Andhra HC (Pre-Telangana)
The State Of Andhra Pradesh vs Goodyear India Ltd. on 9 June, 1988
Equivalent citations: [1989]74STC47(AP)
Author: B.P. Jeevan Reddy
Bench: B.P. Jeevan Reddy
JUDGMENT Jeevan Reddy, J.
1. The contention urged by the learned Government Pleader for Commercial Taxes in this T.R.C. is that the Tribunal was in error in holding that the transmission beltings are cotton fabrics within the meaning of entry 5 of the Fourth Schedule to the A.P. General Sales Tax Act and, therefore, exempt from tax. According to him, the transmission beltings are not cotton fabrics.
2. Let us first see how the transmission beltings are manufactured. Even according to the Deputy Commissioner who revised the order of the Commercial Tax Officer and held that they are not cotton fabrics, they are manufactured with cotton and superimposed with rubber. The question is whether they can be called "cotton fabrics". Entry 5 of the Fourth Schedule reads as follows :
"FOURTH SCHEDULE Goods exempted from tax under section 8 S. No. Description of goods :-
1. ...............
2. ...............
3. ...............
4. ...............
5. Cotton fabrics, rayon or artificial silk fabrics and woollen fabrics.
* * * Explanation . - The expressions in items 5, 6 and 7 shall have the same meaning assigned to them in the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Central Act 58 of 1957)."
3. Because of the explanation, we have to notice item 19(1) of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957. It reads thus :
"19. (1) Cotton fabrics, other than (i) embroidery in the piece, in strips or in motifs, and (ii) fabrics impregnated, coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials -
(a) Cotton fabrics, not subjected to any process. Twenty per cent ad valorem
(b) Cotton fabrics, subjected to the process of Twenty per cent bleaching, mercerising, dyeing, printing, ad valorem." water - proofing, rubberising, shrink - proofing, organdie processing or any other process or any two or more of these processes.
(This entry was substituted by the Amendment Act of 1980 with restrospective effect from 1st March, 1955.)
4. First, let us examine the meaning of the word "fabric". In Delhi Cloth & General Mills Co. Ltd. v. State of Rajasthan [1980] 46 STC 256, the Supreme Court had an occasion to consider the meaning of this Expression. The relevant para reads thus :
"What is a fabric ? The 'Mercury' Dictionary of Textile Terms defines 'fabric' as a term which covers 'all textiles no matter how constructed, how manufactured, or the nature of the material from which made', and the expression 'textile' is described as ' any product manufactured from fibres through twisting, interlacing, bonding, looping, or any other means, in such a manner that the flexibility, strength, and other characteristic properties of the individual fibres are not suppressed'. The Man-Made Textile Encyclopedia (1959) defines fabric as 'a collective term applied to cloth no matter how constructed or manufactured and regardless of the kind of fibre from which made. In structure it is planar produced by interlacing yarns, fibres or filaments. Textile fabrics include the following varieties, bonding, felted, knitted, braided and woven'. The Fairchild's Dictionary of Textiles (1959) says that fabric is 'a cloth that is woven or knit, braided, netted, with any textile fibre ......', and 'textile' is said to refer to 'a broad classification of any material that can be worked into fabric, such as fibres and yarns including woven and knitted fabric, felt, netted fabric, lace an crouched goods'. In 'Textile Terms and Definitions' (1960) the word cloth in defined as 'a generic term embracing all textile fabrics and laminar felts' and 'textile' is applied in its modern sense to 'any manufacture from fibres, filaments, or yarns, natural or artificial, obtained by interlacing'. The 1967 Annual Book of ASTM Standards defined cloth as 'any textile fabric but specially one designed for apparel, domestic or industrial use', and textile fabric as 'a planar structure consisting of interlaced yarns or fibres'. The 1973 Annual Book of ASTM Standards reproduces those definitions."
5. Applying the above test, there can be little doubt that the transmission beltings herein are certainly cotton fabric. It appears from the judgment of the Tribunal that these transmission beltings contain 66.7 per cent cotton and that the remaining 33.3 per cent content is rubber. This is evidenced from the test certificate issued by the Government of India, National Test House, Alipur, Calcutta. In other words, it is a cotton fabric subjected to a process of rubberising. Applying the test of predominance also, it must be held that it is cotton fabric. We, therefore, agree with the Tribunal that it is "cotton fabric" within the meaning of entry 5 of the Fourth Schedule to the Act and, therefore, exempt from tax.
6. The learned Government Pleader brought to our notice the decision of the Gujarat High Court in Hind Engineering Co. v. Commissioner of Sales Tax [1973] 31 STC 115 where it was held that rubber beltings manufactured by superimposing rubber or rubber compound on both sides of canvas and used in machineries employed for transmission of power are not "cotton fabrics" within the meaning of entry 15 of Schedule A to the Bombay Sales Tax Act, 1959. The court observed that even if it is assumed that canvas is comprehended within the meaning of "cotton fabrics" for the purposes of the Act, the process of superimposition of rubber brings about such a basic change in its character, nature and form that it loses its identity and is converted into an altogether different commercial commodity, which cannot be said to fall within the meaning of the expression "cotton fabrics". The said decision is, however, clearly distinguishable inasmuch as it turned upon the language of item 19 of the First Schedule to the Central Excises and Salt Act, 1944 which was imported into the Bombay Sales Tax Act for understanding the meaning of the expression "cotton fabrics". Item 19 of the First Schedule to the Central Excises and Salt Act, at the relevant time, read thus :
"'Cotton fabrics'. - Cotton fabrics mean all varieties of fabrics manufactured, either wholly or partly from cotton, and include dhoties, saris, chadars, bet-sheets, bed-spreads, counter-panes and table-cloths, but do not include any such fabrics -
(a) if it contains 40 per cent or more by weight of wool;
(b) if it contains 40 per cent or more by weight of silk;
(c) if it contains 60 per cent or more by weight of rayon or artificial silk; or
(d) if manufactured on a handloom."
7. It would be immediately evident from a perusal of above item 19 that the entry was altogether differently worded at that time. In particular, the words "cotton fabrics" subjected to the process of rubberising found in item 19 of the First Schedule to the Central Act 58 of 1957 (Which has since replaced item 19 referred to in the Gujarat judgment) were not there. In our opinion, because of the said words, we must hold that even though the cotton is superimposed with rubber, it still remains a cotton fabric, particularly when two-thirds of it is cotton and one-third rubber. It is essentially a cotton fabric subjected to a process of rubberising.
8. For the above reasons, the T.R.C. is dismissed. No costs. Advocate's fee Rs. 150.
9. Petition dismissed.