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TMI Blog1986 (6) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... nd accordingly they are more appropriately assessable to duty under Heading 73.15(1) of the Schedule. 2. The identical question arises in regard to another import of the same goods in Appeal No. 1950/85-B2 (C.C., Bombay v. Rashtriya Chemicals and Fertilizers Ltd., Bombay). Our decision herein governs that appeal also. 3. It was contended by Shri Gopinath for the appellant before us inter alia that- (a) the relevant heading for the Entry 73.15 in the Schedule, in so far material is alloy steel and high carbon steel . That was sub-divided into stainless steel (coils, rods, wire rods, strips, sheets and plates) and those not elsewhere specified . It is obvious, therefore, that stainless steel is also an alloy steel and it cannot be concluded that just because the goods were of alloy steel they cannot be stainless steel . The conclusion of the Collector (Appeals) to the effect that the goods are not stainless steel because they are made of alloy steel is neither correct nor conclusive on the issue. The goods have necessarily to be alloy steel before they can be classified as of stainless steel or otherwise. Accordingly, the order of the Collector (Appeals) suffers from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 to 30% chromium. The inherent oxidation resistance in ferritic stainless steels is taken advantage of in their wide usage as high temperature cracking tubes in the petroleum industry as heat resisters furnace parts and heat treating fixtures; [Appendix II - ibid] vi) in the McGraw Hill Dictionary (1982) as well, stainless steel is a generic description applied to a wide range of iron alloys containing more than 10% chromium. These alloys can be divided into various groups, those containing chromium and those containing nickel and chromium. (e) there is no definition of stainless steel in the Act or the Schedule. Nevertheless, by the Customs Tariff (Amendment) Bill, 1985, the Schedule is substituted and in Chapter 72 of the substituted Schedule stainless steel had been defined to mean alloy steels containing, by weight, 1.2% or less of carbon and 10.5% or more of chromium, with or without other elements . The said definition is applicable in the absence of a definition in the earlier Act as a exposition by Parliament of its intent [Reliance on (1) AIR 1969 S.C. 1089- (Jogindernath Naskar v. CIT); (2) AIR 1976 S.C. 2520 - (Sone Valley Protland Cement Co. v. General Min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an alloy of the metal which is predominant by weight over the sum total of all others. The goods were of ferrous alloy steel but not stainless steel because the iron content was less than 50%. Even the ASTM standards require that a nickel - iron - chromium alloy should be composed of 30 to 35% of nickel, 19 to 23% of chromium and 39.5% of iron. The goods under import corresponds with a nickel-chromium-iron alloy as described in ASTM rather than with stainless steel ; (e) in the absence of a statutory definition in the Customs Tariff Act, 1972, one will have to go by a meaning given to stainless steel in commercial parlance; (f) the ISI specification relied upon by the appellant is altogether silent about the iron content; (g) the definition of stainless steel in the new tariff is inapplicable since it had not been given a retrospective effect by the use of appropriate language; (h) thus, while it may be that the imported goods were a form of ferrous alloy, they are not stainless steel . 5. In reply, Shri Gopinath drew our attention to the requirement in note (3) of Section XV of predominance over each of the constituent metals rather than the sum total of all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (relied upon for the Appellant herein) is what is known as the rule of Parliamentary exposition. In AIR 1969 S.C. 1089 (cited for the appellant) a question as to whether an individual in S.30 of the Income Tax Act, 1922, took within its scope and ambit a Hindu deity, came up for consideration. It was held, after a review of the case law, including AIR 1957 S.C. 832 = 1958 SCR 1-Commissioner of Income Tax v. Sodra Devi) that a Hindu deity, in law, can symbolise a legal person to the extent it represents the particular purpose indicated by the donor of the property gifted or endowed, and, accordingly, a Hindu deity falls within the meaning of the word individual . After having come to an affirmative conclusion on that issue, as it were, their Lordships D.C. Shah, V. Ramaswamy and A.N. Grover, JJ = judgment by V. Ramaswamy J.] while repelling an argument of the appellant to the effect that a restricted meaning was to be given to the word individual in the 1922 Act, seeing that unlike in that Act, the definition of the word persons in the later Income Tax-Act, 1961, included categorically within its scope, not only an individual but every artificial juridical person , that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Bench of the Hon ble Supreme Court that decided AIR 1969 S.C. 1089 - supra - [Judgement again by Ramaswamy J.], while construing the word assessed in SS 18A(3) and 23 B of the Income Tax Act, 1922. Repelling an argument that Ss 210 and 212 of the Income tax Act, 1961 were a Parliamentary exposition of S.18A(3) of the 1922 Act, their Lordships observed - There is nothing in 1961 Act to suggest that Parliament intended to explain the meaning or clear up doubts about the meaning of the word assessed" in s.l8A(3) of the earlier Act. Generally speaking, a subsequent Act of Parliament affords no useful guide to the meaning of another Act which came into existence before the later one was ever framed. Under special circumstances, the law does, however, admit of a subsequent Act to be resorted to for this purpose but the conditions under which the later Act may be resorted to for the interpretation of the earlier Act are strict; both must be laws on the same subject and the part of the earlier Act which it is sought to construe must be ambiguous and capable of different meanings. For example, in Kirkness (Inspector of Taxes) v. John Hudson Co. Ltd., 1955 A.C. 696, it was held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... = 1983 E.L.T. 1566 -Dunlop India Ltd. v. Union of India - the question was if V.P. Latex was not rubber raw , classifiable under Item 39 of the Import. Tariff, 1934], AIR 1977 S.C. 1638 [State of West Bengal v. Washi Ahmed - The issue was if vegetable was included green ginger ], AIR 1980 S.C. 1552 = 1980 E.L.T. 383 (S.C.) [Delhi Cloth and General Mills v. State of Rajasthan and others - the issue was if rayon tyre cord fabric was a rayon fabric], AIR 1981 S.C. 1079 = 1981 E.L.T. 325 (S.C.) [Indo International Industries v. CIT - the issue was if clinical syringes were glassware]; and (iv)a fourth rule is the construction of a scientific or technical word. If it is a word which is of a technical or scientific character, then it must be construed according to that which is its primary meaning, namely, its technical or scientific meaning - [Per Fry 3. in (1881) 16 Ch. D. 718 at 720 - Holt Co. v. Collyer] adverted to but not. adopted in AIR 1967 S.C. 1454 [The Commissioner of Sales Tax v. M/s. Jaswant Singh - Construction of the word charcoal ]; (e) notwithstanding the apparent adoption of the rule of commercial or popular usage or common parlance for such words as m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nickel to the extent of 32.5% are neither martensitic stainless steels , nor austenitic stainless steels ; (vi) however, a survey of the composition of various stainless steels at p.23-39 to 23-43 in the Chemical Engineer s Handbook would reveal that in only two cases the nickel content ranges between 29% to 3.3-37%, thus approximating to the nickel content in the goods in question. They are carpenter stainless steel - No.20, (nickel content 29%), and Cast 15-3.5 Alloy H.T. (Nickel content 33-37%). But then both of them do not contain either sulphur or aluminium or titanium (which are present in the goods in question) and the composition of other elements also vary from that of the imported goods; (vii) a reference to ASTM - A 240 - 80b - dealing with chromium nickel stainless steels and relied upon by the appellant would also reveal that there is no steel listed therein where the content of nickel exceeds 22%. On the contrary the composition of nickel-iron-chromium alloy in ASTM - B 409 - 80 approximates to the composition of the goods in question; (viii) nor does it appear possible to contend that the goods are not of stainless steel merely because they contain le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sage or common parlance. The definition cannot therefore become otiose, there is, therefore, no question of construing the said expression in the light of the definition thereof given in the Customs Tariff (Amendment) Bill, 1985; (ii) even assuming, however, that the definition of stainless steel occurring in the Customs Tariff (Amendment) Bill, 1985, can be applied to the import in question, the resort to it does not appear to advance the case of the Appellant; (iii) as already observed, alloy steel had been defined in Chapter 73 of the Schedule as it existed at the material time and stainless steel was left undefined - as a species of alloy steel . The scheme was different altogether in the Customs Tariff (Amendment) Bill, 1985. stainless steel was defined as an alloy steel containing 1.2% or less of carbon and 1.0.5% or more of chromium with or without other elements. Other alloy steel ( steels not complying with the definition of stainless steel and......) was separately defined; (iv) going by the definition in the Customs Tariff (Amendment Bill, 1985, most of the nickel-iron-chromium alloys are stainless steel , for several of them contain chromium in excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant. Shri A.N. Haksar, Advocate, for the Respondent. [Order per : M. Gouri Shanker Murthy, Member (J)]. - The short question that arises for consideration in this appeal by the Collector of Customs, Bombay, is as to whether the goods imported (named Incoloy-800) conform to the specification, composition and description of stainless steel , so as to be assessable to duty under Item No. 73.15(2) of .the First Schedule to the Customs Tariff Act, 1975 (the Schedule and the Act for short), or they are assessable to duty under Item 73.15(1) of the Schedule as goods not elsewhere specified . While the Asstt. Collector had held them to be assessable to duty under Item 73.15(2) on the ground that the goods conform to the definition of stainless steel , the Collector (Appeals) had held that they were alloy steel sheets and not stainless steel sheets and accordingly they are more appropriately assessable to duty under Heading 73.15(1) of the Schedule. 2. The identical question arises in regard to another import of the same goods in Appeal No. 1950/85-B2 (C.C., Bombay v. Rashtriya Chemicals and Fertilizers Ltd., Bombay). Our decision herein governs that appeal also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her than carbon. They are generally classified as carbon steel, alloy steel, corrosion and heat resisting steels and tool steel ; [ibid] iii) steel containing alloying elements intentionally added to impart desired mechanical or chemical properties not otherwise obtainable with iron and carbon alone, is known as alloy steel ;[ibid] iv) stainless and heat resisting steels is a generic term. It does not designate any one steel but rather a whole family of steels, the common characteristic of which is their comparatively high chromium content... Hence their general corrosion and high temperature oxidation resistance increases with an increase in the chromium content; [Appendix II - Ibid] v) while martensitic (stainless steels) contain from 11.5 to 18% chromium, ferritic stainless steels (stainless iron) contain from 18 to 30% chromium. The inherent oxidation resistance in ferritic stainless steels is taken advantage of in their wide usage as high temperature cracking tubes in the petroleum industry as heat resisters furnace parts and heat treating fixtures; [Appendix II - ibid] vi) in the McGraw Hill Dictionary (1982) as well, stainless steel is a generic description app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontaining iron, chromium and mainly nickel with minor alloys. It is also classified by its micro structure. It is primarily a refined alloy of iron and carbon (carbon content varying from 0.01% to 1.1%). All stainless steel varieties are classified as low alloy iron and steel, wrought stainless steel, cast stainless steel and other cast alleys. Incoloy-800, on the contrary, is actually classified as nickel alloy and not as stainless steel [Reliance on the Chemical Engineer s Handbook 5th Edn. - Perry - Table 23-5]; (c) Incoloy-800 contains higher percentage of nickel as high as 32.5% whereas stainless steel contains maximum of 22% nickel [Reliance on page 23-15 - Chemical engineer s Handbook by Perry - 5th Edition]; (d) in terms of Note 3 of Section XV of the Schedule, an alloy of base metals is to be classified as an alloy of the metal which is predominant by weight over the sum total of all others. The goods were of ferrous alloy steel but not stainless steel because the iron content was less than 50%. Even the ASTM standards require that a nickel - iron - chromium alloy should be composed of 30 to 35% of nickel, 19 to 23% of chromium and 39.5% of iron. The goods under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Viscount Simon in (1946) A.C. 119 (Candian Eagle Oil Co. v. R]. The Court cannot proceed to make good deficiencies, if there may be any. The Court must interpret the statute as it stands and in case of doubt, in a manner favourable to the tax-payer [AIR 1961 S.C. 609 at 612 - C.A. Abraham v. ITO, Kottayam]. The subject is not taxable by inference or analogy, but only by the plain words of a statute applicable to the facts and circumstances of the case [per Lord Kilowen in 1936 A.C.I at 24 - Inland Revenue Commissioners v. Duke of Westminster]. If there is any ambiguity of language in a fiscal statute, benefit of that ambiguity must be given to the assessee [AIR 1960 S.C. 1175 at 1182 = 1960 (3) S.C. 727 at 742 - Commissioner of Income Tax v. Karamchand Premchand Ltd., Ahmedabad]; (ii) a second rule of construction (relied upon for the Appellant herein) is what is known as the rule of Parliamentary exposition. In AIR 1969 S.C. 1089 (cited for the appellant) a question as to whether an individual in S.30 of the Income Tax Act, 1922, took within its scope and ambit a Hindu deity, came up for consideration. It was held, after a review of the case law, including AIR 1957 S.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatute as it existed prior to the amendment. It was observed, sometimes light may be thrown upon the meaning of an act by taking into consideration Parliamentary expositions as revealed by the later Act which amends the earlier one to clear up any doubt or ambiguity. This principle has to be followed, where, as in this case, a particular construction of the earlier Act will render the later incorporated Act ineffectual or otiose or inept. [See Kirkness v. John Hudson Co. 1955 A.C. 696 (H.L.)]. This view also receives support from the decision of this Court in Jogendranath Naskar v. CIT, Calcutta [(1969) 1 SCC 555 = AIR 1969 S.C. 1089] (adverted to supra). The limitations in applying the concept of Parliamentary exposition were laid down in AIR 1969 S.C. 543 [The I.T.O., Kanpur v. Maniram and Others] by the identical Bench of the Hon ble Supreme Court that decided AIR 1969 S.C. 1089 - supra - [Judgement again by Ramaswamy J.], while construing the word assessed in SS 18A(3) and 23 B of the Income Tax Act, 1922. Repelling an argument that Ss 210 and 212 of the Income tax Act, 1961 were a Parliamentary exposition of S.18A(3) of the 1922 Act, their Lordships observed - The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any particular science or art" are to be construed as they are understood in common language [1831 2 D CI 302 at 310]. As was observed by Pollock B in (1876) 1 Ex D 242 at 248, statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning, of course by the words popular sense that sense which people conversant with the subject matter with which the statute is dealing would attribute to it. This rule would appear to have been adopted in AIR 1961 S.C. 1325 [Ramavatar v. Asstt. Sales Tax Officer - issue was if betel leaves were vegetables], 1972 (2) SCC 620 [MMTC v. Union of India - question was if wolfram ore was a metallic ore so as to come within the ambit of item 26 of the Import Tariff, 1934], AIR 1977 SC 597 = 1983 E.L.T. 1566 -Dunlop India Ltd. v. Union of India - the question was if V.P. Latex was not rubber raw , classifiable under Item 39 of the Import. Tariff, 1934], AIR 1977 S.C. 1638 [State of West Bengal v. Washi Ahmed - The issue was if vegetable was included green ginger ], AIR 1980 S.C. 1552 = 1980 E.L.T. 383 (S.C.) [Delhi Cloth and General Mills v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dictionary by J.G. Henderson] (iii) if the chromium content is less than 18% they are classified as Martensitic stainless steels and if more than 18%, the goods may be either ferretic stainless steels (or stainless irons - containing 18 to 30% of chromium) or austenitic stainless steels (or the so called 18-8 grades - of which the chromium content is 18 - 26%; (Annexure II ibid). (iv) austenitic stainless steel contains nickel to the extent of 6 - 20% - (Appendix II - ibid), or 22% P .(.23 - 15 of the Chemical Engineer s Handbook). However, there is no specification of the nickel content in ferretic stainless steels in either in the Appendix II or the Chemical Engineer s Handbook. (v) it is reasonable, in the circumstances, to conclude that the goods, in question, containing chromium to the extent of 21% and nickel to the extent of 32.5% are neither martensitic stainless steels , nor austenitic stainless steels ; (vi) however, a survey of the composition of various stainless steels at p.23-39 to 23-43 in the Chemical Engineer s Handbook would reveal that in only two cases the nickel content ranges between 29% to 3.3-37%, thus approximating to the nickel content in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be resorted to. There is no ambiguity in it and if the expression was not defined, we have to ascertain what it means, rather than resort to the concept of Parliamentary exposition in a bid to discover its meaning from a definition furnished in the succeeding enactment. No construction adopted in this case in accordance with settled principles of statutory interpretation can render the later incorporated Act ineffectual or otiose. If Parliament thought fit to define stainless steel in a particular manner in the succeeding enactment, goods conforming to that definition or description are goods of stainless , notwithstanding that the expression could, but for the statutory definition be construed differently in accordance with the meaning given in scientific treatises or the understanding in popular or commercial usage or common parlance. The definition cannot therefore become otiose, there is, therefore, no question of construing the said expression in the light of the definition thereof given in the Customs Tariff (Amendment) Bill, 1985; (ii) even assuming, however, that the definition of stainless steel occurring in the Customs Tariff (Amendment) Bill, 1985, can be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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