Holding

Rough Ophthalmic Blanks are not "other glass, glassware including tableware" and therefore fall under Residuary Tariff Item 68 of the Central Excise Tariff.

Summary

Real Optical Co. imported Rough Ophthalmic Blanks, which are glass articles used specifically for manufacturing spectacle lenses. The Customs authorities levied counter‑vailing duty on the basis that the blanks fell under Tariff Item 23‑A(4) ("other glass, glassware including tableware"), which carries a higher rate than the Residuary Tariff Item 68. The company appealed, arguing that the functional character of the blanks – their specialised use in optics – places them under Item 68, attracting a lower duty. The Customs, Excise and Gold (Control) Appellate Tribunal rejected this view and dismissed the appeal. The Supreme Court, interpreting the Central Excises and Salt Act, held that classification should be based on how the relevant class of users identifies the product and its primary function, not merely on its material composition. Consequently, the Court classified Rough Ophthalmic Blanks under Residuary Tariff Item 68 and allowed the appeal, setting aside the Tribunal’s decision.

Issues considered

Whether Rough Ophthalmic Blanks should be classified under Central Excise Tariff Item 23‑A(4) or Residuary Tariff Item 68.
Whether the functional/ commercial identification of a product can outweigh its literal material description in tariff classification.

Legislation cited

Central Excises and Salt Act, 1944

Subjects

central excisetariff classificationfunctional charactercommercial identificationcountervailing dutyresiduary tariff itemglasswarestatutory interpretation

Judgment

A REAL OPTICAL CO.
v.
APPELLATE COLLECTOR OF CUSTOMS AND ANR.
J
FEBRUARY 23, 2001

B [SYED SHAH MOHAMMED QUADRI AND
S.N. PHUKAN, JJ.]

)-
Excise Laws :

Central Excises and Salt Act, 1944 :
c
Rough Ophthalmic Blanks-Classification of-Tariffitem No. 23-A(4) or
Residuary Tariff Item No. 68--Held: Identity ofan article is associated with its
primary function-The functional character of Rough Ophthalmic Blanks is
.,,...
different from glass or glassware as these are used for making optical lenses-
D Hence, Rough Ophthalmic Blanks are not classifiable under Tariff Item No. 23-
A(4) but under Residuary Tariff Item 68 attracting a lower rate of dutr-
Central Excise Tariff.

The appellant imported Rough Ophthalmic Blanks and was called
upon to pay countervailing duty, which it paid. The appellant filed an
E appeal before the Customs, Excise and Gold (Control) Appellate Tribunal
~

contending that Rough Ophthalmic Blanks fell under Residuary Tariff
Item No. 68 attracting a lower rate of excise duty and not under Tariff
Item No. 23-A(4) and claimed refund of countervailing duty. The appeal
was dismissed. Hence this appeal.
F
Allowing the appeal, the Court

HELD : 1. In interpreting items in Statutes like Excise Acts or Sales

G
Tax Acts resort should be had not to the scientific or technical meaning of
the terms or expressions used but how does the class or section of people
dealing with or using the product identify the product. However, if any
-
term or expression has been defined in the enactment then it must be
understood in the sense in which it is so defined. It is also a common ~

experience that the identity of an article is associated with its primary
function inasmuch as a customer buys it to perform a specific function
H from it. [73-A-B]
70
REAL OPTICAL CO. v. APPELLATE COLLECTOR OF CUSTOMS [PHUKAN, !.] 71
2. A general merchant dealing in glass or tableware does not deal in A
+ articles like Rough Ophthalmic Blanks with optical properties, which may
be used for making spectacles. The functional character of Rough Oph·
thalmic Blanks is different from glass or glassware, as these commodities
are used for different purpose viz., making of optical lenses, etc. Rough
Ophthalmic Blanks are purchased by manufacturer of spectacles for mak·
B
ing spectacle lenses and not for the purpose of other glass or glassware
.. induding tableware. [73-D]

Inda International Industries v. CST, AIR (1981) SC 1079, followed.

Atul Glass Industries (Pvt.) Ud. v. CCE, [1986) 3 SCC 480, relied on.
~ c
3. Rough Ophthalmic Blanks would not come under Tariff Item No.
23·A(4) but will come under Residuary Tariff Item No. 68.

CIVIL AP!"ELLATE JURISDICTION: Civil Appeal No. 467 of 1987.

From the Judgment and Order dated 1.7.86 of the Customs, Excise and D
Gold (Control) Appellate Tribunal, New Delhi, in C.A. No. 242 of 1981-D.

Ambrish Kumar for the Appellant.

.,,.. Gowri Shankar Moorthy, T. Raja and P. Parmeshwaran for the Respond-
ents. E
The Judgment of the Court was delivered by

PHUKAN, J. This appeal by special leave is directed against the
... judgment dated 1-7-1986 of the Customs, Excise and Gold (Control) Appel-
late Tribunal, New Delhi. F
+
The question raised in this appeal is whether Rough Ophthalmic Blanks
falls under tariff item No.23-A (4) or under Residuary Tariff item No.68 of
Central Excise Tariff.

The appellant imported Rough Ophthalmic Blanks and was called upon G
to pay connter-vailing duty, which was paid. The Appellate Collector of
Customs, Mumbai in another appeal held that Rough Ophthalmic Blanks
could be charged to duty only under Residuary Tariff item No.68. The
appellant, therefore, applied to the Assistant Collector of Customs (lncharge
of Refuod), Madras claiming refund of the above connter-vailing duty, which
H
72 SUPREME COURT REPORTS [2001] 2 S.C.R.
A was· rejected. The appeal and the review filed by the appellant were also
dismissed. Thereafter, the appellant filed the appeal before the Customs, 1'-
Excise and Gold (Control) Appellate Tribunal, New Delhi. The Tribunal
heard the appeal filed by the appellant along with other appeals and dismissed
the appeal of the appellant by the impugned judgment dated 1.7.1986.

B The facts are not disputed that Rough Ophthalmic Blanks with optical
properties are manufactured out of combination of highly purified form of raw
glass and other materials such as silica, alwnina, sodium potassium and rare
earths etc. after technical, chemical and thermal processes.

c The Tribunal rejected the contention on behalf of appellant that Rough
Ophthalmic Blanks are not imported as glass simpliciter but as a special
commodity for the purpose of manufacture of spectacle lenses. According to
Tribunal, the true test for classification is not the actual process adopted for
manufacture but the identity of the goods with the relevant description or
definition in the First Schedule to the Act or failing that, in terms of com-
D mercial parlance and further that the existence or otherwise of optical prop-
erties, as distinguished from the exact specification required for optical glass,
is no criterion for inclusion in, or exclusion out of the above Item. The
Tribunal also referred to Indian Standard Glossary of terms relating to glass
and glassware and after discussion did not accept the contention on behalf of
E the appellant that Rough Ophthalmic Blanks though made of glass are not
known in the trade as glass.

Learned counsel for the appellant has placed reliance on other authori-
ties to explain how Rough Ophthalmic Blanks are made from glass. In our
opinion it is not necessary to go into these authorities as we have already
F explained how Rough Ophthalmic Blanks are made and this is not disputed.

According to learned counsel for revenue, Rough Ophthalmic Blanks
would fall under the above Tariff Item 23-A (4), as these are articles of glass.

G Tariff Item 23-A (4) after amendment on. 1.3.1979 read as follows:-

"other glass, glass ware including tableware"

Tariff Item 68 is of residuary character and relates to all other goods
not elsewhere specified. The rate of duty is higher if the product falls under
H Tariff Item No.23A (4) then if it fell under Tariff Item No.68.
REAL OPTICAL CO. v. APPELLATE COLLECTOR OF CUSTOMS (PHUKAN, J.] 73

It is settled position of law that in intexpreting items in Statutes like A
Excise Acts or Sales Tax Acts resort should be had not to the scientific or
technical meaning of the terms or expressions used but how is the product
ide.ntified by the class or section of people dealing with or using the product,
however, if any term or expression has been defined in the enactment
then it must be understood in the sense in which it is so defmed. It is also
B
a common experience that the identity of an article is associated with its
primary function inasmuch as a customer buys it to perform a specific
function from it.

What was important by the appellant was not glass simplicitor but
Rough Ophthalmic Blanks. We have already referred that Rough Ophthalmic C
Blanks 'with optical properties are manufactured out of combination of highly
purified raw glass and other material after highly technical, chemical and
thermal process.

A general merchant dealing in glass or tableware does not deal in
D
articles like Rough Ophthalmic Blanks with optical properties, which may be
used for making spectacles. The functional character of Rough Ophthalmic
Blanks is different from glass or glassware, as these commodities are used for
different puxpose viz. making of optical lenses, etc. Rough Ophthalmic Blanks
are purchased by manufacturer of spectacles for making spectacle lenses not
for the puxpose of other glasses or glassware including tableware. E
In Mis. Inda International Industries v.' Commissioner of Sales Tax,
Uttar Pradesh, AIR [1981] SC 1079, a three judge Bench of tl1is Court
considered the entry "glassware" falling within Entry No.39 of First Schedl'!e
of U.P. Sales Tax Act and held that clinical syringes would not fall under the F
said entry. It was also held that in commercial sense glassware would never
comprise articles like clinical syringes, thermometer, etc., which have spe-
cialized significance and utility. In this appeal also Rough Optical Blanks
has specialized utility and, therefore, would not come under Tariff Item
No.23A (4).
G
In Atul Glass Industries (Pvt.) I.ul. v. Collector of Central Excise,
(1986] 3 SCC 480, the Bench of this court held that glass mirror cannot be
classified as other glass or glassware set forth in Tariff Item 23-A (4) and
must, therefore, fall under the residuary Truill Item 68 of the First Schedule
to the Act. H
--
74 SUPREME COURT REPORTS [2001] 2 S.C.R.
A For the reasons stated above, we have no hesitation to hold that Rough
Ophthalmic Blanks would not come under Tariff Item No.23A (4) and will ~
come under Residuary Tariff Item No.68. Accordingly we hold that the appeal
has merit and it is allowed by setting aside the impugned judgment. In the
facts and circumstances of the case we direct the parties to bear their own
costs.
B
v.s.s. Appeal allowed.