Bombay High Court
The Bombay Metal And Alloys Mfg. Co. vs Union Of India on 8 October, 1990
Equivalent citations: 1991(52)ELT119(BOM)
JUDGMENT Pendse, J.
1. The petitioner No. 1 is a Company registered under the provisions of the Companies Act, 1956 and is engaged in the manufacture of various metals and alloys. The Company runs a factory at Vadavali village in Thane District and manufactures aluminium and old scrap of aluminium and nickel. The raw material used is virgin aluminium and old scrap of aluminium and nickel. The raw materials are either indegenous or imported and if indegenous, excise duty is paid and if imported, customs duty and countervailing duty are paid. The process of manufacture is that by combination the raw material re converted into ingots of aluminium nickel alloys. The aluminium content in ingots is more than 50% thereof by weight. The aluminium ingots are then broken into lumps and are put in a "jaw-crusher" machine for the purpose of the pulverising. By this process, aluminium nickel powder comes into existence and the powder is used in various pharmaceutical, chemical and petroleum products.
2. Section 3 of the Central Excises and Salt Act, 1944 (hereinafter referred to as the 'Act') provides that there shall be levied and collected duties of excise on all excisable goods which are produced or manufactured in India at the rates set forth in the First Schedule to the Act. Tariff No. 27(a)(i) of the First Schedule reads as under :
------------------------------------------------------------------------
Item No. Tariff Description Rate of duty
------------------------------------------------------------------------ 27 Aluminium -
(a)(i) In any crude form (including Fifty per cent
ingots, bars, blocks, slabs, billets, ad valorem plus
shots, and pellets). Rs. 2000/- per
metric tonne.
------------------------------------------------------------------------
Explanation II to Tariff Item No. 27 provides that expression "aluminium' shall include any alloy in which aluminium predominates by weight over each of the other metals.
The Government of India, in exercise of powers conferred by sub-rule (1) of Rule 8 of the Central Excises Rules, 1944, published exemption notification in respect of certain specified types of aluminium products. The notification exempts aluminium in any crude form (including ingots, bars, blocks, slabs, billets, shots, pellets) and castings falling under Tariff Item No. 27 of the First Schedule from so much of the duty of excise leviable thereon as is in excess of the duty specified and subject to the conditions laid down in the notification. The levy of duty under the exemption notification is nil and the conditions are that aluminium in crude form must be manufactured from any of the following materials or a combination thereof, viz., (a) old aluminium scraps, or (b) waste or scrap obtained from virgin metal, or virgin aluminium in any crude form, or a combination of both on which appropriate duty of excise has been paid.
3. In the year 1978, the Superintendent of Central Excise classified aluminium nickel powder manufactured and cleared by the Company under Item No. 68 of the First Schedule and called upon the Company to pay duty at the rate of 8% per annum ad valorem. The Company by letter dated August 19, 1978 claimed that powder is not excisable goods and the process of powdering did not amount to manufacture. The company also claimed that in any event, the duty is leviable under Tariff Item No. 27 and the Company is not liable to pay any duty in view of exemption notification. The Assistant Collector of Central Excise by order dated December 19, 1978 did not accept the claim of the Company and held that duty is liable to be paid on manufacture of powder under Tariff Item No. 68 of the First Schedule. The decision was carried in appeal before the Collector of Central Excise (Appeals), but appeal ended in dismissal by order dated June 26, 1980. The Appellate Authority held that aluminium nickel powder was not in crude form and hence Tariff Item No. 27(a)(i) is not attracted. The Appellate Authority further held that conversion of ingots into powder was manufacturing process and is liable to payment of duty under Tariff Item No. 68. The Company carried revision petition before the Government of India but the revision ended in dismissal by order dated March 3, 1982. The orders passed by the three authorities below are under challenge in this petition filed under Article 226 of the Constitution of India.
4. Shri Talyarkhan, learned counsel appearing on behalf of the Company, submitted that the view taken by the authorities below is entirely erroneous. It was contended by the learned counsel that aluminium nickel powder is a crude form of aluminium as contemplated under Tariff Item No. 27(a)(i) and the authorities below overlooked that merely because crushing of ingots into powder, the powder cannot be said to be not in crude form. The learned counsel also submitted that the process of the crushings ingots into powder does not amount to manufacture and consequently, the authorities below were in error in holding that the Company is liable to pay duty under Tariff Item No. 68. Shri Desai, learned counsel appearing on behalf of the revenue, on the other hand, submitted that the view taken by the there authorities below does not suffer from any infirmity and is not required to be distributed in exercise of writ jurisdiction. It was contended by Shri Desai that even if two views are possible it is not permissible to disturb the conclusion of the authorities as regards whether aluminium nickel powder is liable to duty under Tariff Item No. 68. In view of the rival submission, two question which squarely fall for consideration are (a) whether aluminium nickel powder can be described as aluminium in any crude form, and (b) whether the process of converting ingots into powder can be considered as a manufacturing process liable to payment of excise duty.
5. Tariff Item No. 27(a)(i) refers to aluminium in any crude form and includes ingots, bars, blocks, slabs, etc. Explanation II to Tariff Item No. 27 provides that expression 'aluminium' shall include any alloys in which aluminium predominates by weight over each of the other metals. Shri Talyarkhan submitted that aluminium ingots are brought into existence by combination of virgin aluminium and old scrap of aluminium and nickel. It is not in dispute that in alloy ingots aluminium predominates by weight over nickel. In view of Explanation II to Tariff Item No. 27, there is no debate that the ingots of aluminium nickel alloy would attract Tariff Item No. 27(a)(i). The ingots are certainly to be treated as aluminium in crude form. The principal question which falls for determination is whether aluminium nickel powder manufactured from ingots can be treated as aluminium in any crude form. Shri Talyarkhan submitted that expression "crude form" can be examined from two angles : (1) aluminium in its raw or in its natural form, and (2) aluminium which is rough and unfinished. The question of raw and natural aluminium does not arise because ingots are manufactured by combination of aluminium and nickel. Shri Talyarkhan that the powder manufactured from ingots contains nothing but aluminium and powder should also be treated as aluminium in crude form because powder is an item which is rough and unfinished one. It is not possible to accede to the submission of the learned counsel. The expression crude form is not defined under Tariff Item and, therefore, it is necessary to bear in mind the meaning which is understood in common parlance. By reading Tariff Item No. 27(a)(i), it is obvious that ingots, bars, blacks, etc. though are not in crude form and though are identifiable articles are treated as in crude form by artificial definition. The expression 'crude form' in its sweep takes into account aluminium in any shape or form including the ingots but such form or shape of articles of aluminium must be one which came into existence at the initial stage. As mentioned hereinabove, the ingots come into existence by combination of aluminium and nickel and the alloy by artificial definition are treated as aluminium in crude form. The ingots come into existence by process of manufacture by combination of raw materials like aluminium and old scrap of material. This process of manufacture is liable to payment of duty under Tariff Item No. 27.
6. Shri Talyarkhan submits that the ingots are converted into powder and by this process, the contents of aluminium are not altered nor a different article comes into existence. It was urged that powder is also a form of aluminium and, therefore, should be equated with the expression 'in crude form'. It is not possible to accept the submission. The ingots were treated as aluminium in crude form by artificial definition under Tariff Item No. 27 and it is not permissible to stretch this artificial definition even when ingots are converted into powder by further process. The Legislature contemplated that ingots which come into existence by combination of two metals should be treated as aluminium in crude form for the purpose of Tariff Item No. 27. It is not permissible to stretch the entry by holding that even when the ingots undergo further process and are converted into powder form, still the powder form should be treated as aluminium crude form. The acceptance of submission of Shri Talyarkhan would lead to very unusual results. The mere fact that the contents of powder and the ingots are aluminium is not sufficient to warrant the conclusion that nickel powder is aluminium in crude form. It is not possible to accept the claim that the powder is also a rough and unfinished article and therefore, is aluminium in crude form. The powder is used, as claimed by the Company, for production of pharmaceutical, chemical, petroleum and other products and we are in agreement with the authorities below that the ingots and the powder are two different and distinct articles and are so known in the market. Once, the ingots which comes into existence undergoes manufacturing process for manufacture of aluminium nickel powder, then not only the form is changed but the powder cannot attract the expression "aluminium in crude form".
Shri Talyarkhan placed reliance upon the words "in any crude form" in entry to urge that ingots and powder are merely forms and, therefore, must be treated as any crude form. We are unable to accept the submission because the Legislature has in its contemplation only that article which initially comes into existence for consideration as aluminium in crude form. Once aluminium in crude form undergoes further process, then the article which subsequently comes into existence even though in the form of aluminium, still cannot be considered as aluminium in crude form. In our judgment, the view taken by the three authorities below is not only plausible but the only view possible on the interpretation of Tariff No. 27.
7. It is also necessary to bear in mind the process undertaken by the Company for bringing into existence aluminium nickel powder. The aluminium ingots are broken into lumps and then put in a jaw-crusher machine so as to pulverise them. The result of the operation is aluminium nickel powder. Turning to the exemption notification, it is obvious that exemption from payment of duty for manufacture of aluminium in any crude form is available provided such manufacture is by the process of manufacture is by the process of combination of scrap obtained from virgin metal and virgin aluminium in crude form. complete as soon as the two metals are combined and ingots come into existence. Reading Tariff Item No. 27 along with exemption notification, it is obvious that the Legislature felt that aluminium in crude form is only that article which comes into existence at the initial stage. The aluminium nickel powder comes into existence at the second stage by further manufacturing process on the ingots and the article which comes into existence at the second stage cannot be treated as aluminium in any crude form. In our judgment, the authorities below were right in concluding that the manufacture of aluminium nickel powder attracts duty under Tariff Item No. 68 which is a residuary item and not under Tariff Item No. 27(a)(i) of the First Schedule. Once it is held that Tariff Item No. 27(a)(i) is not attracted, then the exemption notification is of no assistance to the Company.
8. Shri Talyarkhan then submitted that the conversion of ingots into powder does not amount to a process of manufacture inviting duty under the provisions of the Act. The learned counsel urged that by merely pulverising the ingots after breaking them into lumps, results into manufacture of aluminium nickel powder and this process should not be treated as one of manufacture demanding payment of excise duty. The learned counsel made reference to the decision in the case of Minerals & Metals Trading Corporation of India Ltd. v. Union of India & Others and the decisions in the case of Sandoz India Limited v. Union of India and Others reported in 1980 (6) ELT 696, but, in our judgment, these decisions are of no assistant to the petitioners. Whether a certain process amounts to manufacture inviting duty under the Act depends upon the facts and circumstances of each case and there cannot be general principle applicable to all sets of facts. It is futile to suggest that conversion of the ingots into powder does not amount to manufacture. The process of conversion is not merely by dividing the ingots or breaking it into smaller pieces. The ingots which are broken into lumps are put in a 'jaw-crusher' machine so as to pulverise them. The authorities below held that this process amounts to manufacture and we do not find any reason to take a different view. The contention of Shri Talyarkhan that ingots are merely crushed into powder form and, therefore, the process is not one of manufacture cannot be accepted. It is undoubtedly true that the authorities blow were not right in relying upon Brussels' Tariff Nomenclature for holding that the expression "ingots and powder" are distinct and different but independently of the Brussels' Tariff Nomenclature, in our judgment, the conclusion of the three authorities below is correct and deserves to be upheld. It is now well settled that if the view taken by the Authorities is a plausible one, then the High Court is not entitled to take different view in exercise of writ jurisdiction. The reliance by Shri Desai on the decision of the Supreme Court in the case of P. V. Godbole and Another v. Jagannath Fakirchand in this regard is very appropriate.
9. Accordingly, petition fails and rule is discharged. There will be no order as to costs.