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Sim Maneklal Industries Ltd. Vs. V.K. Jain - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Application No. 1084 of 1973
Judge
Reported in1979(4)ELT150(Guj)
ActsCentral Excise Act, 1944
AppellantSim Maneklal Industries Ltd.
RespondentV.K. Jain
DispositionApplication allowed
Cases ReferredDunlop India Ltd. v. Union of India
Excerpt:
- - the supreme court has consistently taken the view that it is good fiscal policy not to put people in doubt and quandary about their liability to duty, see dunlop india ltd. 242 at page 254. when a particular product known by a particular name to trade and commerce in this country and abroad is imported, it would have been better if the article is, eo nomine, put under a proper classification to avoid controversy......4, 1972 called upon the petitioners, messrs. sim. maneklal industries limited, to explain why twin lobe compressors should not be subjected to excise duty at the rate provided in sub item (2) of item no. 33. the petitioners in their reply pointed out the essential characteristics of twin lobe compressors. they contended that they cannot be characterised as 'electric fans, all sorts' so as to make them exigible to duty under item no. 33(2). the first respondent rejected the explanation of the petitioners and levied duty at 12 per cent ad valorem on the sales of twin lobe compressors. it is this order rejecting the case of petitioners and levying duty at 12 per cent ad valorem under no. 33 that is challenged in this petition.2.mr. kaji, learned counsel appearing for the petitioners,.....
Judgment:

S. Obul Reddi, C.J.

1. The only question that arises in this special Civil Application directed against the order of the Assistant Collector, Central Excise, dated June 11, 1973 is whether Lobe Compressors come within the sweep of the definition 'Electric Fans, all sorts' in Item No. 33 of the First Schedule to the Central Excise and Salt Act I of 1944. The Superintendent of Central Excise by his letter dated January 4, 1972 called upon the petitioners, Messrs. SIM. Maneklal Industries Limited, to explain why Twin Lobe Compressors should not be subjected to excise duty at the rate provided in sub item (2) of Item No. 33. The petitioners in their reply pointed out the essential characteristics of Twin Lobe Compressors. They contended that they cannot be characterised as 'Electric Fans, all sorts' so as to make them exigible to duty under Item No. 33(2). The first respondent rejected the explanation of the petitioners and levied duty at 12 per cent ad valorem on the sales of Twin Lobe Compressors. It is this Order rejecting the case of petitioners and levying duty at 12 per cent ad valorem under No. 33 that is challenged in this petition.

2.Mr. Kaji, learned counsel appearing for the petitioners, contended that there is no identifiable standard or test by which it could be said that the goods in question are covered by sub item (2) of item No. 33. The language of Item No. 33 is so vague and ambiguous that it will be unreasonable to hold that the goods in question could be brought within the definition of 'Electric Fans, all sorts.'

3. Mr. Vakharia, learned counsel appearing for the respondents, contended that the description of 'Electric Fans, all sorts' is so wide that it takes in the goods in question and, that the Department, on the facts and material placed before it, had reasonably construed that the goods in question fall within the scope of the description given in sub-item (2) of Item No. 33 and it is not open to us to interfere with the reasonable conclusion drawn by it.

4. * * * * * *

5. It may be stated that no definition of the words 'Electric Fans' has been given in the Act. Therefore, we have to fall back upon what is understood by 'Electric Fans' in common parlance and the characteristics of the uses to which electric fans are put. Chambers Technical Dictionary, 1958 Edition, defines fans as 'a device for delivering air on exhausting large volumes of air or gas with but a low pressure increase.'. 'Compressors' arc also defined in the same Dictionary as ''any kind of reciprocating rotary or centrifugal pump for raising the pressure of a gas.' The Indian Standards Institute in its Glossary of Terms defines 'Roots compressor' in these words.

'Two symmetrically arranged rotors with two or three teeth rotate in opposite directions. The rotors are synchronized by means of a gear drive so that they can move past each other and past the housing wall with little play and without touching.'

In the Pamphlet, Exhibit 'A', made available to us regarding Twin Lobe Compressors, they are used for the following purposes.

'1. Sulphitation process Sugar Industry. 2. Filter Bed agitation Water Treatment Plants. 3. Pneumatic Conveying Cattlefeed, Cement, Grain, Flour. 4. Slurry Agitation. 5. Gas Boosting. 6. Humidification Looms Sheds. 7. Centralised Vaccum Cleaning Plants. 8. High altitude Pressurised Chambers. 9. Fertilizer Projects.'

The photographs placed before us also show that the rotors are fitted into a casing. The Twin Lobe Compressors have two counter rotating shafts. Rotary Air Compressors and/or Vacuum Pumps have sliding vanes. If there is an obstruction put near the output side of either of the aforesaid compressors, the machine will function so as to remove the obstruction.

6.According to the learned counsel for the respondents Twin Lobe Compressor rotates and sucks in air. It functions in the same manner as an electrical fan by blowing air or sucking air and, therefore, it will come within the meaning of the sub-item (2) of Item 33. He also states that if the rotors form an indispensable part of the machine, and cannot be put to use for any other purpose would come within the mischief of sub-item (2). The test to be applied is not whether Twin Lobe compressors rotate in opposite directions and in the process it sucks air or blows air, but whether it could be fitted in within the meaning of 'Electric Fans, all sorts'. Sub item (2), to say the least, is vague and ambiguous. It is not possible to read in sub item (2) that rotors which rotate in opposite direction would come within the meaning of 'electric fans.' which form an indispensable part of the machinery for its operation. Eo Nomine rotors have not been named nor is it possible for us to say that any identificable standard or test has been laid down to reasonably hold that rotors which rotate in opposite directions could also be brought within the meaning of sub item (2) of Item No. 33.

7. The learned counsel for the respondents, however, sought to reply upon the meaning given in 'Fan' in Encyclopaedia Britannica, Volume 9, Page 61. The definition of 'Fan' given therein is with reference to the fans illustrated at page 62 of the same volume. It is defined as 'a device for moving air or other gases or vapours'. 'Mechanical fans' as defined therein 'are used in systems for ventilating, heating and air conditioning building; for cooling internal combustion engine; for dust exhaust; for conveying light materials; and for induced and forced draft for steam boilers.' We have already detailed above the characteristics of the goods. The functioning of the compressors has also been averted to by us. There is nothing in the definition or even in Encyclopaedia Britannica which brings in the goods in question within its sweep.

8.The learned counsel also sought to rely upon the meaning of 'Fans and Blowers' as stated in Explanatory Notes to the Brussels Nomenclature. Fans and Blowers are described at page 1190 of volume 3 in these words :

'These machines, which may be fitted with integral motors or not, are designed either for delivering large volumes of air or gas at relatively low pressure or merely for operating a movement of the surrounding air. Those of the first kind may act as air extractors or as blowers; they consist of a propeller or blade type impeller revolving in a casing or conduit, and function on the principle of rotary or centrifugal compressors.'

The rotors here are not fitted with integral motors nor is it the case of the respondents that they are designed for the purpose of delivering large volumes of air or gas at relatively low pressure or they are intended merely for creating a movement of the surrounding air. It is also pointed out in the same volume that the second type of fans and blowers consist merely of a driven fan rotating in free air. We do not attribute to the Legislature mechanical knowledge of the functioning of various types of machines which produce or blow air, We have got to construe the expression 'electric fans, all sorts' by giving it, a popular meaning and as understood in commercial world and also in consumer world. One is not expected, when he has got to see whether 'electric fans of all sorts', come within the meaning of the expression, to have technical knowledge in electronics.

9. The Supreme Court had occasion to consider in Union of India v. Tata Iron and Steel Co., AIR 1975 S.C. 769, whether a particular product was 'skelp'. The Supreme Court laid down that the taxing authority would undoubtedly require some evidence provided, however, there is an identifiable uniform and determinate test by which skelp can be properly distinguished from strip. It held in no uncertain terms that in the absence of any identifiable standard or test, there was no need to drive a party for a full fledged inquiry. According to the learned Judges, in the absence of any clear criterion to detemine what is skelp and not strip, no useful purpose would be served by even remanding the matter to the excise authorities for a decision after taking necessary evidence. The Supreme Court has consistently taken the view that it is good fiscal policy not to put people in doubt and quandary about their liability to duty, see Dunlop India Ltd. v. Union of India-(1976) 2 S.C.C. 242 at page 254. When a particular product known by a particular name to trade and commerce in this country and abroad is imported, it would have been better if the article is, Eo Nomine, put under a proper classification to avoid controversy.

10. As stated by us at the outset, the meaning given to 'electric fans all sorts' in sub item (2) of Item No. 33 is so vague that it is difficult for any reasonable person to apply any standard or identifiable test and it is unreasonable to come to the conclusion that the goods in question come within the meaning of 'electric fans, all sorts' If it were the intention of the Legislature that the goods of the type with which we are now concerned should also be exigible to duty, the Legislature would have named these goods Eo nomine or defined electric fans in such a way so as to bring in the goods with which we are now concerned within the ambit of Item No. 33(2).

11. For all these reasons, we quash the impugned order of the first respondent and hold that the goods in question are not liable to excise under Item No. 33(2) or any other sub item of Item No. 33. This. special. Civil Application is, therefore, allowed. Rule is made absolute with cost.


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