goods which can be brought to the market for the purpose of purchase or sale. We have already taken the view that glass frit and glass enamel do not fall within the scope of the expression glassware . We may now examine in some more detail whether it would fall within the description other glass . 12. Reference has been made by both sides to the Customs Co-operation Council Nomenclature (C.C.C.N., and the position of glass frit with reference to the Nomenclature adopted therein. Chapter 70 of the CCCN as well as India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bars, rods or tubes (Heading 70.03), and to small regular spherical grains (microspheres) used for coating cinematograph screens, road signs, etc. (Heading 70.19). It is therefore, clear that for the purpose of classification under the CCCN and Indian Customs Tariff Schedule, `frit is considered as a form of glass which because of the scheme of the tariff, is specifically excluded from Chapter 70 (glass and glassware). Though it gets classified in Chapter 32 (Tanning and dyeing extracts tannings and their derivatives, dyes, colours, paints and varnishes, putty, fillers and stoppings; inks), its very description, namely, glass frit and other glass in the form of powders, granules or flakes is evidence of the fact that frit is considered as glass. Apart from this, there is a clue or indication in the terminology employed in Item 23-A as to the scope of the said item. The explanation appearing at the end of the item provides that electrical insulators or electrical insulating fittings or parts of such insulators or insulating fittings are not included in 23-A CET. This is a good evidence of the position that but for the said exclusion, the articles described therein, namely, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and General Mills Co. Ltd., 1977 E.L.T. (J 199)]. Therefore, the glass frit or glass enamel produced by the appellants are, in our view, correctly classifiable under Item 23-A(4) CET and not under Item 68-CET. 14. The appellants have cited several judicial pronouncements laying down that meanings given to articles in a fiscal statute must be as people in trade and commerce conversant with the subject generally treat and understand them in the usual course and that in interpreting taxing statutes resort should be had not to the scientific or technical meaning, but to the meaning attached to them by those dealing in them in their commercial sense. As we have stated already, the scope of the term other glass appearing in Item 23-A(4) CET has to be understood not necessarily and only in the sense in which dealers in ordinary glass and glassware articles understand it, but having due regard in cases such as the present one (where the product is of a special nature and has a very limited market being of interest only to manufacturers of glasslined equipment and not to the general trade and industry) to the sense in which people requiring the product understand it. From this point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is that, in the present case, no such notice was issued and, therefore, the Collector s order in so far as it seeks to demand payment of differential duty for the entire past period is incorrect and illegal. Section 35A(2) of the Act empowers the Collector to revise the decision or order passed by a Central Excise Officer subordinate to him. Section 35A(3)(a) provides : No decision or order under this section shall be varied so as to prejudicially affect any person unless such person is given a reasonable opportunity of making a representation and, if he so desires, of being heard in his defence . Section 35A(3)(b) reads : Where the Board or, as the case may be, the Collector of Central Excise is of opinion that any duty of excise has not been levied or has been short-levied or erroneously refunded, no order levying or enhancing the duty, or no order requiring payment of the duty so refunded, shall be made under this section unless the person affected by the proposed order is given notice to show cause against it within the time limit specified in Section 11A . 16. Now, the show cause notice dated 4-11-1981 issued by the Collector in terms of Section 35A(3)(a) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevance to the present case. A decision given by a competent authority on the classification of goods is, in our view, only a statement of what, in his opinion, the law was and always has been (assuming that the nomenclature of the relevant item or items in the tariff has not undergone any change). Therefore, the proposition canvassed by the appellants that decisions on tariff classification are only prospective in nature does not appeal to us, especially in the absence of any direct judicial pronouncement on the subject being brought to our notice. Recoveries of short-levied amounts would, however, be governed by the provisions regarding limitation. 18. The show cause notice date 4-11-1981, no doubt, did not, in terms, ask the appellants to show cause why recoveries of short-levies in respect of the past period should not be effected. It is probable that the Collector did not do so since the question of recovery in respect of past period would arise only after the basic issue, viz. the classification of frit, was adjudicated upon. We do not know. Be that as it may, once the Collector came to the conclusion and ordered reclassification of frit under Item 23A(4) CET, he was righ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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