Customs, Excise and Gold Tribunal - Delhi
Automotive Ancillary Services vs Collector Of Central Excise on 29 September, 1987
Equivalent citations: 1987(14)ECC211, 1987(13)ECR1057(TRI.-DELHI), 1987(32)ELT735(TRI-DEL)
ORDER K. Prakash Anand, Member (T)
1. The issue in this matter relates to classification of certain Automotive Switches being manufactured by appellants for use as original equipments in motor vehicles. These switches are described as flasher switch, horn and dipper switch and head-light switch (combination switch).
2. As per the orders of the lower authorities, these switches, which had been earlier classified under Central excise Tariff Item No. 68 were correctly classifiable under Central Excise Tariff Item No. 61. Appellant urges, however, that the goods had correctly been classified under Tariff Item No. 68 and that there was no warrant for a .change in practice.
3. Heard Shri V. Lakshmikumaran, advocate for the appellant company and Smt. Dolly Saxena, SDR for the department.
4. The learned advocate makes the point that the impugned products are not lighting switches at all. Their function, it is claimed, is not to illuminate. The actual functioning of the impugned products has been explained to us.
5. It is emphasized that in commercial parlance also the products are not known as general purpose electric goods and that they are not available with dealers of electric goods. It is stated that they are available with dealers in motor vehicle parts only. In this connection Shri Lakshmikumaran relies on the decision of the Supreme Court in the case of Atul Glass Industries Ltd. - 1986(25) ELT 473.
6. Appellants also state that the impugned products are for exclusive use in motor vehicles and are sold as original equipment to Ashok Leyland, of attention has also been drawn to a Tariff Advice No. 48/84 dated -he 12th September, 1984 issued by the Central Board of Excise & Customs, according to which, handle bar switches for motor-cycles are excluded from the purview of Tariff Item 61 and are stated to be classifiable under Tariff Item 68.
7. Shri Lakshmikumaran further makes the point that even if the goods are held to be correctly classifiable under Tariff Item 61, duty cannot be demanded retrospectively as assessment and clearance had been going on as per approval of the department. There is no allegation at all of suppression of facts or fraud. Accordingly, duty can be demanded only from the date of a Show Cause Notice, it is submitted. The learned advocate has also relied on the following two decisions in support of the points he has made :
1. Indo-International Industries - 1981 ELT 325(5.C.) Vs. Commissioner of Sales Tax, U.P.
2. New Trade Links, Madras - 1984 ECR 2060 (Cegat) v. Collector of Customs, Madras [1984 (18)ELT 445(Tri)]
8. Responding, Smt. Dolly Saxena contests the point made that lighting switches should necessarily be illuminating switches. It is submitted that a perusal of the Tariff Items does not support any presumption as regards the extent of lighting necessary to bring in a switch within the purview of the relevant tariff item. Soft lighting, it is submitted, would also be included and as long as some kind of lighting is there, he switch would rightly be describable as lighting switch. It is further contended that the Supreme Court judgment in the case of Atul Glass Industries is not at ail relevant for even though the impugned products are motor vehicle parts, it cannot be denied that they are light switches. The learned SDR has cited in favour of her arguments the decision of the Tribunal in the case of Collector of Central Excise, Kanpur Vs. West Glass Works - 1984 (17) ELT 368.
9. We have carefully considered the facts of the case and the submissions made before us. The department holds that the impugned products are classifiable under Central Excise Tariff Item No. 61 This Tariff Item reads as follows :
Electric lighting fittings, namely, "Switches, plugs and sockets, all kinds, chokes and starters for fluorescent tubes".
There are two things to be immediately noticed as regards the description of the Tariff Item. Firstly, it does not talk of electric fittings but it talks of electric lighting fittings. An indication of what is considered as lighting fittings can be had from the fact that chokes and starters for fluorescent tubes are specifically included in the Tariff Item. The question now arises whether the impugned products can fall in such a category of products.
10. The products, all of which indisputably are motor vehicle parts, are as follows :
(a) Flasher switch; This is for indication of the direction in which the driver intends to turn the vehicle through an indicator light.
(b) Combination switch : This is meant to energise the starter solenoid through the starter button. When the switch is in the off position, current is not available to any of the switch output points. Combination switch is also headlight switch, but in different positions it provides for operation of horn, ignition switch and ignition coil, wiper switch and wiper motor and fuel gauge.
(c) Horn and dipper switch : The top portion of the switch operates the horn and the bottom portion of the switch alters the beam to bright or dim. This, it is submitted, is not a lighting switch but a change-over switch.
11. It seems to us that there is no gainsaying the following facts in regard to the above products :
Firstly, these are not general purpose electric switches but they are parts of motor vehicles.
Secondly, insofar as horn and dipper switch is concerned, whether it operates for blowing of the horn or for altering the high beam to low beam or the reverse, it cannot really be considered as a lighting switch.
Thirdly, so far as combination switch goes, this is a multi-point current switch for energising the connections to horn, ignition, wiper and fuel gauge, although, admittedly, it is also a headlight switch.
Finally, so far as flasher switch is concerned, it does flash an indicator light to indicate the direction in which the driver proposes to turn, but there is no illumination provided as such.
12. In the view that we have to take in this matter the argument that the Tariff Item relates to electrical lighting switches and not merely electrical switches is pertinent and has to be dealt with. The learned SDR has argued in this connection that it is not necessary for classification under Item 61-CET that the operation of the switch should result in lighting or illumination. She adds that the extent of lighting is also not relevant and all that is necessary is some kind of lighting. If this argument is to be accepted then one cannot understand as to what would be the purpose of including in the description of the tariff item the word 'lighting'. Use of this word, to our mind necessitates that the operation of the switch should result in lighting or illumination. Interpreted in this light, it can hardly be contended that products like flasher switch and horn & dipper switch are meant to illuminate. The position in regard to the combination switch is somewhat different, inasmuch as it is also a headlight switch, but nevertheless, being a combination switch, the function of which is essentially to energise the operation of horn, ignition, wiper, fuel gauge as well as the headlight, it cannot be considered as a mere electric lighting switch. In this view of the matter, therefore, these items should appear to fall outside the purview of Central Excise Tariff Item No. 61.
13. In taking this view, we have in the background two other arguments. Firstly, our attention was drawn to wordings of the new Customs Tariff Heading Nos. 85.35 and 85.36 which dealt with "electrical apparatus for switching or protecting electrical circuits or for making connections to or in electrical circuits ...". The wordings of the Customs Headings is wide and comprehensive. As against the headings in the Customs Tariff, the wording in the relevant Central Excise Tariff Item is restricted to electric lighting switches only.
Secondly, we are also impressed by the argument that in common trade parlance, the impugned items are not known as electrical switches nor are they to be found in shops dealing with electrical goods as such. There is no denying that these are motor vehicle parts and they would be found with dealers of such parts. In this connection, we feel that the appellant has rightly relied on the decision of the Supreme Court in Atul Glass Industries Ltd. (Supra). The relevant part of the judgment which we feel clinches the issue before us is extracted below :
"The test commonly applied to such cases is : How is the product identified by the class or section of people dealing with or using the product? That is a test which is attracted whenever the statute does not contain any definition. Porritts and Spencer (Asia) Ltd. Vi State of Haryana (1978) H2 S.T.C. 433. It is generally by its functional character that a product is so identified. In Commissioner of Sales Tax.- U.P. v. Macneill & Barry Ltd. Kanpur (1985) 2 SCALE 1093 , this Court expressed the view that ammonia paper and ferro paper, used for obtaining prints and sketches of site plans could not be described as paper as that word was used in common parlance. On the same basis the Orissa High Court held in State of Orissa v. Gestetner Duplicators (P) Ltd. (1974) 33 S.T.C. 333 that stencil paper could not be classified as paper for the purposes of the Orissa Sales Tax Act. It is a matter of common experience that the entity of an article is associated with its primary function. It is only logical that it should be so. When a connuner buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between the article and the need it supplier, in his life. It is the functional character of the article which identifies it in his mind. In the case of a glass mirror, the consumer recalls primarily the reflective function of the article more than anything else. It is a miror sets images. It is referred to as a glass mirror only because the word glass is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The basic or fundamental character of the articles lies in its being a miror. It was observed by this Court in Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan and Ors., (1980) 3 SCR 1109 which was a case under the Sales Tax law :
"In determining the meaning or connotation of words and expression describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well settled it is that the words or expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. It is they who are concerned with it, and it is the sense in which they understand it that constitutes the definitive index of the legislative intention when the statute was enacted".
That was also the view expressed in Geep Flashlight Industries Ltd. v. Union of India and Ors. - 1985 (22) ELT 3. Where the goods are not marketable that principle of construction is not attracted. Indian Aluminium Cables Ltd. v. Union of India and Ors. - (1985) 3 S.C.C. 284, 1985 (21) ELT 3 (S.C.). The question whether thermometers, lactometers, syringes, eye-wash glasses and measuring glasses could be described as 'glassware' for the purpose of the Orissa Sales Tax Act, 1947 was answered by the Orissa High Court in State of Orissa v. Janta Medical Stores (1976) 37 S.T.C. 33 in the negative. To the same effect is the decision of this Court in Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, (1981) 3 S.C.R. 294 , where hypodermic clinical syringes were regarded as falling more accurately under the entry relating to "hospital equipment and apparatus" rather than under the entry which related to "glasswares" in the U.P. Sales Tax Act."
14. It seems to us quite clearly that the items in question are basically motor vehicle parts. They are not lighting switches as such and they are certainly not known or dealt with in the trade as electric lighting switches. The learned SDR, in the course of her arguments, referred to the decision of this Bench in the case of Collector of Central Excise, Kanpur v. West Glass Forks - (Supra), but we do not understand how it can support the department's point of view because this decision reiterated that if any term or expression has been defined in the enactment, then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment, the meaning of the term in common parlance or commercial parlance has to be adopted. We feel that neither the description in the Tariff nor common or commercial parlance supports the department's interpretation.
15. While Tariff Advices or Trade Notices issued by the department are not binding on the Tribunal, we nevertheless have taken note of the fact that the department itself clarified in 1984 that handle bar switch assembly would be classifiable under Tariff Item No. 68 and not Tariff Item No. 61.
16. In the light of the foregoing discussions, we hold that the impugned goods are excisable under Item 68 of the Central Excise Tariff.
17. In passing these orders, we are fortified by the decision of the Bombay High Court in the case of P.M.P. Auto Industries Ltd. v. Union of India & Others - 1987 (31) ELT 369.
18. Appellants have also prayed that they would be entitled to the benefit of Notification No. 309/79 dated 4-2-1979. This issue was raised only before the Collector (Appeals) and has been gone into neither by the Assistant Collector nor by the Collector (Appeals). As rightly observed in the order of the Collector (Appeals), appellants may, if they deem fit, agitate the issue before the proper authority.
V.T. Raghavachari, Member (J)
19. I have perused with case the lucid and well reasoned order of Shri Anand. I readily concur with his reasoning so far as the combination switches and the horn-dipper switches are concerned. But it appears to me that the position may not be the same so far as the flasher switch is concerned.
20. That switch has only one function i.e. to put on the flasher on pulb which blinks on and off indicating the direction of which the driver intends to turn the vehicle. If a lighting switch is defined as one to switch on a light and thus provide illumination, this flasher bulb does appear to me to perform that function. It illuminates a particular part of the body of the vehicle and thus attracts attention (by blinking) so as to communicate the necessary information to illuminate is to shed light. The flasher bulb does shed light on a particular part of the motor-vehicle.
21. But then we have the decision of the Bombay High Court (reported subsequent to the hearing) in 1987 Vol. 31 ELT 369. In view of the said decision I concur with the order of Shri Anand in respect of all three switches.