Customs, Excise and Gold Tribunal - Delhi
Gurind Sales vs Collector Of Central Excise on 30 June, 1998
Equivalent citations: 1999(110)ELT992(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. In this appeal filed by M/s. Gurind Sales, the matter relates to the classification of the photo frames. The appellants had classified the photo frames under sub-heading No. 9003.19 of the Central Excise Tariff under their classification list effective from 1-2-1989. Under demand-cum-show cause notice dated 4-7-1989 it was alleged that the said goods were correctly classifiable under sub-heading No. 7015.00 of the said Tariff. The Central Excise duty amounting to Rs 54,577.74 was demanded for the period from February, 1989 to May, 1989. The classification under sub-heading No. 7015.00 of the central excise tariff was confirmed by the Assistant Collector of Central Excise under his Order-in-Original dated 22-1-1990. Before the Collector of Central Excise (Appeals), alternative classification under Heading No. 83.06 was sought by the appellants. The Collector of Central Excise (Appeals) examined the sample of the disputed goods and referred to the Section/Chapter Notes under the Tariff, and after examining the competing tariff entries, he held that the classification under sub-heading No. 7015.00 was appropriate.
2. The matter was posted for hearing on 31-3-1998, when Shri Naveen Mullick, Advocate, pleaded that the expression "or the like" in Heading No. 90.03 of the Tariff was wide enough to cover the classification of the photo frames in question under sub-heading No. 9003.19 of the Tariff. He referred to the Heading No. 90.03 of the Tariff which covered frames and mountings for spectacles, goggles or the like, and parts thereof. He referred to the Supreme Court decision in the case of Pardeep Aggarbatti v. State of Punjab, 1997 (96) E.L.T. 219 (S.C), wherein the Apex Court had held that when some articles are grouped together in an entry, then each word in the entry draws colour from the other words therein, on the principle of noscitur a sociis.
3. In reply, Shri Satnam Singh, SDR, submitted that the photo frames were essentially made of glass and other aids attached to the glass portion could not take away the goods in question out of the coverage of Heading No. 70.15 of the Tariff. The photo frames had no likeness with the frames and mountings for spectacles and goggles. He pleaded for the rejection of the appeal.
4. We have carefully considered the matter. In the classification list, the goods had been described as photo frames. The appellants in reply to the show cause notice had stated that in the manufacture of photo frames, the following inputs had been used :
(1) Glass (2) Metallic Profile (3) Acrylic Strip (4) Plastic Sheet; and (5) PVC Strip.
The process of manufacture involved fixing of metallic profile along with PVC strip on the glass which was curved. On the other side of the glass acrylic strip covered by plastic sheet was pasted. It is from the side of acrylic strip having been pasted by the plastic sheet that the photo, picture etc. was to be fixed. Such photo frame etc. within the metallic profile border line become visible from the other side of the glass.
5. The appellants had claimed assessment under Heading No. 9003.19 of the Central Excise Tariff. Chapter 90 of the Central Excise Tariff covered optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof. Such articles as optical fibres, optically worked optical elements, hypodermic syringes, artificial eyes, thermometers, barometers, hydrometers etc. were covered by the said Chapter Heading. Heading No. 90.03 covers frames and mountings for spectacles, goggles or the like and parts thereof. Frames and mountings for spectacles and goggles had no affinity with the photo frames. The expression "or the like" has to be seen with reference to spectacles and goggles. The photos had no likeness with the spectacles or the goggles. The goods, as described by the appellants in reply to the show cause notice, were neither in the nature of an instrument or apparatus or a part or accessory of any instrument or apparatus. They were in no way like a frame or mounting for spectacles or the goggles. Thus their classification under sub-heading No. 9003.19 of the Tariff is ruled out.
6. The appellants have referred to the Supreme Court decision in the case of Pardeep Aggarbatti v. State of Punjab, 1997 (96) E.L.T. 219 (S.C.), in support of their contention that the photo frame was akin to frame and mountings for spectacles and goggles. The case before the Hon'ble Supreme Court was related to the provisions under the Punjab General Sales Tax Act, 1948. The issue for consideration was, whether dhoop and aggarbatti were covered by the expression "perfumery". In para 9 of their order, the Apex Court had observed that the entries in the Schedules of Sales Tax and Excise statutes list some articles separately and some articles are grouped together. When they are grouped together each word in the Entry draws colour from the other words therein. The Apex Court had referred to this principle as the principle of noscitur a sociis. This principle is not applicable in the facts and circumstances of the case as the photo frames had not been grouped along with the frames and mountings for spectacles and goggles. The Supreme Court in para 10 of their decision had held as under :
"10. We are in no doubt whatever that the word "perfumery" in the said Entry No. 16 draws colour from the words 'cosmetics' and 'toilet goods' therein and that, so read, the word 'perfumery' in the said Entry No. 16 can only refer to such articles of perfumery as are used, as cosmetics and toilet goods are, upon the person. The word "perfumery" in the context in which it is used has, therefore, no application to 'dhoop' and 'aggarbatti'. The distinction between the present case and the case of Indian Herbs Research and Supply company is evident for the word 'perfumes' in the entry under consideration in the latter case was not limited by the words before and after, as in the entry before as; both the words 'scent' and 'perfumes' related to articles that produced fragrances."
We do not consider that the facts and circumstances of the present case are in any way akin to the issue for consideration before the Hon'ble Supreme Court in the case of Pardeep Aggarbatti v. State of Punjab, supra.
7. As regards the alternative classification, we find that Chapter 83 of the Tariff covers Miscellaneous articles of base metal. Base metal is distinguished from the precious metal, such as, gold and silver. Metals, such as, iron, lead etc. are base metals. They are subject to corrosion, oxidisation and tarnishing by the vagaries of weather. Various utility items, items of hardware, kitch-enware etc. were covered by that Chapter Heading. Under Heading No. 83.15 frames of base metals were covered. But could the disputed photo frames be considered as a frame of base metal? The metal was a very small part of the frame which was made of glass. It could not be considered as an article of base metal.
8. The frame was made of glass. Other patti, strip, sheet etc. were just pasted on the glass to facilitate insertion of the photo. They do not make the frame. The frame is of glass and the form in which presented for assessment, it was clearly an article of glass. It was used for displaying the picture/photograph. Other embellishments/aids were to fix the picture or photograph for proper display.
9. Under Chapter 70 of the Tariff even framed glass mirrors are covered. The articles impregnated, coated, covered or laminated with plastics or varnish were also included in this Chapter.
10. In the Explanatory Notes to the Customs Co-operation Council Nomenclature (CCCN), it was explained that the articles classified as other articles of glass, (Heading No. 70.21 of the CCCN) remained there even if combined with materials other than glass provided that they retained the essential character of glass articles. Similar explanation finds place in Heading No. 70.20 of the Harmonised Commodity Description and Coding System Explanatory Notes (HSN) in respect of other articles of glass.
11. The function of an article is one of the most important criteria for determining the essential character of an article. The factors which determine the essential character of a composite product may vary as between different kinds of goods. Among the various factors, the dominant purpose for which the possession of the composite item is craved, may be relevant. The value of one or the other component may be determinative of the price paid, but it may not be the sole consideration for which a buyer goes to the market to possess the goods in question. The functional character of the composite article is also determined by the convenience it provides to the user, in the present case by the curved glass which meets the basic requirement of display of the photograph, picture etc. While dealing with the glass mirror, the Hon'ble Supreme Court in para 8 of their judgment in the case of Atul Glass Indus. Ltd. v. CCE, 1986 (25) E.L.T. 473 (S.C.), had held as under :
'8. 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. v. State of Haryana (1978) 42 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. 353 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 identity of an article is associated with its primary functions. It is only logical that it should be so. When a consumer 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 supplies 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 mirror, an article which reflects 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 article lies in its being a mirror. 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 farely 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) E.L.T. 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. 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 STC 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.' This decision was rended by the Supreme Court under the old Central Excise Tariff. Under the new Central Excise Tariff glass mirrors were specifically included under Heading No. 70.06 of the Tariff.
12. The utility of the glass is in its transparency. It is this utility which is being used of in the present product. Para 6 of the order-in-appeal is extracted below:
"6. Seeing the sample of the item which is evidently a composite item, I am of the view that Interpretative Rule 3(b) would be squarely applicable for classifying this item. According to the nature of the product, I find that the glass portion gives it the essential character and hence the classification under Tariff sub-heading 7015.00 is appropriate. A photoframe is essentially to hold a photograph and preserve it free from dust etc. and at the same time permitting the viewer to have a clear view of the photograph. The role of the glass portion in the frame is thus most important. Moreover, by seeing the product itself, one immediately gathers the impression that it is glass photoframe. Therefore, it would be reasonable to hold that glass gives the product its essential character. Reference to Hon'ble Supreme Court's decision in Geep Flashlights case is not relevant in this context. The decision was given in the context of a dispute regarding the classification of plastic torch where the question was whether such torches would be covered by Tariff Item 15A(2) or the residuary Tariff Item 68 of the old Central Excise Tariff. No interpretative rule was applicable nor was the choice lay between two specific Tariff sub-heading as in the present case. Moreover, the observation of the Hon'ble Supreme Court was made in the context of the wordings of Tariff Item 15A(2) which could not cover a plastic torch in the same way as it covers other items specified in that Tariff Item. This is not so in case of Tariff sub-heading 7015.00.
13. Taking all the relevant facts and considerations into account, we do not find any ground to differ with the view taken by the learned Collector of Central Excise (Appeals). We do not find any merit in this appeal and the same is rejected.