M/S.
Indian Rayon & Industries Ltd., M/S. J.K. White Cement Vs. Collector of
Central Excise, Jaipur [1998] INSC 293 (12 May 1998)
Sujata
V. Manohar, D.P. Wadhwa Mrs. Sujata V. Manohar, J.
ACT:
HEAD NOTE:
With
CIVIL APPEAL NO. 6030 OF 1994
M/s.
J.K White Cement Works and M/s. Indian Rayon and Industries Ltd., the two
appellants herein, are engaged in the manufacture of rapid hardening white
cement. The dispute relates to the classification of white cement produced by
these appellants under the Central Exciso Tariff in force at the relevant time.
In the case of J.K. White Cement Works, the period of disputed classification
if 16.21985 to 28.2.1986 and 1.3.1986 to 28.2.1992. In the case of Indian Rayon
and Industries Ltd. the relevant period is 26.4.1991 to 28.2.1992.
For
the period prior to 28.2.1986, the relevant Tariff Entry for cement was Tariff
Entry 23. After coming into force of the new Excise Tariff from 28.2.1986, the
relevant Entry is 2502. There was a change in the Entry 2502 with which we are
concerned, w.e.f. 1.3.192. The amended Tariff Entry 2502.21 thereafter covered
rapid hardening white cement. The relevant Entries for the three periods are as
follows :
(a)
Prior to 28-2-1986
------------------------------------------------------------
23.
CEMENT ALL VARIETIES Rs. 250/- 10% of the
(i)
Grey Portland Cement Per MT basic duty ch- (including Ordinary Portland argeable
Cement, Portland-Pozzolana Cement and Portland slag cement), masonry cement,
rapid hardening cement, low heat cement and waterproof (hydro- phobic) cement.
(ii)
All Others 40% ad -do- valorem
------------------------------------------------------------ (b) From 28-2-1986
------------------------------------------------------------ Heading Sub-
Description of goods Rate of Duty Heading
------------------------------------------------------------ 25.02 Cement
Clinkers; Cement all sorts
------------------------------------------------------------ 2502.10 Cement
Clinkers 12% ------------------------------------------------------------ 2502.20
Grey Portland Cement (including ordinary portland cement, prot- Rs. 225 land pozzolana
cement and port- Per Tonne land slag cement), masonry cement, rapid hardening
cement, low-heat cement and water-proof hydrophobic cement.
------------------------------------------------------------
...............
------------------------------------------------------------
....................
------------------------------------------------------------
2502.90 Other 40% ------------------------------------------------------------
(c) From 1-3-1992 ------------------------------------------------------------
Heading Sub- Description of goods Rate of Heading Duty
------------------------------------------------------------ 25.02 Cement
clinkers; cement all sorts ------------------------------------------------------------
2502.10 Cement clinkers Portland 10% Cement
------------------------------------------------------------ 2502.21 White
Cement, whether or 40% + Rs. not artificially coloured 250 per and whether or
not with tonne rapid hardening properties
------------------------------------------------------------ 2502.29 Other 40%
+ Rs.250 per tonne ------------------------------------------------------------
....................
------------------------------------------------------------
In respect of the period prior to 28.2.1986, the Tribunal has held that Entry
23(i) is applicable only to grey portland cement. "Rapid hardening
cement" in Entry 23(i) refers, according to the Tribunal, only to grey portland
cement which has a rapid hardening quality. Since the Item manufactured by the
appellants is white cement and not grey cement with rapid hardening quality, it
falls under the Residuary Entry 23(ii). According to the assessees, each item
in Tariff Entry 23(i) has to be read separately. Rapid hardening cement whether
it is grey or white will be covered by Entry 23(i). Hence it will not fall
under Entry 23(ii). In the same manner from 28.2.1986, to 1.3.1992, the
Tribunal has held that the correct classification of the Item produced by the
appellants is under 2502.90 which is the Residuary Entry. While according to t
he appellants, the correct classification would be under Entry 2502.20. These
Entries are similar to old Entries 23(i) and 23(ii). From 1.3.1992, Entry 2502.21
covers the case because it expressly deals with white cement whether or not
with rapid hardening quality.
The
Tribunal has held that white cement will not fall under Entry 23(i) of 2502.20.
The appellants had produced considerable literature before the Tribunal in
order to show that the cement produced by them has rapid hardening quality. In
this connection, the appellants relied on the publicity catalogue of white
cement called `The Technology of White Concrete' published by Aalborg Portland,
Denmark.
The
catalogue mentions, "Danish white cement is produced in special plants
which are completely separated from the production of grey cement and Danish
White Cement fulfils the requirements of most countries to rapid-hardening
cement, thus for instance, the British standard 12 : 1958.
The
most essential differences from ordinary rapid-hardening cement are whiteness
and a particularly low alkali-content." The appellants also relied upon a
test certificate from Shriram Institute for Industrial Research which tested a
sample of rapid hardening J.K. White Cement. The test results are set out in
the test certificate and the Institute has certified that the sample conformed
to IS : 8041.78 is to the Indian standard specification for rapid hardening
cement. The appellants possess a licence for the manufacture of IS : 8041.78
rapid hardening cement. The Appellants have also relied upon the test report of
the Department of Civil Engineering, University of Roorkee which states that
J.K. White Cement has also got rapid hardening property as it has satisfied the
requirements of IS:8041.78.
It is
also mentioned there that J.K. White Protland Cement can be used as rapid
hardening portland cement since it has got all the properties of rapid
hardening cement. In general, white cement can be ordinary or of rapid
hardening nature like grey rapid hardening and grey ordinary cement because the
rapid hardening property of white or grey cement is due to its physical and
chemical properties irrespective of colour. The colour of the cement is not t
he criterion for achieving rapid hardening property. Rapid hardening white
cement can be used in the preparation of masonry structural finishes.
Another
report was also obtained by the Department from the National Council for Cement
and Building Material, Ballabhgarh testing the physical properties of the white
cement manufactured by the appellants. The test report has stated that the
compressive stress of cement on one day was 230 kg/CM2 as against "not
less that 160 kg/CM2 per rapid hardening cement". These test results also
confirm that the cement produced by the appellants conforms to the ISI
specifications for rapid hardening portland cement IS : 8041 : 1978. In fact,
the adjudicating officer has held that the white cement manufactured by the
appellant thus conforms to the properties of rapid hardening cement. However,
because it is white in colour, the Department has held that it will fall under
Tariff Entry 23(i) or 2502.20.
Learned
counsel for the respondent has drawn our attention to a decision of this Court
(to which one of us was a part) in the case of Kajaria Exports Ltd. & Ors.
V. Union of India & Ors. (1995 Supp. (3) SCC 61) where this Court held that
white cement and ordinary grey portland cement are two different commercial commodities
both in commercial parlance and in technical composition. In the present case,
however, the appellants do not seek to include ordinary white cement without
rapid hardening properties in Tariff Item 23(i) or 2502.20. In these two Tariff
Entries, apart from grey portland cement, there are other kinds of cement which
are mentioned without any reference to their colour but with reference to their
properties. Thus, the Entry includes rapid hardening cement, low heat cement
and water proof hydrophobic cement. The appellants have produced enough
technical material to show that rapid hardening cement can be grey portland or white. Since these Items in the
Tariff Entry 23(i) and 2502.20, have no nexus with the colour of the cement,
unlike the first Item which is expressly grey portland cement, we do not see
why the other kinds of cement referred to in the Entry should be confined only
to cement of grey colour. The rapid hardening property has no correlation with
the colour of the cement. Hence, in our view, the Tribunal was not right in
excluding rapid hardening cement having white colour from classification under
the Head "Rapid Hardening Cement" in Entry 23.1 or 2502.20. It is
also necessary to note, in this connection, that ISI specification also has two
different specifications, 8041.78 for rapid hardening cement and 8042 : 1978
for rapid hardening cement and 8042 : 1978 for white cement. The product of the
appellants is licensed under both these specifications. The Tribunal has placed
emphasis on the cement manufactured by the appellants being sold as white
cement. This emphasis does not appear justified. All white cements do not
possess rapid hardening properties. The cement manufactured by the appellants
is a special kind of white cement having rapid hardening properties. It is used
for giving a finish to structures and for other decorative purposes. Since it
possesses rapid hardening qualities and is cement, it must be classified as
rapid hardening cement.
It
cannot, therefore, fall under the Residuary Item 23(ii) or 2502.90.
In the
premises, the appeals are allowed, the impugned judgment and order of the
Tribunal is set aside and the appellants' contention that prior to 28.2.1986
the Item manufactured by them was classifiable under Tariff Item 23(i) while
after 28.2.1986 and upto 1.3.1992, it was classifiable under Tariff Item
2502.20 is upheld. The appellants will be entitled to all consequential reliefs
in accordance with law. There will, however, be no order as to costs.
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