Cement Co. Ltd. Vs. State of M.P. & Ors
 Insc 372 (5 May
CA No.. of 2004 @SLP ) No.1186 of 2000) G.P. MATHUR,J.
Leave granted in SLP (c) No. 1186 of 2000 (Municipal Corporation Katni v. M/s.
Associated Cement Co. Ltd.).
Civil appeal no. 7188 of 1997 has been preferred against the judgment and order
dated 21.4.1997 of a Division Bench of Madhya Pradesh High Court deciding the
issue relating to levy of export tax on certain products manufactured by M/s.
Associated Cement Co. Ltd.
a resolution published in M.P. Gazette dated 25.10.1991, the Municipal
Corporation, Katni levied tax on export of goods from within the area of
Municipal Corporation. Entry Nos. 1 and 2 in the Schedule appended to the Notification
read as under:- SCHEDULE S. No. Name of Article Tax Proposed (1) (2) (3)
types of Cement =% of the cost of the consignment
Materials made of cement 1% of the cost of article
appellants Associated Cement Co. Ltd. filed writ petition challenging the levy
of export tax on refractory cement and Acco Proof basically on the ground that
they were not covered by the Schedule as they were not cement. The writ
petition was dismissed by a learned Single Judge but the Letters Patent Appeal
was party allowed by a Division Bench and it was held that refractory cement is
a cement so as to attract liability of export tax but Acco Proof being a water
proofing compound was not cement and was therefore not exigible to export tax.
main question which requires consideration is whether refractory cement is
cement so as to attract liability of export tax. Shri T.R. Andhyarujina,
learned senior counsel appearing for the appellant has submitted that the
Associated Cement Co. (hereinafter referred to as 'the appellant') has several
factories in different parts of the country including a manufacturing unit by
the name of Katni Refractory Works at Katni.
Alumina Refractory Binder;
aforesaid products in the commercial parlance are known as "Refractory
material" and they are entirely different from "cement" or
material made "out of cement". Most of the Refractory products are
sold directly to the end users and only a small quantity is sold by way of
retail sale whereas cement is sold through warehouses and cement stockists
network. It has been submitted that the products manufactured by the appellant
can by no stretch of imagination be equated with or used for the purposes for
which cement is used. The refractory materials are used in furnaces and kilns
to withstand high temperature, corrosion and abrasion and they are not usable
as a substitute of cement or for construction activities. Learned counsel has
further submitted that cement cannot be used for the purpose for which
refractory material is used and the process of manufacturing cement and refractories
are entirely different and the plant manufacturing refractories can neither be
used nor can be converted for manufacturing any type of cement. The raw
materials required for manufacturing refractory are also entirely different
from those required for manufacturing cement. The main raw material required
for manufacture of cement is limestone, silicous clay and gypsum whereas for
manufacture of refractory products, the main raw material is bauxite, kyanite
and fire clays. Bauxite and fire clay are not used for manufacture of cement
and chemical composition and properties of the two products are entirely
different. It has also been urged that so far as construction activity is
concerned the most important criteria applicable in the case of cement is its
strength in ordinary temperature but for refractory it is its refractoriness at
high temperature. Lastly learned counsel has submitted that in common parlance
and in trade, refractory can never be understood as cement. It has thus been
urged that the levy of export tax on refractory is wholly illegal as the said
product is not covered by the relevant entries in the schedule.
Anoop G. Choudhary, learned senior counsel appearing for the Municipal
Corporation, Katni, has submitted that Entry I in the Schedule mentions
"all types of cement" and so long as the material is cement whatever
be its chemical composition, nature or characteristic it will be covered by the
said Entry. Learned counsel has laid emphasis on the words "all types
of" and has submitted that it is a very comprehensive Entry and consequently
irrespective of the purpose for which the article is used on account of its
special qualities and components etc. as long as it is cement it will be
covered by the Entry. According to Shri Choudhary the fact that refractories
are used in furnaces and are capable of withstanding very high temperature,
corrosion and abrasion will make no difference as it is still a cement and
therefore it is covered by the Entry. Learned counsel has also submitted that
being a taxing statute it has to be strictly construed and one has to look
merely at what is clearly said and since the entry is all embracing which
covers "all types of cement" it will take within its compass
refractory as well as cement.
Learned counsel for the appellant has referred to some dictionaries and
technical books to get an idea what "refractory" is and it will be
useful to take note of the same.
Cambridge Encyclopedia Materials which are neither deformed nor chemically
changed by exposure to high temperatures. This makes them suitable for
containers, structural materials, and components, particularly in metallurgical
operations, such as furnace linings.
occurring refrectories include silica, fireclay, and alumina.
refractories include the high-melting carbides and nitrides used in nuclear
New Encyclopaedia Britannica material not deformed or damaged by high
temperatures, used to make crucibles, incinerators, insulation and furnaces,
particularly metallurgical furnaces. Refractories are produced in several
forms; molded bricks of various shapes(see firebrick); bulk granular materials;
plastic mixtures consisting or moistened aggregate that are rammed into place: castables
composed of dry aggregates and a binder that can be mixed with water and poured
like concrete: and mortars and cements for laying brickwork.
Oxford Dictionary and (of a substance) hard to fuse or work, Thesaurus
substance especially resistant to heat, corrosion etc.
Webster's Dictionary suitable for lining furnaces because of and Thesaurus
resistance to fusion at very high temperature The Oxford Universal Dictionary
Resisting the action of heat; difficult Illustrated on Historical Principles to
fuse (or to work in any way) Chambers Twentieth esp. difficult of fusion: fire-resisting
Chambers Dictionary n. a substance that is able to resist high temperatures
etc., used in lining furnaces etc.
Encyclopedia of One of a number of ceramic materials Science & Technology
for use in high temperatures structures or equipment. The term high temperatures
is somewhat indefinite but usually means above about 1800 F (1000 C),
or temperatures at which, because of melting or oxidation, the common metals
cannot be used. In some special high temperature applications, the so-called
refractory metals such as tungsten, molybdenum, and tantalum are used.
greatest use of refractories is in the steel industry, where they are used for
construction of linings of equipment such as blast furnaces, hot stoves and
open-hearth furnaces. Other important uses of refractories are for cement
kilns, glass tanks, noneferrous metallurgical furnaces, ceramic kilns, steam
boilers, and paper plants. Special types of refractories are used in rockets,
jets and nuclear power plants. Many refractory materials, such as aluminium
oxide and silicon carbide, are also very hard and are used as abrasives; some
applications, for example, aircraft brake lining, use both characteristics
Refractory materials are commonly grouped into
containing mainly aluminosilicates;
made predominately of silica;
made of magnesite, dolomite, or chrome ore, termed basic refractories (because
of their chemical behavior); and
miscellaneous category usually referred to as special refractories.
appellant has also placed on record certain technical data regarding the refractories
manufactured by it which are used in Iron and Steel Industry and in Fertilizer
Industry. This technical data shows that different varieties of refrectories are
manufactured for use in different kind of industries. Learned counsel has also
laid emphasis upon the fact that for the purpose of levy of excise duty the
Central Government has treated refractory as distinct from cement. Tariff Item
23 C.B.E.&C. Tariff Advice No.75/80, dated 24.11.1980 reads as under:
is considered and clarified for the information of the trade and all others
concerned that Fire clay/Refractory Mortars and Ramming Masses are classifiable
under Item 68 and not under Item 23 of Central Excise Tariff." The
relevant tariff entries are as under:
No.23- Cement Item No. Tariff Description Rate of Duty
Cement, all varieties - Rupees two
Grey portland cement (including hundred per ordinary portland cement, pozzolana
metric tonne cement and blast furnace slag cement), masonry cement, rapid
hardening cement, low heat cement and waterproof (hydrophobic) cement
All others Forty per cent ad valorem Item No.68-All other Goods, N.E.S. Item
No. Tariff Descripton Rate of duty
All other goods, not elsewhere Eight per cent specified, but excluding ad valorem
all sorts including alcoholic liquors for human consumption.
basis of above tariff entries it is submitted on behalf of the appellant that
refractory is not cement.
technical material referred to above shows that refractories are basically
materials which are used in high temperature structures or equipment. They can
withstand temperatures above one thousand degree centigrade when other metals will
melt or oxide and they are generally used for lining of furnaces etc.
The principle to be applied for interpretation of taxing statutes which is
relevant for the decision of the present case has been settled by a catena of
decisions of this Court. In Commissioner of Sales Tax v. M/s. Jaswant Singh AIR
1967 SC 1454 it was held that while interpreting items in statutes like Sales
Tax Acts resort should be had not to the scientific or the technical meaning of
such terms but to their popular meaning or the meaning attached to them by
those dealing in them, that is to say, to their commercial sense.
same view was taken in Minerals and Metals Trading Corporation of India v.
Union of India & Ors. (1972) 2 SCC 620; Royal Hatcheries Pvt. Ltd. v. State
of A.P. & Ors. 1994 Supp. (1) SCC 429; Dunlop India Ltd. v. Union of India 1976 (2)
SCC 241. In Indian Cable Company Ltd. v. Collector of Central Excise (1994) 6
SCC 610 this principle was stated as under:- "..But we would like to point
out that in construing the relevant item or entry, in fiscal statutes if it is
one of every day use, the authority concerned must normally, construe it, as to
how it is understood in common parlance or in the commercial world or trade
circles. It must be given its popular meaning.
meaning given in the dictionary must not prevail. Nor should the entry be
understood in any technical or botanical or scientific sense. In the case of
technical words, it may call for a different approach. The approach to be made
in such cases has been stated by Lord Esher in Unwin v. Hanson (1891) 2 QB 115
the Act is directed to dealing with matters affecting everybody generally, the
words used have the meaning attached to them in the common and ordinary use of
language. If the Act is one passed with reference to a particular trade,
business, or transaction and words are used which everybody conversant with
that trade, business or transaction knows and understands to have a particular
meaning in it then the words are to be construed as having that particular
meaning, though it may differ from the common or ordinary meaning of the
words." We would only add that there should be material to enter
appropriate finding in the case. The material may be either oral or documentary
evidence." The word 'cement' has not been defined in the relevant
it has to be understood in the same way as is understood in common parlance.
Cement is exclusively used as a building material and is a commodity of
everyday use. Therefore, we have to go only by the popular or commercial
meaning of the term. The main property of the refractory is that it can
withstand very high temperature, corrosion and abrasion. Cement is used for
building roads, bridges and dams etc. and also by common people for building
residential or commercial buildings.
buying cement for building purpose would under no circumstance buy refractory.
Similarly a mason or a supervisor would under no circumstance use refractory
material in making a normal construction. The refractory is used for entirely
different purpose namely for furnaces, linings and for insulation. A dealer
would not supply refractory to anyone wanting Excise 2002 (8) SCC 139 it has
been held that it is axiomatic that if the product is not cement but can be
used for some purposes like cement, such product is not cement. We are,
therefore, of the opinion that refractory material produced by the appellant
does not fall within the Entry "all types of cement" and consequently
it is not exigible to levy of export tax.
The challenge in the appeal preferred by the Municipal Corporation, Katni is to
the order of the High Court in the matter relating to withdrawal of the amount
deposited by the Associated Cement Co. Ltd. In view of our finding that refractory
material is not exigible to export tax, the appeal is liable to be dismissed.
the result CA No.7188 of 1997 is allowed and the judgment and order of the High
Court in so far as it holds that refractory manufactured by the appellant are
cement and are exigible to export tax is set aside. CA No.. of 2004 @ SLP) NO.
1186 of 2000 preferred by Municipal Corporation, Katni is dismissed.