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TMI Blog1983 (8) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants drain the glass tank of surplus molten glass which forms into lumps when drained and sprinkled with water. This is the substance referred to as "glass lumps", whose classification is at issue. These glass lumps are further crushed into pieces of powder and processed further in the staple tissue plant of the appellants to produce glass staple tissue, which is charged to excise duty under Item 22F. The controversy is on the question whether these glass lumps are assessable to duty as "other glass and glassware" under sub-item (4) of Item 23A of the Central Excise Tariff Schedule as contended by the Department, or they are "unfinished, not marketed and unmarketable goods, not falling under any of the items of the Central Excise Tariff", as claimed by the appellants. 4. Appearing before us for the appellants, Dr. Nitin Kantawala took us through the Order-in-Appeal of the Collector of Central Excise (Appeals), Bombay. He referred to para 3 of that order, wherein the Collector observed that borax/rasorite is not normally used for the manufacture of ordinary glass, but went on to say that the scope of Item 23A did not exclude glass containing borax or rasorite from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66, wherein it was observed that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally understand them. 8. Dr. Kantawala then referred to the letters which the appellants had addressed to three glass manufacturers, to ask them whether they could make use of these glass lumps. The three manufacturers, namely M/s. Borosil Glass Works Ltd., M/s Hindustan National Glass and Industries Ltd., and M/s. Vitrum Glass, had each stated that the glass lumps were not suitable for use by them and that they would not be interested to buy the same. According to Dr. Kantawala, this showed that the glass lumps had no commercial value and could not be sold. He stressed that it was for the Department to establish that the goods came within the scope of the taxing provision. 9. Dr. Kantawala also referred to a decision of the Tribunal in the case of Alkali and Chemicals Corporation reported in 1983 E.C.R. 699D. It had been held in the case of chlorine gas that it was possible to have different tariff values for gas in different forms. It had inter alia been held that when liquid chlorine changed to chlorine gas, no new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n he argued that the Order-in-Appeal did not contain any discussion regarding the applicability of Item 68). In reply to a question whether the point relating to limitation had been raised by the appellants before the lower authorities (as this was not mentioned in their orders), Dr. Kantawala stated that he would submit copies of the show cause notice, the appellants' reply, and the memorandum of appeal to the Appellate Collector. He has subsequently done so, and has also filed photostat copies of what purports to be a classification list filed by the appellants in which there is a reference to glass lumps under Part II, against Item 23A(4). 14. Replying to Dr. Kantawala, Shri Tayal referred to his argument that only excess production of glass was drained out. He argued that the record did not show that it was only excess production of glass which was drained out and used for making glass staple fibre, nor did the record show that the composition of the glass used for making glass staple fibre was the same as that used for making glass wool. 15. Shri Tayal then referred to para 3 of the Order-in-Appeal. He pointed out that the Collector had not said in this para that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquid chlorine and chlorine gas. In the present case it was between the raw material such as silica sand and the glass lumps. Similarly, the case of Pio Food Packers Ltd., could be distinguished (apart from the fact that it related to sales tax) since that case involved the difference between pine apples and pine apple slices, obtained by merely slicing the pine apples. In the present case the difference between the input and the output, as pointed above, was very substantial. 22. Referring to judgment of the Bombay High Court in the case of Techni-Glass (vide para 11 above), Shri Tayal submitted that that case related to the period when sub-item (4) of Item 23A referred only to "other glassware". The present case related to the period after amendment of that entry to read as "other glass and glassware". Accordingly, the judgment would not be relevant to the present case. 23. Referring to the judgment in the case of J.K. Cotton Spinning and Weaving Mills (vide para 12 above), Shri Tayal stated that it concerned a limited issue as to whether goods produced or manufactured had been "removed". In the present case there was no doubt that certain goods had been manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not glass. The very fact that the appellants themselves have referred to the substance as "glass lumps" and to the product made from it as "glass staple fibre", shows that the material is clearly glass according to the understanding in the trade. 29. An important point raised is whether the glass in the form of lumps could be considered to be "goods". This involve two arguments, namely whether they were the result of a manufacturing process, and whether they were such as could come to the market to be bought and sold. 30. The first argument has been dealt with in para 4 of the Order-in-Appeal. The Collector has pointed out that the raw materials used are silica-sand, soda ash, borax/rasorite etc., and that these are certainly different from the product described as glass lumps. He has observed that the raw materials on the one hand and the glass lumps on the other are two entirely different things having distinctive name, character or use. The difference between the raw materials which are mixed and heated in the furnace, and the glass lumps which emerge from the furnace is very substantial and obvious even to a layman. There is accordingly no force in the argument th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... makes torches. It was held that the aluminium cans were known and dealt with as an entity by itself, and were marketable according to the needs of those who dealt in it. The fact that these cans had a very limited and specialised market would make no impact on the legal position. The above observations would apply with equal force to the present case. (It has already been noted that the Supreme Court had held in the cases referred to in para 6 that the fact that a product is not actually sold would not affect its liability to duty as "goods"). 32. Dr. Kantawala had also relied on the judgment of the Supreme Court in the case of Dunlop India Ltd., where it was stressed that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally understand them. That judgment is not of assistance to the appellants in the present case, since it is contended by the appellants themselves they are the only manufacturers of glass staple tissue, and no one else could have a use for their glass lumps. But apart from this, the fact that they themselves have called the material "glass lumps" is the best evidence that they are regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps" could clearly not be considered as "glassware". Such considerations have evidently been taken into consideration by the Assistant Collector in coming to the conclusion that prior to 1-3-1979 the classification should be under Item 68. 36. One of the arguments of Dr. Kantawala was that the glass lumps were not specially manufactured by the appellants, but only resulted from excess glass being drawn out. As pointed out to Dr. Kantawala during the hearing, it is difficult to accept this contention. The appellants had installed machinery for the manufacture of glass staple tissue, for which the glass lumps constituted the essential raw material. It is difficult to accept that the appellants would depend purely on excess glass which had to be drawn from the furnace for functional purposes, in order to feed the machinery specifically installed by them for manufacturing glass staple tissue. In any event, in the light of the judgment of the Allahabad High Court in the case of Oudh Sugar Mill Ltd., cited by Shri Tayal (vide para 23 above) it would not be material whether the glass was produced as a by-product, an intermediate product or even a residual product. 37. Dr. Kanta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector (Appeals) apparently did not deem it necessary to justify their classification under Item 68 for the period prior to 1-3-1979. Before us also no arguments have been addressed on the specific point that even if the glass lumps are `goods' they were not classifiable under Item 68 prior to 1-3-1979. Even if such an argument were advanced, it would have to be rejected straightway, in the absence of any other tariff item which could cover the glass lumps. 40. Dr. Kantawala also made a passing reference to the fact that the glass lumps were captively consumed. Whatever the force of this contention might have been earlier, it cannot survive after the amendments to Rules 9 and 49, which have been given retrospective effect. 41. The question of limitation remains to be considered. Shri Tayal had objected to this plea being taken at the present stage. Dr. Kantawala's reply was that it was a point of law which could be taken at any time. In this connection he had relied on the Delhi High Court judgment in the case of J.K. Cotton Spinning and Weaving Mills Ltd. (1983 E.L.T. page 239). He had also undertaken to send copies of the show cause notice issued to the appellants, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies concerned. We do not therefore think that the appellants can claim as a matter of right to raise the question of limitation at this late stage. 43. Dr. Kantawala had cited the judgment of the Delhi High Court in the case of J.K. Cotton Spinning and Weaving Mills Ltd. & Another v. Union of India & Others, reported in 1983 E.L.T. 239, in support of his contention that he could raise the point of limitation at any stage. We have read this judgment and (as a matter of abundant caution) the judgment of the Delhi High Court in the case of J.K. Synthetics Ltd. & Another v. Union of India & Others, reported in 1981 E.L.T. 328. We do not find anything in either of these judgments to the effect that the plea of limitation can be taken at any stage as a matter of right. 44. However, as we are anxious to avoid any obvious miscarriage of justice, we have taken note of Dr. Kantawala's argument, with a view to seeing if there is any error apparent on the face of the record. The recital of facts in the Assistant collector's Order-in-Original shows that the facts relating to the manufacture of glass lumps were brought to the notice of the Central Excise authorities for the first tim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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