Bombay High Court
Godfrey Phillips India Ltd vs The Municipal Corporation Of Gr. Bom. ... on 10 August, 1993
Equivalent citations: 1994(1)BOMCR292
JUDGMENT B.P. Saraf, J.
1. The dispute in this case relates to interpretation of Entries 50 and 52 of Schedule H to the Bombay Municipal Corporation Act (the Act). The petitioners carry on the business of manufacturing cigarettes and for that purpose they have a factory at Andheri, Bombay. Some time in December, 1987, the petitioners purchased a machine called "Shell and Slide Machine" from M/s. Molins of India Ltd. which is used for packing cigarettes. The machine was supplied with several standard features. One of the standard features supplied with the machine was a Slide Miss Detector Electronic Memory Unit. The cost of the machine itself was Rs. 2,46,09,900/-. The standard features that come with the machine cost approximately Rs. 2,69,000/-. The cost of the "Slide Miss Detector Electronic Memory Unit" was approximately Rs. 10,000/-. The machine arrived the octroi check post of Bombay Mulund Octroi Naka on 6th January, 1987. The petitioners' clearing agents filed an import octroi bill classifying the said machinery under Entry No. 50 of Schedule H to the Act. Entry 50 of Schedule H relates to machinery, its components and spares not specifically provided for. The rate of octroi is 2% ad valorem. The concerned official of the respondent No. 1, the Bombay Municipal Corporation at the check post, however, insisted on classifying the said packing machine under Entry 52 of Schedule H and demanded octroi at the rate of 4% ad valorem. The reason for doing so was stated to be the word "Electronic" which appeared in the description of one of the standard features of the said machine in the invoice. The petitioners thereupon discussed the matter with the Assistant Collector of Octroi. He was, however, of the opinion that the said packing machine was not "direct productive machinery" and therefore it fell under the heading "Instruments, apparatus etc." specified in Entry 52 and not under the heading "Machinery" as specified under Entry 50. Not satisfied with the above interpretation, the petitioners made representation before the Deputy Municipal Commissioner of Greater Bombay (Personnel) - respondent No. 3 and furnished him in writing all the details of the machine asked for by him. It was pointed out to him that the entire packing machine was purely mechanical in nature except the memory unit which costed approximately Rs. 10,000/- only. As there was delay on the part of the respondents in taking any decision in this regard, the petitioners decided to pay under protest the octroi duty amounting to Rs. 1,31,408.17 calculated at the rate of 4% ad-valorem applicable to articles falling under Entry 52 of the Schedule as demanded by the officials of the check post. This was done as the machinery in question was required urgently by the petitioners. The petitioners thereafter requested the third respondent-Deputy Municipal Commissioner to classify the said packing machine as "machinery" under Entry 50 of the Schedule to enable to get the refund of Rs. 65,954.35. The petitioners also claimed refund of the said amount. However, the 2nd respondent - the Deputy Assessor and Collector of Octroi, by letter dated 3rd February, 1988 informed the petitioners that their refund claim could not be considered and the same stood rejected as the machine in question had been correctly charged under Entry 52 at the rate of 4% ad valorem. Against the decision of the Deputy Assessor and Collector of Octroi the petitioners approached the third respondent - the Deputy Municipal Commissioner with a request to reconsider the matter and grant the refund. However, by a letter dated 14th July, 1988, the petitioners were informed by the Deputy Assessor and Collector of Octroi that their contentions could not be acceded to. Even the request of the petitioners for a speaking order was not conceded to by the respondent No. 3. Under the circumstances, the petitioners approached this Court by filing the present writ petition challenging the levy of octroi duty at the rate of 4% ad valorem on the machinery imported by them by treating the same as instruments/apparatus falling under Entry 52.
2. To appreciate the controversy it may be expendient to set out Entries 50 and 52 of Schedule H to the Act. These are as below :
Articles Maximum rates of octroi leviable 1 2 "50. Machinery and their components and spares ---
(a)(i) electric machinery for gen- 2 per cent eration, transmission and dis- ad valorem. tribution and motors and generators and their components and spares, (ii) electric goods including cells, batteries and copper strips, horn electric
(iii) electrical fittings and materials, (iv) electrical domestic appliances, (v) electrical machinery of all kinds, control switch-gear, generators, alternators and dynamos, motors, transformers and turbo generating sets, (b) agricultural machinery and parts, (c) oil engines, diesel engines, steam engines, petrol and gas engines and machines worked by hydraulic pressures, and their parts, (d) tools of all kinds, (e) printing press machines and spares, (f) any other machinery, its components and spares not specifically provided for.
.....
52. Instruments apparatus and 4 per cent appliances and parts thereof :--- ad valorem
(a) sewing machines, clocks and watches and typewriters, and their spares, (b) radio, radiograms, television set or apparatus, loud-speakers, gramophones, amplifiers, wireless goods, their components and spares, (c) Photographic machinery, Photo goods and materials including photographic chemicals, films and mounts, and their components and spares, (d) cine projection machinery, their components, spares, and materials used therein,
(e) surveying apparatus, (f) scientific appliances,
(g) optical goods, their spares and accessories, surgical instruments and hospital requirements, including their spares and accessories, (h) mill and gin stores including crucibles, cotton ropes, and (i) all kinds of apparatus, appliances and spares."
It may also be expedient to set out the description of the machine imported by the petitioners which is available from the literature published by the manufacturers which is named as Data Sheet No. DB Issue 1 dated 1-9-1971 which is Exhibit-B to the petition. It is as under :
"MOLINS M 2 10's `DUPLEX' MACHINE The M2 10`s `Duplex' shell and slide machine packs cigarettes at speeds upto 300 packets per minute.
The machine packs two 10's shell and slide packets simultaneously, the cigarettes being wrapped in foil and tissue bundles. The machine has twin conveyors from the cigarette hopper which produce wrapped bundles. The bundles are transferred to a third conveyor at right angles along which the final assembly takes place.
The machine is supplied with cigarette and detectors; extended slide feed and lifting mechanism; foil embossing equipment; loose front foil parts; water lubricated suction pump; fault detectors and warning lights; faulty packet ejection facility and full electrical equipment. ..."
The question that falls for determination is whether the above machine which is admittedly used not for manufacturing but packing of cigarettes will fall under Entry 50 or Entry 52 of the Schedule.
3. Entry 50 deals with "Machinery and their components and spares". Certain machineries have been specified in Clauses (a) to (e) of that entry. Clause (f) which is relevant reads:
"Any other machinery, its components and spares not specifically provided for."
It is clear from the above entry that all machineries, their components and spares fall under Clause (f) of Entry 50, the only exception being the machineries specifically provided for in any other entry of the schedule. The heading of Entry 52, on the other hand, is "Instruments, apparatus and parts theroef." The various items mentioned therein are sewing machines, clocks and watches and type-writers and their spares, radio, radiograms, television sets, photographic machinery, cine projection machinery, surveying apparatus, scientific appliances, optical goods, surgical instruments, hospital requirements, mill and gin stores and all kinds of apparatus, appliances and spares. Evidently, many of the items mentioned in Entry 52, can be termed as machinery, which could have been covered by Entry 50(f) but they are out of the same because of the specific provision contained in Entry 52. We are, therefore, first to see whether the "shell and slide machine", which is used for packing of cigarettes, can be broadly termed as "instrument" or it falls in any of the items enumerated in Entry 52 under that head. There is no serious dispute about the fact that in common parlance, such machines are not known or termed as "instrument, apparatus or appliance". In the industrial and the commercial world, these machines are known and more appropriately termed as "machinery". A careful scanning of the various items specified in Entry 52 also clearly goes to show that the said machine does not meet the description of any of the items specified therein. In that view of the matter it cannot be said that the machine in question falls under Entry 52 of the Schedule. The only aspect that remains to be considered, therefore, is whether it is a "machinery". I do not think that there can be any serious controversy in that regard. However, as an issue had been raised, in this regard, it will be proper to deal with it.
4. The word machinery has not been defined in the Act or the Schedule. We are, therefore, to find out its meaning. Though "machinery" is an expression of day to day use it is, in fact, difficult to define the same. The Privy Council in the case of Corporation of Calcutta v. Chairman, Cossipore and Chitpore Municipality, A.I.R. 1922 P.C. 27, as reported attempted to define "machinery" as follows : (at 172) "The word `machinery' when used in ordinary language prima facie means some mechanical contrivances which, by themselves or in combination with one or more other mechanical contrivances, by the combined movement and interdependent operation of their respective parts generate power, or evoke, modify, apply or direct natural forces with the object in each case of effecting so definite and specific a result."
The aforesaid definition was quoted with approval by the Supreme Court in CIT v. Mir Mohammad Ali , while interpreting the said expression in the context of the Income Tax Act. It was observed :
"The Privy Council case was not a tax case but prima facie the ordinary meaning of the word "machinery" - and the word "machinery" is an ordinary and not a technical word - must, unless there is something in the context, prevail in the Indian Income-tax Act also."
Following the above definition, the Supreme Court held that a diesel engine is clearly "machinery". These observations of the Supreme Court will apply mutatis mutandis to interpretation of items in Schedule H to the Act.
5. Considering the nature and description of the machine in question, in the present case and the details furnished in the data sheet supplied by the manufacturers, it is clear to me that it is nothing but "machinery". To be "machinery", it is not necessary that it should be used directly in the production of goods. What is necessary is that it should generate power or evoke, modify or apply or direct natural forces with the object in each case of effecting so definite and specific a result. Packing of cigarettes is undoubtedly a definite and specific result. Even a layman will not hestitate to term the packing machine as machinery. That being so the machine in question is clearly machinery which falls under Entry 50 of Schedule H to the Act. The respondents were not correct in classifying the same as instruments or appliances falling under Entry 52 of the Schedule and in pursuance thereof levying octroi duty at a higher rate.
6. Before concluding, it may be expedient to deal with two preliminary objections of the learned Counsel for the Corporation. Firstly, that the interpretation of taxing items is a question of fact and the High Court in exercise of its writ jurisdiction should not decide the same. Secondly, alternative remedy by way of appeal being available under the Act, this writ petition should not be entertained. I have considered both the objections of the respondents. I, however, do not find any force in either of them. It is no more res integra that interpretation of an item of taxing statute is a question of law which can be decided by the High Court in exercise of powers under Article 226 of the Constitution. It is also well-settled that alternative remedy by way of appeal is not an absolute bar to the exercise of writ jurisdiction by the High Court though in appropriate cases the High Court may refuse to exercise its jurisdiction on that account. The learned Counsel for the Corporation referred to a recent decision of this Court in O.O.C.J. Writ Petition No. 940 of 1989 dated 23rd June, 1993 wherein this Court did not decide the dispute whether a particular item fell under Entry 20 of Schedule H to the Act or not. I have carefully perused the said judgment. The controversy therein related to "palm stearine". The question was whether it was inedible vegetable oil. After elaborate efforts to decide the controversy, the Court felt that despite a number of reports of various experts it was not possible to decide the question raised in that case which was a highly controversial question of fact. It was in such a situation that the Court was compelled to relegate the parties to the appellate authority for determination of the dispute. In paragraph 5 of the judgment, the Court observed :
"The above facts clearly show that detailed evidence will have to be taken in the matter before coming to the conclusion whether palm stearine could be classified as a vegetable inedible oil as alleged by the Corporation. The various dictionary meanings as also the affidavits and the letters referred to hereinabove also indicate that the matter cannot be decided on affidavits and that experts will have to be examined."
It was in such a situation that the Court did not decide the controversy itself and relegated the parties to file appeal before the authorities under the Act. The above judgment has not laid down any legal preposition of general application. It is confined to the peculiar facts of that case.
6A. In view of the foregoing discussion, I am of the clear opinion that the machine imported by the petitioners is machinery within the meaning of Entry 50 of Schedule H to the Act and the respondents are entitled to charge octroi at the rate of 2% ad valorem which is applicable to the goods specified in that entry. They are directed to revise the assessment accordingly and to refund the excess amount collected by them with simple interest at the rate of 15% per annum from the date of payment till the date of refund. The refund must be made within three months from today.
7. In the result, this writ petition is allowed and the rule is made absolute in the above terms. Under the facts and circumstances of the case, there will be no order as to costs.