Full Judgment Text
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PETITIONER:
M/S. INDIAN RAYON & INDUSTRIES LTD., M/S. J.K. WHITE CEMENT
Vs.
RESPONDENT:
COLLECTOR OF CENTRAL EXCISE, JAIPUR
DATE OF JUDGMENT: 12/05/1998
BENCH:
SUJATA V. MANOHAR, D.P. WADHWA
ACT:
HEADNOTE:
JUDGMENT:
With
CIVIL APPEAL NO. 6030 OF 1994
J U D G M E N T
Mrs. Sujata V. Manohar, J.
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
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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
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(b) From 28-2-1986
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Heading Sub- Description of goods Rate of Duty
Heading
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25.02 Cement Clinkers; Cement all
sorts
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2502.10 Cement Clinkers 12%
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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.
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...............
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....................
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2502.90 Other 40%
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(c) From 1-3-1992
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Heading Sub- Description of goods Rate of
Heading Duty
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25.02 Cement clinkers; cement
all sorts
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2502.10 Cement clinkers Portland 10%
Cement
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2502.21 White Cement, whether or 40% + Rs.
not artificially coloured 250 per
and whether or not with tonne
rapid hardening properties
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2502.29 Other 40% + Rs.
250 per
tonne
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....................
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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
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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
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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.