1. The short question that arises on this reference is whether 'L' type Industrial Centrifugal Humidifiers complete with electric motors of 3/4 H.P. and starters fall within Entry 15 of Schedule C of the Bombay Sales Tax Act, 1959. The applicants made an application to the Deputy Commissioner of Sales Tax under section 52 of the Act to determine the rate of tax payable on the sale of humidifiers. The contention of the applicants was that humidifiers are machinery used in the manufacture of cloth and are, therefore, covered by Entry 15 of Schedule C. This contention was, however, negatived by the Deputy Commissioner of Sales Tax. The Deputy Commissioner of Sales Tax described the role of humidifiers in the textile industry in the following words :
'The humidifiers are used by the textile mills. The purpose of this is to maintain the humidity of a particular room where the process of spinning etc., is done. This humidity helps to increase the length and strength of yarn. According to the learned representative without humidifiers it is not possible for any of the textile mills run according to the modern technique to run their mills. In order to give a clear idea of the use of the humidifiers the learned representative furnished me with an extract from the textile and allied Industries Research Organization and a pamphlet giving the details regarding the use of the humidifiers. From the materials placed before me it appears that the humidifiers are used in various departments of textile industry for improving the quality of the production in general. It also appears that the modern textile industry cannot do without such humidifiers.'
and thus accepted the position that humidifiers are necessary for the production of the cloth in that by maintaining a particular humidity in the room in which the manufacturing process is being carried on, they help to increase the length and strength of yarn and that modern textile industry cannot do without humidifiers. But, in his view, this function of humidifiers did not directly connect humidifiers with the manufacturing process and humidifiers were therefore not machinery used in the manufacture of cloth and were consequently not covered by Entry 15 of Schedule C. He observed that humidifiers were run by electric motors and were therefore electrical goods, and not being machinery used in the manufacture of cloth, they fell within Entry 20 of Schedule C. He accordingly held that the sale of humidifiers was liable to be taxed under Entry 20 and not under Entry 15 of Schedule C.
2. From this decision of the Deputy Commissioner of Sales Tax, the applicants preferred an appeal to the Tribunal. The Tribunal also accepted the position that humidifiers are used by cotton textile mills to control the humidity of the atmosphere and to maintain a certain humidity in the mills which is necessary for improving the quality of yarn and preventing waste of yarn and that they are absolutely essential to the modern textile industry. The Tribunal, however, held that this circumstance did not bring humidifiers within Entry 15 of Schedule C. The Tribunal observed that in order to bring an item of machinery within Entry 15 of Schedule C it was necessary to show that it was used in the actual process of manufacture of cloth and that humidifiers though essential to the modern textile industry were not used in the actual process of manufacture of cloth and were, therefore, not covered by Entry 15 of Schedule C. The Tribunal then proceeded to consider whether humidifiers were electrical goods and since they are worked by electric motors, the Tribunal held that they were electrical goods and were accordingly within Entry 20 of Schedule C. The Tribunal, taking this view, confirmed the decision of the Deputy Commissioner of Sales Tax. This view of the Tribunal is now challenged before us on this reference.
3. The decision of the question whether humidifiers fall within Entry 15 or Entry 20 of Schedule C depends upon the answer to the question whether humidifiers can be said to be machinery used in the manufacture of cloth. Entry 15 of Schedule C comprises 'machinery used in the manufacture of goods' and it is, therefore, clear that if humidifiers can be said to be machinery used in the manufacture of cloth, they would be covered by that entry and in that event they would not fall within Entry 20 of Schedule C which applies to electrical goods other than those specified in Entry 15 in Schedule E, not being machinery used in the manufacture of goods. If, on the other hand, humidifiers cannot be regarded as machinery used in the manufacture of cloth, they would fall within Entry 20 of Schedule C, for they are run by electric motors and are, therefore, indisputably electrical goods. The sole question which, therefore, requires to be determined is whether humidifiers are machinery used in the manufacture of cloth.
4. On this question two arguments were addressed before us. The first argument was that humidifiers are not machinery at all and cannot, therefore, possibly come within the ambit of Entry 15 of Schedule C. This argument which was advanced by Mr. A. D. Desai, learned Assistant Government Pleader appearing on behalf of the State, was sought to be supported by reference to a decision of the Privy Council in Corporation of Calcutta v. Cassipore Municipality (A.I.R. 1922 P.C. 27.). The question which arose in this case was whether a steel tank with its supporting structure for storage of water was 'machinery' within the meaning of proviso 3 to section 101 of the Bengal Municipal Act. Lord Atkinson delivering the judgment of the Privy Council said that there was great danger in attempting to give a definition of the word 'machinery' which would be applicable in all cases, but that if their Lordships of the Privy Council were obliged to run the hazard of attempting such definition, they would be inclined to say that -
'The word 'machinery' when used in ordinary language, prima facie, means some mechanical contrivances which by them selves 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 ......'
5. Lord Atkinson, however, made it clear that however skilful definitions of 'machinery' may be framed, the determination in any given case of what is or is not 'machinery' must, to a large extent, depend upon the special facts of the case. It is, therefore, clear that no set formula can be applied for the purpose of determining whether humidifiers constitute machinery. But even if the definition formulated by their Lordships of the Privy Council be applied, it is clear that humidifiers are machinery. Humidifiers are operated by electric motors and they evaporate water into a fine mist, throw out vaporized air and distribute it uniformly throughout the room producing the required humidity. This would certainly be included in the definition of 'machinery' given by their Lordships of the Privy Council. We are, therefore, of the view that humidifiers are machinery and if it can be said of them that they are used in the manufacture of cloth, they would certainly fall within Entry 15 of Schedule C.
6. What we must, therefore, proceed to consider is whether humidifiers are machinery used in the manufacture of cloth. On this part of the case great emphasis was laid by Mr. A. D. Desai on behalf of the State on the use of the words 'machinery used in the manufacture of goods' in Entry 15 of Schedule C. Mr. A. D. Desai contended that only those items of machinery fell within Entry 15 of Schedule C which were used in the actual process of manufacture of cloth and that humidifiers which were installed in textile mills merely for the purpose of maintaining a certain humidity could not be said to be machinery used in the actual process of manufacture of cloth. Now we agree with Mr. A. D. Desai that on a plain and natural construction of the words 'machinery used in the manufacture of goods' what is comprehended within Entry 15 of Schedule C is machinery which is used in the actual process of manufacture of goods. But we cannot agree with him when he says that humidifiers are not used in the actual process of manufacture of cloth. Manufacture of goods means the process of converting raw materials into finished goods and whatever machinery is required for converting raw materials into finished goods would be machinery used in the manufacture of such goods. Every item of machinery which has a use in the manufacture of finished goods, which plays some role in the process of manufacture of finished goods and without which manufacture of finished goods would not be possible would be machinery used in the manufacture of such goods. Such machinery would be an essential and integral part of the plant which manufactures finished goods and would certainly satisfy the description that it is machinery used in the manufacture of finished goods. If this test be applied, it is clear that humidifiers are machinery used in the manufacture of cloth. It is evident from the finding given by the Deputy Commissioner of Sales Tax and accepted by the Tribunal that humidifiers are used by cotton textile mills in order to maintain certain humidity for the purpose of increasing the strength of yarn, avoiding breakages of yarn and improving the quality of yarn and they are essential to the modern textile industry. They play an important role in the manufacturing process in that they provide a particular humidity without which yarn would not acquire proper strength and there may be breakages in yarn affecting not only the quality of the yarn but also the smooth functioning of the ring frames. They are as essential to the manufacturing process as ring frames or looms and they are certainly machinery used in the manufacture of cloth. Any machinery which helps to improve the quality of yarn, to avoid breakages in yarn and to secure smooth functioning of the ring frames would certainly be machinery used in the manufacture of cloth. We are, therefore, of the view that humidifiers are machinery used in the manufacture of cloth and must fall within Entry 15 of Schedule C.
7. Before we part with this point we must refer to a decision of the Allahabad High Court in Delta Engineering Co. v. Commissioner of Sales Tax ( 14 S.T.C. 515), which was cited by Mr. A. D. Desai on behalf of the State. In that case the question was whether centrifugal water pumps used for pumping water from tube wells were exempt from tax on the ground that they were agricultural implements and a Division Bench of the Allahabad High Court held that they were not agricultural implements. An argument was advanced before the Court in that case that the water pumps were agricultural implements because water pumped out from tube wells by means of the water pumps could be used for irrigation. This argument was negatived and it was held that a water pump belonging to an agriculturist and used by him for irrigating his agricultural land may be an agricultural implement in his hands, but it does not follow that every water pump is, therefore, an agricultural implement, and that consequently when a dealer in water pumps sells them without regard to the ultimate purpose for which they may be used, it cannot be said that he is selling agricultural implements. It is difficult to see how this decision can assist us in determining the question which arises on the present reference. In this case the Court was concerned with the limited question as to whether water pumps could be said to be agricultural implements. The question was not whether water pumps could be said to be machinery used in agriculture. The question which we have to consider is, however, an entirely different question, namely, the true connotation of the expression 'machinery used in the manufacture of goods' and on that question this decision unfortunately does not throw any light.
8. In this view of the matter, in our opinion, humidifiers sold by the applicants under their bill No. 117 dated 30th October, 1960, are covered by Entry 15 of Schedule C and not by Entry 20 of Schedule C and the question referred to us will, therefore, be answered accordingly. The respondent will pay the costs of the reference to the applicants.
9. Reference answered accordingly.