http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 9

CASE NO.:

Appeal (civil) 1411 of 1995

PETITIONER:

Forbes Gokak Limited

RESPONDENT:

Collector of Central Excise, Aurangabad

DATE OF JUDGMENT: 26/02/2003

BENCH:

M.B. SHAH & D.M. DHARMADHIKARI

JUDGMENT:

J U D G M E N T

WITH

C.A. No. 7086 of 1999, C.A. Nos.2366-67 & 4384 of 2001

Shah, J.

CIVIL APPEAL No.1411 OF 1995.

By judgment and order dated 28th October, 1994, in Appeal

No.E/139/94-D, Customs Excise and Gold (Control) Appellate

Tribunal, New Delhi (hereinafter referred to as "the Tribunal") arrived

at the conclusion that 'Glass Moulds' along with plastic Gasket were

classifiable under Central Excise Tariff Chapter heading 70.15 as

'other articles of glass' and thereby confirmed the order passed by the

Collector of Central Excise, Aurangabad.

The questions for consideration before the Tribunal were:

(1) Whether grinding and polishing of Opthalmic

Blanks into Glass Moulds amounts to

manufacture?

(2) Whether the goods are known in the market as

Glass Moulds?

(3) Whether the goods should be classified under

Chapter sub-heading 84.80 or under Chapter 70.15

of the Central Excise Tariff?

For the first question, the Tribunal came to the conclusion that

the product which comes out after grinding and polishing is product

completely different from raw-material, namely, the opthalmic blanks.

The ground and polished material acquires different characteristic and

properties, and a new product distinct in name, character and use

comes into existence after the process of grinding and polishing.

Thus, the process of grinding and polishing is nothing but a process of

manufacture.

For the second question, the Tribunal found that the appellant

had described the product as Glass Moulds and that the product was

internationally known as Glass Moulds. That means, in common/

trade parlance, the product was known as glass moulds. For the

contention that the product is not marketable and does not come to the

market for being bought and sold on the ground that the technology

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 9

for manufacture of the product was a highly guarded secret and,

therefore, it was not available to trade in general, the Tribunal held

that as the product was imported by the appellant itself, it was not

necessary that the product should essentially come to the market for

being bought and sold in the market. The Tribunal held that the test is

whether the product is capable of being bought and sold in the

market or is marketable? For this, the Tribunal relied upon the

decision of this Court in U.P. State Electricity Board v. CCE [1994

(70) ELT 3].

For the last question whether the goods were moulds for

plastic articles or moulds made of glass, the Tribunal relied upon the

test of common/trade parlance and observed that the admitted position

was that the goods were known in the international market as glass

moulds; the appellants who were the manufacturer also call the

product as glass moulds; even at the time of import of the product, it

was declared as 'glass moulds'. Hence, the Tribunal held that the

product was known as 'glass moulds or moulds made of glass'.

With regard to classification of the product, the Tribunal

pointed out that lot of emphasis was laid on Chapter Note 1(c) of

Chapter 84 by the appellant whereas the Department was of the view

that the goods were articles for technical use and the plastic gaskets

were parts thereof and, therefore, not classifiable under Chapter 84

and were appropriately classifiable under Chapter Heading 70.15.

The Tribunal held that the moulds in dispute were glass moulds as

known internationally and nationally in trade/commercial parlance.

They were not moulds for making plastic articles and therefore, in

terms of the Explanatory Notes of HSN, the goods were appropriately

classifiable under Central Excise Tariff Heading 70.15.

The Tribunal also held that Gaskets are essential components

and are used for binding of male and female to form a glass mould

assembly and, therefore, were classified under Central Excise Tariff

Chapter heading 70.15 when they were imported along with glass

moulds. Gaskets were given specific shape and design for the purpose

of preparing these glass moulds assembly and, therefore, shall be

classifiable under Central Excise Tariff Heading 39 as articles for

plastic and finally held that the glass moulds along with gaskets were

classifiable under Heading 70.15.

That judgment and order of the Tribunal is challenged by filing

this appeal.

Admittedly, the Glass Moulds consist of (1) glass moulds; and

(2) gaskets. Ground of one glass mould is of concave shape while

other is convex. These pieces of ground opthalmic glass are known as

glass moulds in International Trade. A plastic gasket which holds the

two Moulds is then manufactured out of ethyl vinyl acetate. The said

two moulds are held together by this gasket. This is for

manufacturing opthalmic lenses. Admittedly, the process is as

follows:

(a) In the mould making section, the glass blanks are

subjected, first to cutting the surface by diamond to

achieve designed curvature on the surface, then these

glass blanks are subjected to grinding and polishing to

achieve a smooth surface.

(b) Two glass blanks so processed from (called male &

female) constitute appliances or articles of glass for use

known as glass moulds, these two moulds are held

together with plastic gasket which they call a glass mould

assembly, such glass moulds are used repeatedly for

casting of the plastic lenses.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 9

It was contended by the Department that the assessees were

manufacturing glass moulds and gaskets and consuming these

products captively for manufacture of ophthalmic lenses and that

these glass moulds were classifiable under Central Excise Tariff

Chapter heading 70.15. The assessee submitted that the same are

classifiable under the heading 84.80 for which there is exemption

notification No.220/86 dated 2.4.1986.

For appreciating the contentions raised by the learned counsel

for the parties, we would refer to the relevant entries and chapter notes

thereunder, upon which reliance is placed by them.

"CHAPTER 70

Glass and Glassware

NOTES

1. This Chapter does not cover:

(a) (b) .

(c) Optical fibre cables, electrical insulators or

fittings of insulating material (Chapter 85);

(d) Optical fibres, optically worked optical

elements hypodermic syringes, artificial eyes,

thermometers, barometers, hydrometers or

other articles of Chapter 90.

5. Throughout this Schedule, the expression 'glass'

includes fused quartz and other fused silica.

HEADING

Heading 70.15 Other articles of glass including

those of a kind used for table, kitchen, office,

indoor decoration or similar purposes (other than

that of heading No.70.07 or 70.13)

CHAPTER 84

Nuclear Reactors, Boilers, Machinery and

Mechanical Appliances; Parts Thereof

NOTES

1. This Chapter does not cover:

(a) (b) .

(c) Laboratory glassware (heading No.70.12);

machinery, appliances or other articles for

technical uses or parts thereof, of glass

(heading No.70.14 or 70.15)

(d) Articles of heading No.73.21 or 73.22 or

similar articles of other base metals (Chapter

74 to 76 or 78 to 81)."

HEADING

Heading 84.80 Moulding boxes for metal foundry;

mould bases; moulding patterns; moulds for metal

(other than ingot moulds) metal carbides, glass,

mineral materials, rubber or plastics.

CHAPTER 90

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 9

Optical, Photographic, Cinematographic,

Measuring, Checking, Precision, Medical or

Surgical Instruments and Apparatus; Clocks

and Watches; Musical Instruments; Parts and

Accessories Thereof.

HEADINGS

Heading 90.01 Optical fibres and optical fibre

bundles; optical fibre cables other than those of

heading No.85.44; sheets and plates of polarising

material; lenses (including contact lenses), prisms,

mirrors and other optical elements, of any material,

unmounted, other than such elements of glass not

optically worked.

Heading 90.02 Lenses, prisms, mirrors and

other optical elements, of any material, mounted,

being parts of or fittings for instruments or

apparatus, other than such elements of glass not

optically worked."

Further, learned counsel for the appellant referred to relevant

parts of Rules 1 to 4 of the Rules for Interpretation of the Schedule of

the Excise Tariff which are as under:

"THE SCHEDULE EXCISE TARIFF

RULES FOR THE INTERPRETATION OF THIS SCHEDULE

1. The titles of Sections and Chapters are provided

for ease of reference only; for legal purposes,

classification shall be determined according to

the terms of the headings and any relative Section

or Chapter Notes and, provided such headings or

Notes do not otherwise require, according to the

provisions hereinafter contained.

2. (a)

(b) Any reference in a heading to a material or

substance shall be taken to include a

reference to mixtures or combinations of

that material or substance with other

materials or substances. Any reference to

goods of a given material or substance shall

be taken to include a reference to goods

consisting wholly or partly of such material

or substance. The classification of goods

consisting of more than one material or

substance shall be according to the

principles contained in rule 3.

3. When by application of sub-rule (b) of rule 2 or for

any other reason, goods are, prima facie, classifiable

under two or more headings, classification shall be

effected as follows :

(a) The heading which provides the most

specific description shall be preferred to

headings providing a more general

description. However, when two or more

headings each refer to part only of the

materials or substances contained in mixed

or composite goods or to part only of the

items in a set, those headings are to be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 9

regarded as equally specific in relation to

those goods, even if one of them gives a

more complete or precise description of the

goods.

(b) Mixtures, composite goods consisting of

different materials or made up of different

components, and goods put up in sets,

which cannot be classified by reference to

(a), shall be classified as if they consisted of

the material or component which gives them

their essential character, insofar as this

criterion is applicable.

(c) When goods cannot be classified by

reference to (a) or (b), they shall be

classified under the heading which occurs

last in the numerical order among those

which equally merit consideration.

4. Goods which cannot be classified in accordance

with the above rules shall be classified under the

heading appropriate to the goods to which they are

most akin."

Now we would deal with the contention of the learned counsel

for the appellant that the glass moulds with plastic gasket

manufactured by the appellant would be covered by heading 84.80

and in any case, it would fall under Chapter 90, heading 90.02.

For the alternative submission, admittedly, it was neither the

contention of the Department nor of the appellant that the product

would be covered under heading 90.02 and, therefore, that question is

not required to be considered. However, prima facie, it would be

difficult for us to arrive at the conclusion that the product is lense,

prism, mirror and other optical element, of any material, unmounted,

being part of or fitting for instruments or apparatus, other than such

elements of glass not optically worked so as to be covered by Heading

90.02. Admittedly, the product in question is for manufacture of

lenses.

Hence, we would straightway consider whether the product

would be covered by heading 84.80? Chapter Note 1(c) quoted above

clearly provides that Chapter 84 does not cover laboratory glassware

(Heading No.70.12); machinery appliances or other articles for

technical uses or parts thereof of glass (Heading No. 70.14 or 70.15).

Therefore, we have to consider whether it would be covered by

heading 70.15? Undisputedly, in the present case, the glass moulds

are articles of glass which are not covered by heading 70.07 or 70.13.

The glass moulds in question are covered by plastic gasket. As per

the Rules for Interpretation of Tariff Items, a product which is made

up of different components and goods put up in sets, which cannot be

classified by reference to rule 2 (a), are to be classified as if they

consisted of the material or component which gives them their

essential character. In the present case, plastic gasket cannot give the

essential character of glass moulds which are for the purpose of

manufacture of opthalmic lenses. Plastic gasket only holds the male

and female moulds together.

Further, relevant part of heading 84.80 deals with moulds for

metal, metal carbides, glass, mineral materials, rubber or plastics.

Reading the said heading as a whole, it appears that the said heading

covers various moulds such as, mould boxes for metal foundry, mould

bases, moulding patterns, moulds for metal, moulds for metal

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 9

carbides, moulds for glass, moulds for mineral materials, moulds for

rubber or plastics. It is nobody's case that the product in question,

namely, 'glass mould' is used for the aforesaid purposes. It is used

for manufacture of opthalmic lenses. Merely because lenses may be

of glass, it cannot be said that the said product is mould for glass. As

per Rule 3(a) of the Rules for the Interpretation quoted above, the

heading which provides most specific description shall be preferred to

headings providing a more general description. The heading 70.15

would specifically cover the product which is mainly consisting of

glass as 'other article of glass'. These glass-moulds are used for

casting of the lenses.

Aforesaid discussion is also in conformity with the HSN

explanatory notes. In Chapter 70 for Glass and Glassware, the general

note specifically provides that the Chapter covers glass in all forms

and articles of glass, other than goods excluded by Note-1 to the said

chapter or covered more specifically by other headings of the

nomenclature. Learned counsel for the appellant submitted that the

chapter note 1(d) specifically includes optical fibres, optically worked

optical elements, hypodermic syringes, artificial eyes, thermometers,

barometers, hydrometers or other articles of Chapter 90. As stated

above, the glass moulds cannot be termed as optical fibres or optically

worked optical elements, which would be covered by Chapter 90. It

also provides that manufacturing processes vary considerably and

inter alia include:

(D) Moulding, whether or not combined with pressing,

blowing or drawing (e.g., for the manufacture of

bottles, tumblers, certain types of optical glass,

ashtrays).

(IJ) Cutting out the required articles from blanks,

spheres, etc., obtained by any process (articles of

fused quartz or other fused silica, in particular, are

often obtained from blanks of solid or hollow

section).

This has been made clear in Chapter/Heading 90, the relevant part of

which reads as under:

"(C) Optical elements of glass, optically

worked, not permanently mounted. In order to

distinguish between optical elements of glass of this

heading and those of Chapter 70 it is necessary to

determine whether or not they have been optically

worked.

The optical working of glass is usually performed

in two stages, viz., the production of the surfaces to the

shape required (i.e., with the necessary curvature, at the

correct angle, etc.), and the polishing of these surfaces.

This working consists of grinding the surfaces by means

of abrasives, rough at first, then gradually finer, the

successive operations being roughing, trueing, smoothing

and polishing. Finally, in the case of lenses required to

be of an exact diameter, the edges are ground; this is

known as the centring and edging operation. This

heading applies only to optical elements of which the

whole or part of their surface has been polished in order

to produce the required optical properties. It applies

therefore to elements which have been ground and

polished as described above, and also to elements which

have been polished after moulding. The heading does

not apply to unpolished elements having undergone

merely one or more of the processes which precede

polishing. Such elements fall in Chapter 70."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 9

Further, as stated above, it is nobody's case that item in

question is covered by Chapter 90.

Further, with regard to the applicability of Chapter 84, Chapter

Notes to Chapter 84 provide as under:

"Chapter 84

NUCLEAR REACTORS, BOILERS, MACHINERY AND

MECHANICAL APPLIANCES; PARTS THEREOF

Chapter Notes

1. This chapter does not cover:

(c) Laboratory glassware (heading No. 70.17);

machinery, appliances or other articles for

technical uses or parts thereof, of glass (heading

No. 70.19 or 70.20);

GENERAL

(A) GENERAL CONTENT OF THE CHAPTER

Subject to the provisions of the General

Explanatory Note to Section XVI, this Chapter covers all

machinery and mechanical appliances, and parts thereof,

not more specifically covered by Chapter 85, and not

being:

(a) (c)

(d) Laboratory glassware of heading 70.17; machinery

and appliances and parts thereof, of glass (heading

70.19 or 70.20).

In general, Chapter 84 covers machinery and

mechanical apparatus and Chapter 85 electrical goods.

However, certain machines are specified in headings of

Chapter 85 (e.g. electro-mechanical hand tools and

electro-mechanical domestic appliances) while Chapter

84 on the other hand covers certain non-mechanical

apparatus (e.g. steam generating boilers and their

auxiliary apparatus, and filtering apparatus).

It should also be noted that machinery and

apparatus of a kind covered by Chapter 84 remain in this

Chapter even if electric:

Since ceramic articles and parts thereof (Chapter

69), laboratory glassware (heading 70.17) and machinery

and appliances and parts thereof, of glass (heading 70.19

or 70.20) are excluded from this Chapter, it follows that

even if a machine or mechanical appliance is covered,

because of its description or nature, by a heading of this

Chapter it is not to be classified therein if it has the

character of an article of ceramic materials or of glass.

(B) GENERAL ARRANGEMENT OF THE CHAPTER

(5) Heading 84.80 covers, in addition to moulding

boxes for metal foundry and moulding patterns,

moulds (other than ingot moulds) used, by hand or

in machines, for moulding certain materials.

8480.50 - Moulds for glass

8480.60 - Moulds for mineral materials

- Moulds for rubber or plastics:

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 9

This heading covers the moulding boxes used in

metal foundry, mould bases and moulding patterns, with

certain exceptions referred to later, it also covers all

moulds (whether or not hinged, and whether used by

hand or in presses or moulding machines) which are of a

kind used for moulding the following materials into

blanks or finished articles:

(I) Metals (including metal powders, sintered metal

carbides and cermets.

(II) Glass (including fused quartz or other fused silica)

or mineral materials such as ceramic pastes,

cement, plaster or concrete.

(III) Rubber or plastics.

In general, the essential function of a mould is to

retain the material in a predetermined shape while it

sets; some moulds also exert a certain pressure on the

material. But the heading excludes stamping dies of

heading 82.07 since these shape the material solely by

means of a powerful blow or compression (e.g., dies for

stamping out sheet-metal goods).

MOULDS FOR GLASS

This group includes:

(1) Moulds for glass paving stones, bricks or flags,

and compression moulds for glass tiles.

(2) Bottle moulds for hand or machine working,

including pedal operated moulds (e.g., blank or

finishing moulds, ring moulds).

(3) Moulds for hollow glass ware, for insulators, etc.

(4) Shaping moulds for glassmakers' lathes.

(5) Moulds made of steel or cast iron, used to make

lens or spectacle blanks etc."

Reading the aforesaid notes, it would be difficult to hold that

glass-moulds in question are moulds for glass. It is apparent that

Chapter 84 covers machinery and mechanical apparatus and certain

non-mechanical apparatus e.g. steam generating boilers and their

auxiliary apparatus and filtering apparatus. Further, the Chapter

excludes ceramic articles and parts thereof, laboratory glassware,

machinery and appliances and parts thereof, of glass, that means even

if a machine or mechanical appliance is covered by a heading of

Chapter 84 by its description or nature, the item is not to be classified

therein if it has the character of an article of ceramic material or of

glass.

Further, heading 84.80 covers moulds used by hand or in

machines for moulding certain materials like moulds for glass, moulds

for mineral materials and moulds for rubber or plastics. The product

in question 'glass mould' is not for moulding such articles of glass.

Moulds for glass include moulds for glass paving stones, bricks or

flags, compression moulds for glass tiles, bottle moulds for hand or

machine working, moulds for hollow glassware and for insulators,

shaping moulds for glassmakers' lathes and moulds made of steel or

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 9

cast iron used to make lens or spectacle blanks.

In the result, Civil Appeal No.1411 of 1995 and Civil Appeal

No.7086 of 1999, filed by the appellant Forbes Gokak Ltd. are

dismissed.

Civil Appeal Nos.2366-67 of 2001 filed by Commissioner of

Central Excise, Mumbai is allowed and the impugned judgment and

order passed by the Tribunal is set aside.

As nothing has been pointed out as to how the impugned

judgment and order is erroneous, Civil Appeal No.4384 of 2001 filed

by Commissioner of Central Excise and Customs, Aurangabad is

dismissed.

There shall be no order as to costs in all the appeals.