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Tata Engineering and Locomotive Company Ltd. and anr. Vs. Pimpri-chinchwad Municipal Corporation and ors. - Court Judgment

LegalCrystal Citation
SubjectOther Taxes
CourtMumbai High Court
Decided On
Case NumberWrit Petition No. 2265 of 1984
Judge
Reported in1984(2)BomCR761; 1985MhLJ520
ActsMaharashtra Municipalities Act, 1965 - Sections 321
AppellantTata Engineering and Locomotive Company Ltd. and anr.
RespondentPimpri-chinchwad Municipal Corporation and ors.
Appellant AdvocateR.J. Joshi, ;B.H. Antia, ; Satish Shah, ; S.K. Sethna, Advs. and ;D.L. Amin, Adv.; i/b. Mulla & Mulla and Craigie Blunt & Caroe
Respondent AdvocateV.T. Walawalkar and; P.S. Patankar, Advs.
DispositionPetition dismissed
Excerpt:
.....at the stage of producing articles from iron and steel in turn. for, at best it will only mean that the petitioners received intermediary or semi-finished or incomplete products from their suppliers. thus it is clear that entries 71 to 76 include iron and steel in its primary form as well as articles manufactured from iron and steel, entry 73 in this context really acts as a residuary entry so far as iron and steel and articles produced from them are concerned. used as parts of some structure or other, there is no denying the fact that they include both types of articles, namely, semi-finished as well as finished. hence, we are of the view that for this reason also argument must fail......form-almost any metal or combination of metals can be forged. some of the forgeable materials are iron, steel, nickel, titanium, aluminium and bronze.when metal is forged, its internal make-up changes. it loses its grainy structure and becomes more fibre like. the fibre like structure gives the forged article more strength. forgings at particularly useful for objects that take heavy wear, such as turbine, blades for jet-aircraft engines, propeller shafts for ships, and locomotive parts.'the encyclopedia also states that the forgings can be done by hand and with hammers. there are various modes of forging including press forging and upset forging etc.in support of his case, he also relied upon a decision of the gujarat high court reported in 23 sales tax cases at page 288, state of.....
Judgment:

P.B. Sawant, J.

1. By this petition filed under Article 226 of the Constitution, the petitioners seek a writ of mandamus against the respondents requiring them to withdraw their demand for Rs. 23,08,075.70 towards the octroi duty as contained in the respondents' letters dated the 18th January, 1st March, 9th April and 26th April, 1984.

2. The first petitioner is a Company engaged in manufacturing commercial vehicles, excavators, spare parts. etc. and has its works at Pimpri and Chinchwad within the jurisdiction of the first respondent, Pimpri Chinchwad Municipal Corporation. The second petitioner is the Director of the first petitioner and respondents 2 and 3 are the Administrator and the Octroi Superintendent of the first Respondent Corporation. The articles on which the Respondent-Corporation seeks to levy octroi duty are listed in Ex. '2' to the affidavit in reply filed by Respondent No. 3 - the Octroi Superintendent, on behalf of he respondents. According to the petitioners, all the said articles are either forgings or castings and they will hereinafter be referred to as such.

3. There is no dispute that the said forgings and castings are chargeable to octroi duty under the Maharashtra Municipalities (Octroi) Rules, 1968 (hereinafter referred to as the said Rules), framed under the Maharashtra Municipalities Act, 1965. The dispute relates to the rate at which the sad goods are chargeable. According to the petitioners the forgings and castings in question are raw material or articles of iron and steel but not articles manufactured from iron and steel, and therefore, they are chargeable to octroi duty under the residuary entry 86 of Schedule 1 of the said Rules, whereas it is the contention of the respondents that these forgings and castings are neither raw material nor only articles of iron and steel but are articles manufactured from iron and steel, and therefore, are covered by entry 73 of the said Schedule. The articles covered by entry 73 are chargeable to a duty which varies between 0.50% to 4.00% ad valorem whereas the articles falling under the residuary entry 86 carry a lower rate of duty within the range of 0.25% to 1.50%. The actual rate of duty charged on articles in entry 73 and which is sought to be recovered from the respondents on the said forgings and castings is at the rate of 2% ad valorem.

4. The short controversy before us therefore is whether the forgings and castings in question answer the description of articles mentioned in entry 73 or not.

5. Shri Joshi, the learned Counsel appearing for the petitioners, referred us to the World Book Encyclopedia, Volumes 3 and 7 and relying one the definitions of cast, casting and forging given there, contended that the articles in question were nothing but iron and steel in their forged or cast form. According to him, they could not be said to be articles manufactured from iron and steel since iron and steel can be had even at its primary stage in the said form. The definition of cast and casting is at page 206 of Volume 3 of the said Encyclopedia and is as follows :---

'Casting is a method of shaping an object by pouring a liquid into a mould and letting it harden. The shaped object is called either a cast or a casting. Casting is used to make thousands of articles including tools, machine parts, toys, and art objects such as statuary.......'

Forging is described on page 351 of Volume 7 of the said Encyclopedia as follows :

'Forging is a method of shaping metal by heating it, then hammering or pressing it into a desired form-Almost any metal or combination of metals can be forged. Some of the forgeable materials are iron, steel, nickel, titanium, aluminium and bronze.

When metal is forged, its internal make-up changes. It loses its grainy structure and becomes more fibre like. The fibre like structure gives the forged article more strength. Forgings at particularly useful for objects that take heavy wear, such as turbine, blades for jet-aircraft engines, propeller shafts for ships, and locomotive parts.'

The Encyclopedia also states that the forgings can be done by hand and with hammers. There are various modes of forging including press forging and upset forging etc.

In support of his case, he also relied upon a decision of the Gujarat High Court reported in 23 Sales Tax Cases at page 288, State of Gujarat v. Shah Veljibhjal Motichand, and a decision of the Supreme Court reported at 17 Sales Tax Cases at page 313, State of Madhya Bharat v. Hiralal. In the case before the Gujarat High Court, after a difference of opinion between two Judges of the Division Bench, the matter was referred to the Chief Justice and the point at issue was whether the corrugated iron sheets were merely iron or articles manufactured or fabricated out of iron. The learned Chief Justice agreeing with one of the Judges held that corrugated iron sheets were merely iron in another shape and form, and they could not be regarded as articles or products manufactured or fabricated out of iron. He also further observed that merely because iron was given the shape of sheet and was subjected to corrugation for the purpose of giving it rigidity and increased stiffness so as to make it acceptable to a particular class of persons who might want to use it in the form of iron sheet for roofing and walling, it did not cease to be iron; it merely assumed another form, namely that of a wrinkled sheet but still continued to retain the essential character of iron.

In the Supreme Court case, the Court was called upon the consider whether scrap iron purchased locally and iron plates imported from outside when converted into bars, flats and plates could be said to have undergone the process of manufacture so as to produce a new article which when sold attracted sales tax. The Court held that the scrap iron purchased by the respondent was processed for convenience of sale. The raw materials were only re-rolled to give them attractive and acceptable form. They did not in the process lose their character as iron and steel. It was, therefore, held that the bars, flats and plates sold by the respondent were iron and steel exempted under the notification which fall for consideration in that case. Relying on these two authorities Shri Joshi contended that in the present case also the forgings and castings were nothing but iron and steel in their primary form and were not articles manufactured from iron and steel to attract entry 73.

6. We are afraid that the definitions of casting and forging will not help Shri Joshi in the present case because the admitted position is that the petitioners do not receive primary iron or steel in the form of the present articles i.e. the castings and forgings in question, from the manufactures of steel. On the other hand their suppliers of the said articles are intermediary producers M/s. Bharat Forge Co. who themselves purchase iron and steel from the manufacturer of iron and steel and produce the articles in question from such iron and steel. The articles are produced by M/s. Bharat Forge Co. to the order and requirements of the petitioners as they produce other articles. It is not therefore a case of iron and steel being manufactured originally in the form of the articles in question. The process of casting and forging is applied both at the stage of the primary production of iron and steel as well as at the stage of producing articles from iron and steel in turn. The present articles were produced by M/s. Bharat Forge Co., thought by a process of casting and forging, from the iron and steel obtained by them in its primary form. Merely because, therefore, the articles in question are called castings and forgings they will not cease to be articles manufactured from iron and steel or answer the description of iron and steel in its primary form.

It is for this reason again that the fact that the petitioners do not use them in the same form as they are received and manufacture out of them the crankshaft gears and double-gears has no relevance in this connection. For, at best it will only mean that the petitioners received intermediary or semi-finished or incomplete products from their suppliers. That does not make them any the less articles manufactured from iron and steel. The petitioners contention that on that account they should be held as raw material for their own products and not as articles manufactured from iron and steel, has only to be sated to be rejected to accept such argument would require us to describe all stages of all articles till their finished stage, as raw material.

7. As regards the authorities cited before us, according to us, for interpreting the entry in the said rules we have primarily to look to the language of the entry itself. It is an elementary rule of interpretation of statues that the language of the statute should be interpreted as it is found in the statute itself and the words and phrases used in other statues and the interpretation placed on them there not only does not serve as a guide but in many cases leads to misinterpretation defeating the object of the statute. Every statute has its own object, and words and phrases used in it gather a special meaning peculiar to its own context. It is, therefore, neither proper not helpful to rely upon the interpretation of the same words used in other statutes. It is for this reason that we decline the invitation to discuss the two decisions cited by Shri Joshi which are under the relevant Sales Tax statutes. According to us, there is enough internal guidance in the present Rules and the Schedule for resolving the controversy between the parties and it is not necessary to seek the external aid for interpreting the entries, though the aid offered is from the same fraternity of the tax statutes.

8. In order to appreciate the exact import of entry 73, we will have to examine other entries also which have a bearing on the language of entry 73. These are entries 71 to 77 and 86. Entries 71 to 77 appear in Class VIII of Schedule I which is headed 'metals and articles of metal'. From this heading it is clear that these entries refer either to the metals in their primary form or articles made out of them. Clauses (A) and (b) of entry 71 mention items of iron and steel in their primary form whereas Clause (c) mentions articles manufactured from iron and steel though they are parts of structures. A look at sub-clause (vii) of the said Clause (c) shows that such manufactured articles may also be in the from of shell, steel, ingots, blooms, billets and bars in which form primary steel is also produced.

Entry, 72 refers to scrap of iron and steel and then follows entry 73 which takes within its sweep any other articles manufactured from iron or steel, other than cutlery etc. not specifically provided for elsewhere. Entries 74 to 76 refer to specific finished products of iron and steel and entry 77 refers to non-ferrous metals. Entry 86 appears in 'Miscellaneous' class and is residuary. It refers to all goods-metal or otherwise not included in any other entries.

Thus it is clear that entries 71 to 76 include iron and steel in its primary form as well as articles manufactured from iron and steel, entry 73 in this context really acts as a residuary entry so far as iron and steel and articles produced from them are concerned. Admittedly, the castings and forgings in question are not included in either of the entries 71, 72 and 74 to 77. If as contended by Shri. Joshi, they are iron and steel in their primary form they must be covered either by Clause (a) or (b) of entry 71. But that is not the contention advanced before us and for obvious reasons. To avail of the benefit of the concessional rate of duty provided for them by Clause (1) of Part I-A of Schedule II of the said Rules, the claimant has to comply with the condition of filing declaration in the requisite form as laid down in the said clause. The petitioners have admittedly not done so. Hence the only other argument available to the petitioners is to show that the articles in question do not fall in any of the said entries 71 to 77 and, therefore fall in the residuary entry 86. For reasons which we have discussed above, it is not possible to hold that the articles are iron and steel as contended. They are articles manufactured from iron and steel and since they are not covered by entries 71, 72 and 74 to 76, They are covered by entry 73.

9. The next contention advanced by Shri Joshi was that even assuming that the forgings and castings in question are articles manufactured from iron and steel, Entry 73 covers only finished articles and not intermediary products or semi-finished products which the present forgings and castings are. In support of this contention, he submitted that entry 73 itself excepts certain finished articles from its scope such as cutlery, hardware and machines or machine parts not specifically provided for elsewhere. Since the excepted articles are finished products it should be held that the said entry refers only to finished products. He tried to strengthen this line of reasoning by pointing out that cutlery of all kinds, and hardware articles are specifically mentioned in sub-clause (b) of entry 53 and machinery and their components and spare parts are mentioned in entry 74. All these are finished articles and it is these finished articles which are excepted from entry 73. The argument looks plausible and attractive at first sight. However, there are various reasons why it is not possible to accept it. In the first instance, as pointed out at the very outset, Class VIII under which the relevant entries appear is based as 'metals and articles of metal'. It does not make a distinction between semi-finished articles and finished articles. Not only it includes both types of articles but it also includes metal in its primary form. Secondly, entry 73 follows close on the heels of entries 71 and 72. Entry 71 includes not only iron and steel in their primary form but also articles made from such iron and steel as is evident from Clause (c) of that entry. Although the said articles are all structural i.e. used as parts of some structure or other, there is no denying the fact that they include both types of articles, namely, semi-finished as well as finished. What is more, entry 72 includes scrap of iron and steel. After listing the aforesaid items follows entry 73 which reads as 'Iron and Steel-any other articles manufactured from iron or steel other than cutlery, etc.' The word 'other' there has necessarily a reference to the articles mentioned both in entries 71 and 72, Otherwise the entry should have omitted the word 'other' there and rested context with the second 'other' which occurs subsequently. This means that the articles referred to in entry 73 are not only the articles of the kind of cutlery, hardware, etc. which are excepted by that entry but also articles of the kind mentioned in entries 71 and 72, Hence the phrase 'any other articles manufactured from iron and steel' used in entry 73 would include any article manufactured from iron and steel in its finished or semi-finished form. Since forgings and castings are manufactured from iron and steel by the suppliers of the petitioners, though in the semi-finished form 30 far as the petitioners are concerned, they would be covered by the said entry 73.

What is more, this arguments suffers from a basic weakness in that it proceeds on the basis of the use to which the said articles are put by the petitioners. The octroi duty is levied on the entry of the goods within the jurisdiction of the Respondent-Corporation. So far as the suppliers are concerned the articles are the goods manufactured by them to the order and requirement of the petitioners and they are finished goods. The respondent-Corporation is concerned with the entry of the goods imported from outside. There is no denying the fact that it is these articles manufactured by their suppliers which are being imported within the municipal jurisdiction. Hence, we are of the view that for this reason also argument must fail.

10. In the result the petition fails and is dismissed. The rule is discharged with costs.

Shri Joshi prays that the respondents should be directed not to enforce their demand letters for a period of six weeks from today to enable the petitioners to approach the higher Court. The respondents agree not to enforce their demands for a period of six weeks from today.


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