Nilsin Industries Vs. State of Tamil Nadu  INSC 623 (28 July 1997)
BHARUCHA, V. N. KHARE
appeals, filed by assessees, challenge the correctness of the judgment and
order of a Division Bench of the High Court at Madras. The question raised in these appeals is whether
ultramarine blue is a pigment, so that it falls under Item 110 of the First
Schedule to the Tamil Nadu General Sales Tax Act, 1959, as contended by the
Sales Tax authorities, or a chemical, so that it falls under item 138 thereof,
as contended by the assessees. The High Court referred to decisions of other
High Courts and came o the conclusion that the stand of Sales Tax authorities
110 reads thus :
Sl. Description of the goods Point of Rate of No. levy Tax %
------------------------------------------------------------ 110. Paints, colours,
dry At the point 10 distempers, varnishes and of first sale blacks cellulose
lacquers, in the state.
including metal polishing bars (but not boot polish), pigments, indigo,
enamels, cement based waterpaints, oilbound distemper, water pigments finishes
for leather, plastic emulsion paints, turpentine oil, bale oil, white oil and
Item 138 covers dyes and chemicals not otherwise specified in the Schedule.
attention was invited by learned counsel for the assessees to the judgments of
the Madhya Pradesh, Rajasthan and Gujarat High Court and we now refer to them
In N. Ganu
Bhai vs. Commissioner of Sales Tax, Madhya Pradesh, 36 S.T.C. 421, the dispute
was whether ultramarine blue, or "neel", was taxable under Entry 25
of Part II of Schedule II of the Madhya Pradesh General Sales Tax Act, 1958, or
under the residuary entry in Part VI of Schedule II of that Act. The former
entry at the relevant time covered dyes and the Sales Tax authorities contended
that ultramarine blue was a dye and should be taxed as such. The High Court
referred to the Concise Oxford Dictionary which stated that ultramarine blue
was a pigment made from lapis lazuli. It referred to Chambers's Encyclopaedia
which stated that blue pigments in common use by artists consisted of native
and artificial ultramarine, cobalt, indigo an prussian blue. It then referred
to the dictionary meaning of `dye'. It found :
Ultramarine blue is (a) pigment got either form "lapis lazuli" or
artificially by mixing clay, carbonate of soda, sulphur and resin, (b) that
when obtained from lapis lazuli or cobalt, it can be permanent and can be used
by artists for painting skies and distances in landscapes, (c) when obtained
artificially is not permanent, (d) also the base for a powder used by laundresses.
Treating neel as a dye arises out of the failure to distinguish "dye"
in its true meaning from a pigment and from the "blue, a powder used by
laundresses". This powder cannot be used to impregnate tissues when the
material is in a raw state to yield more permanent results. It is not capable
of being fixed to the fabric as when it is used on the fabric it is fugitive,
not fast to light, nor resistant to action of water and is not capable of
diluting acids or alkalies. It is not seriously disputed acids or alkalies. It
is not seriously disputed that neel is used after the clothes are washed,
usually at the first rinsing, and that with each rinsing it gets washed away.
cannot resist or withstand the use of detergents or even washing- soda which is
alkaline in nature.
it is neither a direct dye nor a mordant." The High Court concluded that
ultramarine blue was not a dye.
Bhai's case considers whether ultramarine blue, or "neel" is a dye .
In so doing it finds that ultramarine blue or "neel" is a pigment.
The case, far from supporting the assessees, is against them.
Assistant Commercial Taxes Officer, Jodhpur vs. Rajasthan Chemical Corporation, 65 S.T.C 356, the question was
whether ultramarine blue or "neel" was included in the term
`pigment'. The Board of Revenue for Rajasthan, from whose order a reference was
made to the High Court, had posed the question whether ultramarine blue or
"neel" in common parlance was covered by the expression
"pigment". The Board had not gone into the question but had relied
upon on an earlier decision where the Board had held that ultramarine blue
could not be considered to be pigment. (No details of the material that was
before the Board on the earlier occasion are set out in the High Court's judgment).
High Court said that the word "pigment" in the relevant entry had
been used along with dyes, paints, varnishes and dry colours. The dictionary
meaning of the word "pigment" was "any substance used for colouring
: that which gives colour to animal and vegetable tissues". Pigment brown,
pigment caramine, pigment chrome yellow, etc. were used to convey colouring, by
particular colours. Ultramarine blue or `neel' was not a colour. In common
parlance, ultramarine blue or `neel' was understood as a substance which was
used to whiten clothes. It was not understood as a colour. It was a whitening
agent for laundry purposes, used by washermen or by house-holders. Ultramarine
blue was not a colour as it was used to whiten clothes. Ultramarine blue was
not a pigment.
have some difficulty with the reasoning of Rajasthan Chemical Corporations'
decision. According to the High Court itself, ultramarine blue is used to
whiten clothes. We do not, therefore, follow why it is not a colour or colouring
material or why it is not a pigment.
In Union of India 7 Ors. vs.
C.M.C India, Ahmedabad, 1979 E.L.T. 298, considerable evidence had been led by
the assessee and little by the Sales Tax authorities. The Gujarat High Court
noted the evidence of the assessee's witness that the terms used in the
relevant tariff entry were technical terms, that is, terms used by
the High Court said, supported the assessee's case that "ultramarine blue
is not known as a pigment in common parlance and that it is known only as
ultramarine blue". The evidence showed that "only those persons who
were conversant with properties of ultramarine blue may call it as a pigment in
scientific term, but so far as business community is concerned, it is known
only as ultramarine blue ...........
it is found from his evidence and other evidence on record that ultramarine
blue is used mainly for the purpose of heightening the whiteness of things to
which it is applied. Under these circumstances, even though according to the
chemical tests, it can be said to be a pigment, it is not known as such and in
the business community or by persons who are dealing with it..... He further
admits that in the market, the substances in question is known as ultramarine
blue .........." The evidence established, the High Court said, that the
product manufactured by the assessees was known only as ultramarine blue by
consumers and the commercial community. The Excise authorities had not been
able to controvert by evidence the case of the assessees that the particular
product was known only as ultramarine blue not only to the manufacturers and
traders but even to the common people. In the absence of any evidence on the
point, the High Court said, it would be hazardous to interpret the term
"pigment" in the entry as suggested by the Excise authorities.
seems to us that the focus in the case before the Gujarat High Court was mis-directed.
That the assessee's product was ultramarine blue was not in dispute. What was
in dispute was whether utlramarine blue was known as a pigment or whether it
was considered to fall under some other broad or generic description.
Madras High Court in the judgment under appeal referred in extenso to the
judgment of a learned single Judge of the Calcutta High Court in M/s. Nilsin
of Central Excise, 1984 ECR 928. The issue before the Calcutta High Court was
whether ultramarine blue was a pigment for the purposes of assessment under
item 14 (1) (5) The learned Judge said :
The respondents in paragraph 17 of the affidavit-in-opposition have averred
that in paints like emulsion paints or water paints, pigment finishes for
leather, printing ink, textile printing, Ultramarine Blue is compounded in
larger proportion. They have also set out in paragraph 18 of their expression
pigment given in various Coating by Paul Nylen and Edward Sunderland, `pigment'
as the `internationally accepted term for the powdered material intended to be
production of paints, printing inks, plastic materials, rubbers, vitrine
enamels.' In the said book Ultramarine Blue has been classified as a synthetic
and inorganic pigment. The respondents have also relied upon Webster's 3rd
International Dictionary, 1968, page 1714 which describes `pigment', inter alia
as a natural or synthetic inorganic or organic substance that imparts a colour
including black or white to other materials especially, a powder or easily
powdered substance mixed soluble and used in making paints, enamels and other
coating materials, inks, plastic, rubber and also for imparting opacity and
other desirable properties as well as colour.
After the hearing was concluded, the learned Advocate for the petitioner placed
before me the Condensed Chemical Dictionary. 10th Edn. revised by Gessner G.
Hawley, published by Van Nostrant Reinhold Co. Incidentally, the respondents in
paragraph 17 of their affidavit- in-opposition had relied upon he 1953 edition
of Van Nostrand's Chemical Dictionary for the definition of `pigment' as a colouring
substance. The said Condensed Chemical Dictionary Claims to contain three
distinct types of information, namely, (i) technical descriptions (ii) extended
definition, and (iii) descriptions or identifications of wide range of trade
said Dictionary, in my view, does not support he claim laid by the petitioner.
Thus at page 1068 of the said Dictionary the properties of Ultramarine Blue
have been, inter alia, described as "Inorganic pigment ; blue powder ;
alkali and heat resistance..." The said Dictionary mentions the following
uses of Ultramarine Blue : "Colorant for machinery and toy enamels ; white
baking enamels :
inks, rubber products, soaps and laundry blues, cosmetics, textile
printing." "Note : Used in very low percentage to intensify whiteness
of white enamels rubber compounds, laundered clothing etc.
offsetting yellowish undertones ; gives a `blue' rather than a `yellow'
white". According to the same Dictionary, the expression
"Colorant" means any substance that imparts colour to another
material or mixture". Colourants are either dyes or pigments" (vide
page 267 of the book). I may also refer to the definition of `pigment' given at
page 817 of the said Condensed Chemical Dictionary :- "Any substance,
usually in the form of a dry powder, that imparts colour in another substance
or mixture, Most pigments are insoluble in inorganic solvents and water... To
qualify as a pigment, a material must have positive colorant value." The
definition given in the said book excludes certain substances including whiting.
is not correct in contending that Ultramarine Blue is whiting because,
according to the said dictionary, whiting is entirely a distinct product
consisting of finely ground, naturally occurring calcium carbonate derived form
chalk, limestone, etc. and used as filter, putty, etc. One of the properties of
Ultramarine Blue is that it is a whitener, i.e. a white pigment or colorant
used in the paper and textile industries (vide Condensed Chemical Dictionary,
I conclude that the condensed Chemical Dictionary, 10th Edn., relied upon by
the petitioners shows that ultramarine Blue is a pigment having various uses
one of which is whitening or brightening textiles and clothes.
For the foregoing reasons, I conclude that there is overwhelming evidence that
Ultramarine Blue is a pigment.
Blue does no constitute a separate product as contended by the petitioner.
People conversant with and dealing with the said product understand Ultramarine
Blue as a pigment, i.e. as a colorant.
used for imparting colour to various substances. Thus, not only from he
stand-point of its physical constituents but also from the stand-point of its
various uses and of popular understanding Ultramarine Blue is a pigment. In
this connection, it is also necessary to note the comprehensive manner in which
the entry No.14 gave description of the goods which were subject to the rate of
duty specified in the said item. Item No. 14 (1) (5) was broadly in the form of
a residuary clause for inclusion of pigments, colours, paints and enamels not
otherwise specified. Thus, pigments, colours, paints and enamels which have not
been mentioned in any other sub items would be covered by Item 14 (1) (5) of
the First Schedule to the Central Excises and Salt Act, 1944. Accordingly, I
hold that the petitioner is not entitled o challenge the validity of the excise
duties imposed upon the product Ultramarine Blue manufactured by the
petitioner. No question also arises of commanding the respondents to refund excise
duties recovered from the petitioner under Item No. 14 (1) (5) of the First
Schedule to the Central Excises & Salt Act, 1944".
Madras High Court in the judgment under appeal rightly relied strongly on the
Calcutta High Court decision to come to the conclusion that ultramarine blue
was a pigment and, therefore, liable to sales tax under Item 110.
the assessees nor the Sales Tax authorities place any evidence before the Tamil
Nadu Sales Tax Appellate Tribunal or before the High Court. They preferred to
rely upon the decisions of the High Courts aforementioned. We are in no doubt
that ultramarine blue or `neel' is a pigment, having regard to the dictionaries
and literature mentioned in the decisions which we have discussed above and
that, having regard to its use as a whitener or colouring matter, it is
popularly understood to be a pigment.
the appeals are dismisses with no order as to costs.