Sujata V. Manohar, J.
1. The petitioners, Bombay Paints and Allied Products Ltd., are engaged in the manufacture of paints. In January 1977 the petitioners imported three metric tons of 'Aluminum Silicate P. 820'. After the arrival of the goods the petitioners filed a Bill of Entry dated 25th July 1977. They classified the said goods as an 'inorganic chemical compound' under tariff item 28.01/58(1) of the Customs Tariff Act, 1975. The Customs Department however, assessed the said goods to Customs duty under tariff item 32 04/12(1) of the Customs Tariff Act, 1975. Accordingly the petitioners were called upon to pay a total customs duty of Rs. 22,422.80 including the basic customs duty, auxiliary duty and countervailing duty. According to the petitioners the correct total Customs duty leviable was Rs. 13,514.25. The petitioners, however, paid the total Customs duty demanded under protest. Thereafter on 3rd September 1977 the petitioners filed a refund application for the refund of excess customs duty amounting to Rs. 9908.55. This refund application was made by the petitioner on the basis that the goods imported by them were covered by Tariff Item 28.01/58(1) and not under item 32.04/12(1). The petitioners relied upon the technical literature pertaining to the said product. The refund application however, was rejected. An appeal filed therefrom to the Collector of Customs (Appeals) (Respondent No. 3) was also rejected and thereafter a Revision Application filed by the petitioners before the Union of India, respondent No. 1 was also rejected under an order dated 15th December 1980. Thereafter the petitioners filed the present petition.
2. The petitioners have annexed at Exhibit C-5 technical literature pertaining to Aluminum Silicate P. 820. It states :
For more than 10 years the paint and lacquer industry has used the highly dispersed extender Aluminum Silicate P. 820. Initially, this product was used exclusively in emulsion paints as a partial replacement for titanium dioxide or other white pigments. The particular advantages resulting from this practice are improved visual properties as well as a reduction in the cost of price. More recently, Aluminum Silicate P. 820 has also been used to an increasing extent in systems containing solvents, especially in decorative paints....
Depending on the guide formulation, up to 50% of the white pigment can be replaced by Aluminum Silicate P. 820 in emulsion paints as well as in decorative paints without degrading the overall characteristics.
Use of Aluminum Silicate P. 820 has a positive effect in respect to the following points:
(a) a reduction in cost by partial replacement of expensive white pigments,
(b) improved effect of the white pigments used,
(c) good effect as anti-settling agent,
(d) maintenance of constant viscosity during storage,
(e) good weathering properties, and
(f) reduction in dirt pick-up.
3. The dispute relates to classification under the relevant tariff entry. Chapter 28 of Schedule I to the Customs Tariff Act, 1975 has the heading Inorganic chemicals' ; organic and inorganic compounds of precious metals, of rare earth metals, of radio-active elements and of isotopes. Note 1(a) states that except where the context otherwise requires this chapter is to be taken to apply only to : (a) separate chemical elements and separate chemically defined compounds whether or not containing impurities ; Note 3(d) states that this chapter does not cover colouring matter and inorganic products of a kind used as luminophores falling within Heading No. 32.04/12. Heading No. 28.01/58 is as follows :
Chemical elements, inorganic chemical compounds and other products as specified in Notes 1 and 2 to this Chapter :(1) Not elsewhere specified....
According to the petitioner Aluminum Silicate P. 820 is an inorganic chemical compound not elsewhere specified. As against this Chapter 32 is headed 'Tanning and dyeing extracts ; tannins and their derivatives ; dyes, colours, paints and varnishes; putty ; fillers and stopping ; inks.' Item 32.04/12 is as follows : 'Colouring matter ; synthetic organic dye-stuffs ...; paints, varnishes and enamels, prepared driers ; putty, fillers and stopping ;...'. it is the case of the respondents that the goods imported by the petitioner are classifiable under Tariff Item 32.04/12 because these goods are used as 'fillers' in paints.
4. From the technical information annexed by the petitioners at Exhibit 'C-5' Aluminum Silicate P. 820 is used as an extender in paints and lacquers. It has been described as a highly dispersed extender. Among the advantages of using Aluminum Silicate P. 820 listed are : reduction in cost by partial replacement of expensive white pigments, good effect as anti-settling agent, maintenance of constant viscosity during storage, good weathering properties.
5. The Indian Standard Glossary of Terms Relating to Paints (Second Revision), published in April 1984 gives definitions of technical terms widely used in paint industry. It defines 'extender' as an inorganic material in powder form, which has a low refractive index and consequently little obliterating power ; but is used as a constituent of paints to adjust the properties of the paint, notably its working and film forming properties and to avoid settlement on storage.
6. 'Filler' is defined as a composition used for filling fine cracks or indentations to obtain a smooth, even surface preparatory to painting.
7. 'Putty' is defined as a highly pigmented stiff plastic material which is applied by a knife and which normally hardens on air-drying, chemical curing or stoving.
8. Thus an extender is used as a constituent of paint to adjust the properties of the paint, especially its working and film-forming properties and to avoid settlement on storage. This definition accords with the properties of Aluminum Silicate P. 820 which are described in the technical literature, Exhibit C-5 to the petition. The term 'filler' on the other hand refers to a composition used for filling fine cracks or indentations in order to obtain a smooth surface for applying paints. Aluminum Silicate P. 820 is clearly not such a filler. In tariff Item 32.04/12 the relevant phrase refers to putty, fillers and stopping. Putty refers to a pigmented stiff plastic material which is applied by knife to the surface. Filler refers to a compound used for filling cracks and obtaining a smooth surface, while stopping or stopper as per the Indian Standard Glossary of Terms Relating to Paints refer to a stiff paste used for filling holes and cracks and similar defects in surfaces, normally applied after priming. Thus the phrase 'putty, fillers and v' in the said tariff item refers to various items which are applied to the surface in order to obtain a smooth surface for applying paint. An extender, on the other hand, is mixed with paint for reasons which are set out in the technical literature referred to earlier. An extender, therefore, is not covered by the term 'filler'.
9. My attention was drawn to the definition of 'filler' in the Condensed Chemical Dictionary, Tenth Edition by Hawley. The word 'filler' is defined there as 'an inert mineral powder of rather high specific gravity (2.00-4.50) used in plastic products and rubber mixtures to provide a certain degree of stiffness and hardness, and to decrease cost.'
10. The word 'extender' is defined in the same dictionary as 'a low-gravity material used in paint, ink, plastic and rubber formulations chiefly to reduce cost per unit volume by increasing bulk. Extenders include diatomaceous earth, wood flock, mineral rubber, liquid asphalt, etc.
11. Mr. Sethna, learned Counsel for the respondents, emphasised the fact that in this dictionary fillers are considered as similar to extenders and diluents in their cost reducing function. In other words both fillers and extenders reduce the cost of the material by reason of their use in the product in question. But from this it cannot be concluded that extenders are the same as fillers. In fact a filler is defined as a high specific gravity material used to provide stiffness and hardness. It is quite different from an extender which is defined in the same dictionary, as a low gravity material which is used for increasing the bulk and thereby reducing the cost. The two items are different even as per the condensed chemical dictionary. Secondly, for the purpose of interpretation of tariff items what is more relevant is the Indian Standard Glossary of Terms Relating to Paints which defines the various technical terms as used in the paint industry. The meaning of the various terms used in Tariff items have to be understood in the sense in which they are understood in the trade. Therefore the definitions of these items in the Indian Standard Glossary of Terms Relating to Paints carry greater weight while considering the two tariff items in question.
12. In Brussels Tariff Nomenclature Item 28.48 includes 'Double and or Complex Salts'. Sub note (K) under item 28.48 refers to Double and/or complex silicates. Below this it is stated 'Aluminosilicates are used in the glass industry and as an insulator etc.' In item 28.48 of Brussels Tariff Nomenclature therefore, complex silicates including Aluminum silicates are classified under Chapter 28 of that tariff under the heading 'inorganic chemicals'. According to the respondents only those Aluminum silicates which are considered under note (K) as being used in the glass industry and as an insulator are covered under tariff item 28. This submission does not appear to be correct because all double and/or complex silicates are included in tariff item 28.48.
13. Thus tariff item 32.04/12 does not cover Aluminum silicate P. 820 imported by the petitioners These goods are covered by tariff item 28.01/58 which deals with chemical compounds not elsewhere specified. It is nobody's case that the said goods are covered by any other tariff item.
14. Since the respondents have chosen to tax the petitioner on the basis that their goods fall under Tariff item 32.04/12, it was for the respondents to establish that the goods imported can be classified as fillers under the said tariff item. (See in this connection Garware Nylons Ltd. v. Union of India and Ors. reported in 1980 E.L.T. 249 (Bom) : 1980 CC 256.
15. The Supreme Court has said in the case of Diwan Brothers stopping. Central Bank of India reported in : AIR1976SC1503 that fiscal statute must be strictly construed and if there is any doubt about the interpretation of such a statute, the benefit of doubt must go to the assessee, so as to lessen his tax burden. In the present case there is no question of giving any benefit of doubt to the assessee, since the goods are clearly outside the purview of tariff item 32.04/12 and they clearly fall within tariff item 28.01/58.
16. It was also submitted by Mr. Sethna that when two views are possible relating to the interpretation of a tariff entry, if the customs authorities have taken one of the two possible views, which is a reasonable view, the court should not interfere with the order of the Custom authorities under Article 226 of the Constitution. He is undoubtedly right in this submission. (See in this connection V.V. Iyer v. Jasjit Singh, Collector of Customs and Anr. reported in : AIR1973SC194 and Girdharilal Bansidhar v. The Union of India and Ors. reported in : 1964CriLJ461 In the present case however, looking to the clear language of the two entries in question it cannot be said that the goods imported by the petitioners can fall under tariff item 32.04/12, The decision, therefore, of the Customs Authorities is not based on any cogent evidence before any of the officers concerned. Thus, for example, in the order which is passed by the Assistant Collector of Customs which is dated 28.11.1977 the Assistant Collector of Customs has held that die goods imported are not pure Aluminum silicate but there is some other item mixed in it and therefore the goods cannot be classified under tariff item 28.01/58. He has also said that because the goods are used in paints, therefore, they must be classified under tariff item 32.04/12. There is a clear non-application of mind to the material produced by the petitioners before the Assistant Collector of Customs. In the order passed by the Collector of Customs which is dated 14.6.1978 the Collector of Customs has proceeded on the footing that extenders and fillers are the same thing. There is no basis for this conclusion at all. The order in revision also proceeds on the basis that properties of an extender are the same as those of fillers and stopping. There is no material for coming to this conclusion. The revisional order excludes these goods from Chapter 28 on the ground that these goods are Complex Sodium Aluminum Silicate. It is difficult to see why these goods should be excluded from Chapter 28 on the ground that they are Complex Sodium Aluminum Silicate. All silicates are included in Brussels Nomenclature under Chapter 28 and the same is the case with Chapter 28 of the Customs Tariff Act, 1975. The decisions of the Customs Authorities are, therefore, not based on evidence produced before them. The decisions must, therefore, be classified as perverse
In the premises the petition is allowed and the rule is made absolute in terms of prayer (b). The respondents will grant to the petitioner refund of Rs. 9908.55 within three months from today.
The respondents will pay to the petitioner costs of the petition.