Collector of Customs Vs. Hico Products Private Limited - Court Judgment

Excerpt:
1. the facts of the case, briefly stated, are that m/s. hico products ltd., (the respondent before us) imported a consignment of spherical glass flasks of hundred litres capacity. the respondent claimed classification of the goods for the purpose of basic duty of customs under heading 70.17/18 of the first schedule to the customs tariff act, 1975 (hereinafter referred to as the import tariff schedule) and for the purpose of additional duty of customs under item no. 23a(2) of the first schedule to the central excises and salt act, 1944 (hereinafter referred to as the cet). the assistant collector of customs held that the goods were industrial glassware falling under heading no. 70.21 ("other articles of glass") read with item no. 23a(4) of the cet and assessed the goods to duty accordingly. the respondent subsequently claimed refund of the part of the duty on the ground that the goods were meant for use in their research and development laboratory and as such were laboratory glassware. the claim was rejected by the assistant collector. on appeal, the appellate collector of customs allowed the claim of the respondent on the basis of the end use of the goods and held that the goods were not industrial glassware but only laboratory glassware. he further observed that the goods were for use in the respondent's research and development laboratory. the central government, on scrutiny of the records of the case, felt that the goods were correctly classifiable under heading 70.21 of the import tariff schedule and item no. 23a(4) of the cet. the reasons which led the government to come to this tentative view were set out in the following terms : "although the invoice for the impugned goods does not expressly indicate that the impugned goods are made of industrial glasses, the invoice dated 31.7.80 from the suppliers (corning) for similar goods i.e. spherical vessels type vsl 100 described the goods as "reaction vessel for industrial hard glass". even the manufacturer's catalogue "glass for industry, the chemical engineers in glass, qvf" at page 63 indicate spherical vessels type vsl 100 as glass for industry. it thus appears that the manufacturers themselves consider the impugned goods as industrial glass. it also appears from the customs cooperation council nomenclature explanatory notes (on which cta 75 has been broadly based) under heading 70.17 that this heading covers glass articles of a kind in general use in laboratories. it thus appears that the individual use of the impugned goods in research and development laboratory does not qualify it to be classified as for general use in laboratories specifically when the manufacturers themselves seem to describe the impugned goods as industrial glass and the goods even in the particular case are being used in the r & d department of the industry which would seem to put the goods in the category of industrial glassware as distinguished from laboratory glassware which need not be tied up with any industry." accordingly, the central government, acting in exercise of the powers vested in it under section 131 (3) of the customs act 1962 issued a notice dated 4-3-1981 to the respondent to show cause why the appellate collector's order should not be set aside and why the government should not pass appropriate orders in the matter. on the setting up of this tribunal, the records were transferred to this tribunal as pending proceedings in terms of section 131-b of the customs act, 1962 for disposal by the tribunal as if it the matter was an appeal filed before the tribunal.2. we have heard shri o.k. sana, departmental representative for the revenue and shri s.s. mann, zonal manager of the respondent-company.3. shri sana submitted that the glass flasks or reaction vessels were of big dimensions, each of hundred litre capacity and were of industrial glass. even if the flasks were for use in the respondent's pilot plant, they would still be industrial glassware and not laboratory glassware. the term laboratory glassware could take in only glassware of general use in laboratories. shri saha placed reliance on the explanatory notes of the c.c.c.n. (customs co-operation council nomenclature) in terms of which heading no. 70.17 of the c.c.c.n.excluded industrial glassware.4. in reply, shri mann submitted that the capacity of the flask was not determinative of its character as industrial or laboratory glassware.the respondent had imported flasks for use in their r & d laboratory for the purpose of working out the parameters for a hundred tons pilot plant which would ultimately help them in ascertaining the parameters for the production plant. he further submitted that the reaction vessels for production purposes were ordinarily made of metal with glass lining. the goods were still available with them and could be inspected to ascertain their exact use. further shri mann added that the goods were passed by the customs authorities under o.g.l. on the consideration that they were for use in respondent's r & d laboratory.in response to a query from the bench shri saha, departmental representative accepted that the goods had been passed under o.g.l. on the basis that they meant for r & d laboratory.5. we have considered the submissions of both sides. heading no.70.21 of the import tariff schedule is a residuary heading to cover articles of glass which cannot be classified under any other heading of chapter 70. heading no.70.17/18 covers laboratory glassware. if the subject goods were considered as for use in the respondent's r & d laboratory and passed on that basis under the o.g.l,, it does not stand to reason why they cannot be considered as laboratory glassware for the purpose of assessment to duty. the fact that the subject flasks are bigger in capacity than those ordinarily to be found in a scientific laboratory need not, only for that reason, rule out their classification as laboratory glassware if they are for use in laboratories in industry.the review show cause notice places reliance on a certain invoice from the same supplier of similar goods describing that as reaction vessels for, industrial hard glass. it also refers to the manufacturers catalogue indicating spherical vessels of type v.s.l.-100 as glass for industry. the respondent has, in its reply to the show cause notice made a grievance of the fact that it has not been furnished with the invoice or the catalogue relied upon in the show cause notice. in fact, these are not to be found even in the paper-books filed by the revenue.this apart, the show cause notice itself proceeds on the basis that the goods are for use in the r & d department of the respondent, though it takes the view that such use in industry would not qualify the goods for description as laboratory glassware. we cannot find anything in heading 70.17/18 which has the effect of ruling out glassware for use in laboratories in industry. no evidence has been adduced by the revenue that the subject goods are for use in industry for production purposes. if such evidence was available, the position may have been different. in the given facts and circumstances of the case, we are inclined to agree with the appellate collector that the subject goods were correctly classifiable as laboratory glassware under heading no.70.17/18 of the import tariff schedule and item no. 23a(2) of the central excise tariff schedule.6. in the result, the impugned order is upheld and the appeal is dismissed.

Judgment:
1. The facts of the case, briefly stated, are that M/s. Hico Products Ltd., (the respondent before us) imported a consignment of spherical glass flasks of hundred litres capacity. The respondent claimed classification of the goods for the purpose of basic duty of customs under heading 70.17/18 of the First Schedule to the Customs Tariff Act, 1975 (hereinafter referred to as the Import Tariff Schedule) and for the purpose of additional duty of customs under item No. 23A(2) of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the CET). The Assistant Collector of Customs held that the goods were industrial glassware falling under heading No. 70.21 ("other articles of glass") read with item No. 23A(4) of the CET and assessed the goods to duty accordingly. The respondent subsequently claimed refund of the part of the duty on the ground that the goods were meant for use in their research and development laboratory and as such were laboratory glassware. The claim was rejected by the Assistant Collector. On appeal, the Appellate Collector of Customs allowed the claim of the respondent on the basis of the end use of the goods and held that the goods were not industrial glassware but only laboratory glassware. He further observed that the goods were for use in the respondent's research and development laboratory. The Central Government, on scrutiny of the records of the case, felt that the goods were correctly classifiable under heading 70.21 of the Import Tariff Schedule and Item No. 23A(4) of the CET. The reasons which led the Government to come to this tentative view were set out in the following terms : "Although the invoice for the impugned goods does not expressly indicate that the impugned goods are made of industrial glasses, the invoice dated 31.7.80 from the suppliers (Corning) for similar goods i.e. Spherical Vessels type VSL 100 described the goods as "reaction vessel for Industrial Hard Glass". Even the manufacturer's catalogue "Glass for Industry, the Chemical Engineers in Glass, QVF" at page 63 indicate Spherical Vessels type VSL 100 as glass for industry. It thus appears that the manufacturers themselves consider the impugned goods as industrial glass. It also appears from the Customs Cooperation Council Nomenclature explanatory notes (on which CTA 75 has been broadly based) under heading 70.17 that this heading covers glass articles of a kind in general use in laboratories. It thus appears that the individual use of the impugned goods in research and development laboratory does not qualify it to be classified as for general use in laboratories specifically when the manufacturers themselves seem to describe the impugned goods as industrial glass and the goods even in the particular case are being used in the R & D Department of the industry which would seem to put the goods in the category of Industrial glassware as distinguished from Laboratory glassware which need not be tied up with any Industry." Accordingly, the Central Government, acting in exercise of the powers vested in it under Section 131 (3) of the Customs Act 1962 issued a notice dated 4-3-1981 to the respondent to show cause why the Appellate Collector's order should not be set aside and why the Government should not pass appropriate orders in the matter. On the setting up of this Tribunal, the records were transferred to this Tribunal as pending proceedings in terms of Section 131-B of the Customs Act, 1962 for disposal by the Tribunal as if it the matter was an appeal filed before the Tribunal.

2. We have heard Shri O.K. Sana, Departmental Representative for the Revenue and Shri S.S. Mann, Zonal Manager of the respondent-company.

3. Shri Sana submitted that the glass flasks or reaction vessels were of big dimensions, each of hundred litre capacity and were of industrial glass. Even if the flasks were for use in the respondent's pilot plant, they would still be industrial glassware and not laboratory glassware. The term laboratory glassware could take in only glassware of general use in laboratories. Shri Saha placed reliance on the explanatory notes of the C.C.C.N. (Customs Co-operation Council Nomenclature) in terms of which heading No. 70.17 of the C.C.C.N.excluded industrial glassware.

4. In reply, Shri Mann submitted that the capacity of the flask was not determinative of its character as industrial or laboratory glassware.

The respondent had imported flasks for use in their R & D laboratory for the purpose of working out the parameters for a hundred tons pilot plant which would ultimately help them in ascertaining the parameters for the production plant. He further submitted that the reaction vessels for production purposes were ordinarily made of metal with glass lining. The goods were still available with them and could be inspected to ascertain their exact use. Further Shri Mann added that the goods were passed by the customs authorities under O.G.L. on the consideration that they were for use in respondent's R & D laboratory.

In response to a query from the Bench Shri Saha, Departmental Representative accepted that the goods had been passed under O.G.L. on the basis that they meant for R & D laboratory.

5. We have considered the submissions of both sides. Heading No.70.21 of the Import Tariff Schedule is a residuary heading to cover articles of glass which cannot be classified under any other heading of Chapter 70. Heading No.70.17/18 covers laboratory glassware. If the subject goods were considered as for use in the respondent's R & D laboratory and passed on that basis under the O.G.L,, it does not stand to reason why they cannot be considered as laboratory glassware for the purpose of assessment to duty. The fact that the subject flasks are bigger in capacity than those ordinarily to be found in a scientific laboratory need not, only for that reason, rule out their classification as laboratory glassware if they are for use in laboratories in industry.

The review show cause notice places reliance on a certain invoice from the same supplier of similar goods describing that as reaction vessels for, industrial hard glass. It also refers to the manufacturers catalogue indicating spherical vessels of type V.S.L.-100 as glass for industry. The respondent has, in its reply to the show cause notice made a grievance of the fact that it has not been furnished with the invoice or the catalogue relied upon in the show cause notice. In fact, these are not to be found even in the paper-books filed by the Revenue.

This apart, the show cause notice itself proceeds on the basis that the goods are for use in the R & D department of the respondent, though it takes the view that such use in industry would not qualify the goods for description as laboratory glassware. We cannot find anything in heading 70.17/18 which has the effect of ruling out glassware for use in laboratories in industry. No evidence has been adduced by the Revenue that the subject goods are for use in industry for production purposes. If such evidence was available, the position may have been different. In the given facts and circumstances of the case, we are inclined to agree with the Appellate Collector that the subject goods were correctly classifiable as laboratory glassware under heading No.70.17/18 of the Import Tariff Schedule and Item No. 23A(2) of the Central Excise Tariff Schedule.

6. In the result, the impugned order is upheld and the appeal is dismissed.