1. In this appeal by the Collector of Central Excise, Meerut, the question raised is whether the tableware (cups, saucers, plates, etc.) manufactured by the respondents is "terracotta" as claimed by the respondents or "glazed clayware" as contended by the Department. The controversy arises out of the wording of Item 23B of the Central Excise Tariff Schedule, the description of which runs as follows :- "Chinaware" includes all glazed clayware but does not include terracotta.
2. The respondents had sought the classification of the goods under Item 68. After consideration of their arguments, the Assistant Collector, in his order dated 15-11-80, held that the goods were "glazed clayware" and accordingly classifiable under Item23B. In reaching this conclusion, the Assistant Collector, having regard to various authorities held that the articles were "glazed clayware". He further held that, according to the various authorities, terracotta was an article of archaeological and aesthetic value and not a utility or kitchenware or tableware like plates, cups and saucers.
3. In appeal, the Collector (Appeals) took the contrary view. He also considered various authorities cited by both sides. He finally came to the following conclusions :- "Terracotta pottery is merely a type of Terracotta ware. Terracotta is a material which has been put to variety of uses, since ancient times. It is not only used for making articles of artistic value, but also for manufacture of articles of utility. In fact many Terracotta pieces have both utility as well as artistic value. From the affidavit submitted by the appellants regarding the process of manufacture it is evident that the raw materials used in the manufacture of goods in question do not include kaolin and the articles in question are made from ordinary clay mixed with brick powder by firing this mixture. Thus they answer to the description of terracotta in standard books. It is also apparent from the copies of the orders, invoices produced by the appellants, that the goods in question are known as and are being treated as Terracotta ware.
I, therefore, consider that they are correctly classifiable under Tariff Item 68." 4. It is against this order that the Collector has come up in appeal to us. In the memorandum of appeal various grounds have been set out, based on the composition of the goods, their being glazed, etc., and a number of authorities have been cited to show how the term "terracotta" is generally understood. Reference has also been made to a report of the Chemical Examiner, and stress has been laid on the statement therein that each of the samples contained more than 1.5% of iron oxide, thereby indicating that they were not entirely made of China clay or kaolin.
5. No cross-objections were filed by the respondents, but they filed a comprehensive paper book, which has been very useful in the hearing of the appeal. At the hearing, Shri Tayal, who appeared for the appellant Collector, submitted that in the view of the Department the goods were glazed clayware. They were not articles which were known in common parlance as terracotta, nor was such a significance given to the term in various standard dictionaries. The goods were made of red clay, which was a variety of clay. It was not necessary that clayware should be made of a particular variety of clay, such as China clay (otherwise known as kaolin).
6. Shri Tayal stressed the fact that the goods were glazed. According to him, the term "terracotta" applied to goods, mainly ornamental such as statuary, which are not glazed.
7. Shri Tayal placed before us definitions of "terracotta" as found in various standard dictionaries, some of which had been relied upon by the Assistant Collector in his order, while others are contained in the memorandum of appeal. Relevant extracts from these dictionaries as furnished by Shri Tayal are given below :- (i) "A Brownish-orange clay used in the production of high quality of earthenwares, vases and statuettes and for tiles floor and roofings." Mc Graw Hill Dictionany of Scientific and Technical Items-IInd Edition on page 1608.
(ii) "A Hard unglazed pottery of a fine quality of which decorative tiles and bricks, architectural decorations, statuary, vases and the like are made." The Shorter Oxford English Dictionary on Historical Principles, Vol.
II-3rd Edition-Page 2267.
(iii) "A composition of clay and sand used for statues", "hardened like bricks by fire" "an object of art made of it".
(iv) "Hard reddish brown pottery (used for vases, small statues, ornamental building material etc." Advanced Learners' Dictionary of Current English-Oxford University Press.
(v) "la : a usu, low-fired and typically reddish unglazed ceramic material (as the earthenware of many primitive potters); also : an object (as a bowl or figurine) of such material (Greek terra-cottas) b : a usu. hard-fired glazed or unglazed ceramic architectural material often pressed or cast in ornamental forms and used esp. for decorative facing and tiles 2a : a brownish orange that is redder and deeper than spice, leather, or gold pheasant b : textiles : a moderate to strong reddish brown.
Webster's Third New International Dictionary Unabridged And Seven Language Dictionary-Page No. 2360.
(vi) "A clay product fired or burned to fuse into a hard unified mass. Being fire and frost-resistant, terracotta is used unglazed for roofing and other exterior finishing. Compacted to a density in the vicinity of 120 lb./ft3 after firing, terracotta is used structurally. For example, it is used in archways and colonades. It can also be moulded into various shapes having figured surfaces and used decoratively. In the moulding, due allowance is made for the appreciable shrinkage when firing is done at high temperature (typically 125C or higher). Handcrafted terracotta is used in small sculpture. It can be given intricate shapes, made from clays with a variety of colours, and glazed in many colours. The finished product has the hardness and durability of stone." McGraw-Hill Encyclopaedia of Science and Technology (13 Spir-tou) Page No. 587.
8. Shri Tayal also cited "A Text Book of Chemical Technology-Vol. I (Inorganic)-1978 Edition" by Dr. S.D. Shukla and Dr. G.N. Pandey, which according to him, stated that the term "terracotta" was applied to all pottery wares made of common clays and without glaze.
9. On the basis of the above authorities, Shri Tayal submitted that the term "terracotta" by common usage referred to articles of aesthetic, archaeological and architectural value like statuettes, figurines and decorative wares and not utility goods and kitchen and table wares like plates, cups and saucers, etc., like those in question in the instant case.
10. Shri Tayal argued that both clayware and terracotta were made of clay, but terracotta was not glazed. Once such an article was g'azed, there was no question of its being "glazed" terracotta, but it became glazed clayware, which was covered by the Tariff Item. Shri Tayal also referred to the "Glossary of terms relating to ceramic ware (First Revision)", published by the Indian Standards Institution bearing No.IS : 2781-1975. He drew our attention to various definitions occurring therein. In this Standard, terracotta is defined as "a porous, red clayware". "Porosity, Apparent" is defined as 'the relationship of the open pore space to the bulk volume, expressed as percentage" (page 14 of the Standard) "Clayware" is defined as "any article made of clay with or without glaze and with or without the addition of other ingredients like feldspar and quartz" (page 6 of the Standard). Shri Tayal submitted that the goods in question were glazed and obviously not porous, and therefore would not conform to the I.S.I, definition of clayware.
11. Shri Tayal also referred to the Chemical Examiner's report, which is quite detailed. For the present purpose it is only necessary to note that according to the Chemical Examiner each of the five samples was found to be brown coloured with glazed surfaces and of specific shape in the form of tableware. Each had glazed surfaces. Each had water absorption property of more than .5%. The iron oxide content of each was more than 1.5%, indicating that they were not entirely made of China clay or kaolin.
12. Shri Tayal finally submitted that in the light of the characteristics of the goods, the authorities cited by him, and the wording of the relevant Tariff Item, the goods were correctly classifiable under Item 23B as "glazed clayware".
13. Shri Chandrasekharan, who appeared for the respondents, showed us certain articles which he said were representative of those which are the subject matter of the present proceedings. Although these were not authenticated samples, we found it useful to look at them for giving us an insight into the problem. They were found to be generally as described in the Chemical Examiner's report.
14. Shri Chandrasekharan submitted that a question had been posed by Shri Tayal whether the goods were "glazed clayware". He submitted that terracotta was no doubt made of clay and if it was glazed, glazed terracotta could be called glazed clayware. This, however, did not mean that it would be included under Item 23B, because terracotta was specifically excluded from the scope of that Item. For the purpose of this exclusion, it was immaterial whether or not the terracotta was glazed.
15. Shri Chandrasekharan referred to the definitions relied upon by Shri Tayal. These showed that they covered articles such as decorative tiles and bricks, which were clearly articles of utility. Therefore, the conclusion of the Assistant Collector that this term would not cover "utility goods" was not correct, 16. Shri Chandrasekharan filed an extract from the Encyclopaedia Britannica (Vol. 21, Page 1148) on '"tile", which is reproduced below :- "TILE : Tile, a thin flat slab or block, usually of burned clay, glaze ' or unglazed, used either structurally or decoratively in buildings. The usage of the word varies widely; in connection with roofing, flat slabs of any material are sometimes termed tiles, as, for instance, the marble tiles of some Greek temples or the bronze tiles of ancient Rome. Similarly, stone slabs, used for roofing, as in certain parts of England, are termed stone tiles; slate, however, is never so called. Many forms of rough terra cotta used structurally in building are called tiles; thus an arch of hollow terracotta blocks between steel beams is known as a tile arch; partitions built of follow terracotta are known as hollow-tile partitions; rough terracotta pipes used for drainage are called drain tiles." He pointed out that even in this work there is a reference to "terra cotta". Thus, it was clear that terracotta could cover articles of utility.
17. Shri Chandrasekharan also drew our attention to a photocopy of an advertisement by some British manufacturers, showing various articles of tableware. This bore the title "Linea 'TerraCotta' ". He submitted that this showed that under present-day usage the term applied even to tableware.
18. Referring to the quotation from Webster's Dictionary given by Shri Tayal, Shri Chandrasekharan pointed out that among the objects included were a bowl. This would show that utilitarian articles were covered.
Further, the words "often pressed or cast in ornamental forms" would show that utility articles were not ruled out.
19. Shri Chandrasekharan argued that the term "terracotta" might have had a restricted meaning in the past, so as to cover only ornamental articles. However, its connotation had undergone a change in course of time, and nowadays it was applied to articles of utility also. Shri Chandrasekharan submitted that such a shift in the sense of an expression should be taken into account, and in this connection he relied upon the judgment of the Bombay High Court in the case of Commissioner of Sales Tax v. Messrs. Agarwal & Co., reported in 1983 E.C.R. 65D. In that case, which referred to the question whether the term "milk" in the Bombay Sales Tax Act included skimmed milk powder, the Bombay High Court answered the question in the affirmative. In doing so, the High Court cited the judgment of the Supreme Court in the case of Porritts & Spencer (Asia) Ltd., v. State of Haryana, reported in 42 S.T.C. 433, and observed as follows : "The Supreme Court observed that in interpreting any word in an entry, one should bear in mind that it does not embody a static concept. It is the skin of a living thought, and may change its hue with new developments in technology and emergence of new items and processes. A term in a fiscal legislation should be interpreted having regard to newly developing materials, methods, techniques and processes. It held that the concept of "textiles" was not a static concept. It had, having regard to newly developing materials, methods, techniques and processes a continually expanding content and new kinds of fabric may be invented which may legitimately, without doing any violence to the language, be regarded as "textiles". In the same manner, milk in powder form can be looked upon as a result of this continually evolving technology. There is no reason why it should be excluded from the generic term 'milk'." Shri Chandrasekharan submitted that the same principle would be applicable to the present case. The Assistant Collector had given a restricted meaning to the term "terracotta", which was not justified by present usage.
20. Shri Chandrasekharan also relied on a quotation from the Encyclopaedia Americana, Vol. 26, p, 516 to 517, containing an article on "terra cotta". A relevant extract from this article (it is too long to be reproduced in its entirety, nor is the rest of it material for our purpose) is given below :- "TERRA COTTA, is fired earthenware usually unglazed. The term "terra cotta" is Italian for "baked earth". After firing, terra cotta ranges in color from gray through buff to reddish brown or red. It may be left its natural color, painted, or, sometimes, glazed.
Unglazed terra cotta, which remains porous despite firing, is used chiefly for dacorative work such as sculpture, ornamental vases, and architectural ornament. In warm regions, however, unglazed terra cotta vessels serve as water copiers because the process of moisture percolating the walls of the vessel and evaporating on the outer surface cools the remaining liquid. Terra cotta, glazed or unglazed, is also used for bricks, tile, structural materials and fireproofing.
In its widest definition, derived from its meaning in Italian, "terra cotta" refers to all kinds of fired clay. In its most restricted sense the term is used for small sculptures of red, lightly fired, unglazed earthenware popular since the Renaissance." At page 517 there are four illustrations over the heading "Terracotta Pieces". Of these, two represent reliefs found on the temples. One is a painted bowl, possibly from Central Peru, and the fourth represents Chinese glazed funerary figurine of a woman on horse back.
21. Shri Chandrasekharan referred to the report of the Chemical Exarriin-ef, which showed that the iron oxide content was more than 1.5%, and indicated that the articles were not entirely made of China clay or kaolin. He submitted that terracotta could be made of any clay and not necessarily of China clay, which was a fine variety. In fact, some very cheap articles of utility were made of ordinary clay, such as the terra cotta vessels (corresponding to the surahis used in India) referred to in the Encyclopaedia Americana.
22. Finnally, Shri Chandrasekharan referred to a number of invoices of the respondents bearing dates between 12-10-83 and 21-1-84, showing sales of tableware articles to a hotel and to dealers or retailers.
These invoices bear the words "terra cotta" above the detailed list of articles. The respondents had also filed letters from these purchasers, wherein the term "terracotta" is used with reference to the goods under consideration. Shri Chandrasekharan submitted that this was clear evidence that according to commercial understanding also their goods were known as terracotta. (With reference to these invoices and correspondence, Shri Tayal pointed out that they pertained to the period from 1983 onwards, well after the controversy had arisen, and they did not pertain to goods sold during that period).
23. We have given our careful consideration to the points raised in this case, namely whether the articles of tableware which are under consideration could be called "terracotta" within the meaning of Explanation I to Item 23B. In the first place, we have to observe that the term used in the Tariff is "terracotta and not "terracotta ware" although in different places the latter term has been used by the appellants themselves, the Assistant Collector and the Collector (Appeals). (In fact, the term "terracotta ware" has not been used in any of the standard ' dictionaries and encyclopaedias relied upon by both sides). This point has some significance, in view of the fact that the same Tariff Item refers to "Chinaware and Porcelainware" and "glazed clayware", but not to "terracotta ware". In a sales tax case where the term "glassware" had to be interpreted (Indo International Industries v. Commissioner of Sales Tax, CAP., reported in 1981 E.L.T.325), the Supreme Court observed that "glassware" refers to such articles of glass as a general merchant in that line would sell and not specialised articles like clinical syringes, thermometers, lactometers and the like. Again, the Madras High Court, in a case where electric fuse links of procelain were sought to be classified under Item 23B, (English Electric Co. of India Ltd. v. Superintendent, Central Excise and Ors.-1979 E.L.T. 36), referred to the definition of "ware" in the Shorter Oxford Dictionary as articles of merchandise or manufacture: the things which a merchant, tradesman, or pedlar has to sell; goods, commodities. Taking into account also the fact that Item 23 B referred to other articles such as tableware, sanitary ware and glazed tiles, the High Court held that the porcelain fuse links would not be covered by that Item. Taking these considerations into account, it appears to us that the use of the term "terr cotta" by itself would, on the principle of ejusdem generis indicate that it refers to a class of articles distinct from "wares" of China and porcelain and clay (glazed).
24. The quotation from Webster's 3rd New International Dictionary (Vide para 7 above) shows that the term terracotta is used in different senses. As a noun, it can refer to the material (low-fired and typically reddish un-glazed ceramic material). It can also refer to an object of such material. As an adjective, it is used to denote a colour-either a brownish orange or a reddish brown. In the context of the Tariff it has to be taken in the sense of a noun, denoting objects made of the material. Consequently, when interpreting the Tariff Item, we have not to take into account a hypothetical term such as terracotta ware, but the term "terracotta", and find out what objects this term is normally understood to mean.
25. In this context both sides have quoted various works of reference, all of which could be regarded as authoritative. The definitions or descriptions contained in these works refer to various characteristics of terracotta such as the type of clay, the porosity, glazing (or lack of it) and the type of the article.
26. We have referred in para 11 above to the Chemical Examiner's report. That report places emphasis on various instructions or clarifications issued by the Central Board of Excise and Customs, to which it is not necessary to refer in detail. However, it also mentions certain specific characteristics of the articles which would be relevant for the purpose of the present discussion.
27. It would now be useful to compare the definitions or descriptions in the various authorities cited, with reference to the characteristics we have listed above. Doing so, it is found that not only are the descriptions different in different works, but sometimes one is in conflict with others. In such a situation, which is natural when several independent texts are compared, it is obvious that one should arrive at the overall effect or general trend of opinion of the various authorities. It would not be correct to go by an isolated observation in some reference, which is opposed to the general trend of opinion, merely because one or the other side seeks to rely on it.
28. Coming to the question of the type of clay, Shukla and Pandey have said that it is "common" clay. As regards colour, the goods are described as brownish orange, red, reddish brown, etc. (This colour is said to be the result of the content of iron oxide). The Chemical Examiner's report shows that the iron oxide content was more than 1.5%, and also that the articles were not entirely made of China clay or kaolin. Neither this report nor the various definitions point positively to the goods under consideration being terracotta or otherwise with reference to the type of clay used.
29. As regards porosity, it has been specifically referred to in the I.S.I. definition, which defines terracota (so spelt) as "porous, red clayware". The Encyclopaedia Americana states that unglazed terracotta remains porous despite firing. The other definitions do not refer to porosity. The Chdmical Examiner's report shows that each sample has water absorption more than .5%, and goes on to say that they may not merit classification as Chinaware or porcelainware. However, it appears that there is no quantitative dividing line so far as porosity is concerned to assist us in the present case. Still, as submitted by Shri Tayal, and as seen from the Encyclopaedia Americana, porosity could have some connection with lack of glazing, and, therefore, the criteria of being porous and being unglazed would to some extent go together.
30. So far as glazing is concerned, the Shorter Oxford Dictionary defines terracotta as being unglazed. Shukla and Pandey's work has a similar statement. Webster states that it could be glazed or unglazed.
The best exposition is given in the Encyclopaedia Americana (para 20), which states that unglazed terracotta, which remains porous despite firing, is used for decorative work such as sculpture, ornamental vases and architectural ornament. Glazed (and also unglazed) terracotta is used for bricks, tiles, structural materials and fire-proofing. This variation in uses seems logical, because in the case of articles like bricks and tiles, which are exposed to weather, porosity would be a drawback and therefore glazing, which appears to reduce porosity, would be an advantage in their case.
31. The I.S.I, does not say anything about glazing, but the fact that the porous quality is emphasized indicates that terracotta would ordinarily be unglazed. This is certainly true of the less sophisticated varieties of terracotta such as the unglazed vessels (like surahis) referred to in the Encyclopaedia Americana (para 20).
32. With reference to use in India, the Text Book of Chemical Technology by Dr. Shukla and Dr. Pandey (para 8 above) states that the term terracotta is applied to all pottery wares made of common clays and without glaze. The 'applications' of terracotta, according to these authors, are as (1) common bricks, (2) roofing tiles, and (3) unglazed red clay pottery.
33. We therefore find, on a consideration of the various authorities, that the term terracotta is ordinarily applied to articles which are unglazed. Tiles and similar articles of this material may be glazed, but we are not here dealing with such articles.
34. We now come to the important question of the types of articles which would be covered by the term terracotta. Broadly, these appear to fall into three divisions. Firstly, there are ornamental articles or objects of art such as figurines, statuary and vases. Secondly, there are building materials and the like such as tiles and bricks, roofings and other exterior finishing. Thirdly, there are articles of utility such as the unglazed terracotta vessels which serve as a water-coolers or surahis. Examples of each of these can be found in the various quotations given above. What is specially worthy of note is that (except for the advertisement referred to in para 17, which we shall deal with later) none of these authorities refers to terracotta as applying to tableware such as cups, plates and saucers. (There are only references to vases, which one work specifically qualifies as ornamental, and also to bowls, which could be either ornamental or useful). We have already pointed out that the term used in the Tariff as well as in the works of reference is "terracotta" and not "terracotta wares". Tablewares such as cups, plates and saucers would definitely deserve the appellation of "wares", and the use of the term "terracotta" by itself would be a further indication that such tablewares were not under contemplation. It is also interesting to find that even in the Encyclopaedia Americana, relied upon Shri Chandrasekharan, the illustrations of terracotta do not show any article which could be clearly called tableware.
35. It, therefore, appears that the term terracotta as used in the Tariff and as it is ordinarily understood refers to (a) ornamental articles such as statuary and figurines, (b) building and similar materials, and (c) crude and unglazed utility articles such as vessels used for cooling water by evaporation. It would not cover articles of crockery and tableware which are glazed and are similar to Chinaware and Porcelainware except that they are of reddish or brownish colour.
36. The advertisement for Linea Terra Cotta' referred to in para 17 above might appear to go against the above conclusion. We, however, observe that the usage in that advertisement is at variance with the definitions in the authoritative works of reference which we have examined. Further, as explained later in this order, the name that a manufacturer gives to his product is dictated by many considerations and cannot have the authenticity of a standard work of reference. Apart from this, the very use of quotation marks around the words 'terra cotta' in the advertisement shows that the advertisers themselves were conscious that they were not using the term in the ordinary accepted sense.
37. This brings us to the question of the correspondence of the respondents with their customers and the invoices issued to them, wherein there is a general description of the goods as "terracotta". It is apparent that such invoices and correspondence, which are all very recent, and have originated during the pendency of the present proceedings, would not have high value as evidence. In any event, if a manufacturer gives a particular name to his product, it is unlikely that his customers would quarrel with him about the name, unless the use of it were to affect them adversely, which is by no means the case here (rather the reverse). On the other hand, a good businessman would avoid confusion by using the same term for the goods as is used by the manufacturer or supplier. These invoices and correspondence are not, therefore, of any help in dealing with the issue before us.
38. We may here take note of an argument of Shri Chandrasekharan that "glazed terracotta" was no doubt included in the catagory of "glazed clayware", but must be excluded from the scope of Item 23B by virtue of being "terracotta". In view of our conclusion that the term ''terracotta" would not include tableware, we are unable to accept this argument.
39. It appears to us that our conclusions in para 35 above are fully in accordance with the intention of the Legislature in excluding "terracotta" from the scope of Item 23B in 1961 when that Item was introduced. The exclusion of articles such as crude unglazed vessels, which are made by lakhs of individual potters throughout the country, could be easily understood and justified. So also, one could understand the exclusion of ornamental articles such as statuary and figurines-whether because the revenue implication would be very small and many of them would be made by individual artistes, or because the valuation of such articles would be difficult, or because it might not be considered desirable to tax original works of art. On the other hand, exclusion of articles of glazed tableware such as cups and saucers, which are good enough to be sold to prestigious hotels, when similar articles not only of Chinaware and Porcelainware, but even of glazed clayware are included, would be difficult to understand.
40. Shri Chandrasekharan advanced an interesting argument that, whatever might have been contemplated by the Legislature at a particular point of time, if the meaning of a word used by the Legislature underwent a change in course of time, the interpretation should follow the changed meaning. In this context he relied upon the judgment of the Supreme Court in the case of Porritts & Spencer (Asia) Ltd., referred to in para 19 above. With reference to that specific case, it may be observed that the question which was before the Supreme Court was whether "drier felts" were covered by the category of "all varieties of cotton, woollen or silken textiles". That was obviously a very wide category, and it is quite clear that the Legislature meant it to be such. No one could claim to be conversant with all varieties of textiles which were being manufactured or marketed at a particular point of time, let alone in the future. Having regard to the very wide scope of this description, it would certainly follow that it should not be given a narrow interpretation based on the position when the entry was inserted. In contrast, however, the term "terracotta" is a narrow and specific one, nor amplified by words such as "all varieties of".
This would show that there is a substantial difference in the circumstances of the present case and that before the Supreme Court.
41. Even so, Shri Chandrasekharan's contention has force, and if we found that the accepted meaning of the term terracotta had indeed undergone a substantial change, and that as of today it meant something quite differrent from what it meant in 1961, it would be difficult for us to ignore the changed meaning. However, we are spared of this difficulty, because, on a consideration of all the authorities, we have come to the conclusion that there is no such change in the established usage of the word.
42. Our conclusion therefore is that the basic finding of the Assistant Collector, namely, that the articles of glazed tablewere manufactured by the respondents, whichare the subject matter of the present proceedings, were rightly classifiable as "glazed clayware" falling under Item 23B of the Central Excise Tariff Schedule was correct, and the finding of the Collector (Appeals) to the contrary was erroneous.
We accordingly set aside the order of the Collector of Central Excise (Appeals) and confirm the order of the Assistant Collector.