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TMI Blog1989 (2) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... , Senior Advocate (Mrs. Janaki Ramachandran, Advocate, with him), for the respondents in C.A. Nos. 2665 to 2672 of 1981. [Judgment per : Ranganathan, J.].- All these civil appeals and special leave petitions raise a common question as to the interpretation of an expression used in the Central Sales Tax Act. Some of these matters arise out of judgments of the High Court in Tax Revision cases and some out of judgments in writ petitions but the point involved is the same. In view of the pendency of the appeals, we grant leave in the special leave petitions after condoning the delay in filing some of them and proceed to dispose of all the appeals by a common order. 2. The respondents are all dealers in hides and skins carrying on business in the State of Tamil Nadu. As is well known, raw hides and skins undergo various processes such as cutting, tanning, dyeing, dressing and finishing before they get converted into finished leather and assume a condition fit for the manufacture of various kinds of leather articles. The dispute in these appeals is in regard to two items of goods that are sold by these assessees viz. leather splits and coloured leather. The splits are the cut pieces, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dressed skins. In 27 S.T.C page 385 the Orissa High Court has held that if steel plates are cut to sizes, they cease to be the original product. What should be considered is whether those leather splits are commercially understood as dressed hides and skins. If they are understood only as just skins as claimed, there is no need to call them as splits in commercial parlance. The Courts have repeatedly ruled that the entries in the Act should be treated only as understood by the Trade. These splits were produced before the Board at the time of hearing. They were found to be thin pieces which can be utilised only for miscellaneous purposes. The contention that these leather splits continue to be dressed skins and are declared goods of interstate importance, is untenable. The assessing officer was therefore right in treating these splits as scraps and taxing them at the multipoint rate, and in the absence of 'C' forms, at 10%. As regards the coloured skins, once the dressed skins bought are split and the upper layer of uniform size is coloured or dyed, such coloured skins become different products. They are finished leather sold as coloured skins and not as dressed skins. They are com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessees are entitled to the benefit of Sections 14 and 15 of the CST Act in respect of the two items in question. As far as the first item is concerned, it is common ground that leather splits are nothing but cut pieces of hides and skins. We fail to see how they cease to be hides and skins. It is no doubt true that they are cheaper and have a separate name but the name only indicates that they are cut pieces. It is not because they have ceased to be hides and skins and constitute a different commercial commodity that they are called 'scraps'. Some of the dealers purchase and sell such splits and such turnover is considerable. There is no material to suggest that they are useless or worthless articles. A loose description of them as 'scrap' cannot deprive them of the benefit of S. 14 of the Act. 6. Turning to coloured leather, we may, at the outset, refer to a very important circumstance referred to by the respondents. When the CST Act came into force on 1-4-1957, a question was raised regarding the meaning of the expression 'hides and skins in dressed state' used in S. 14. The matter was referred to the leather development wing of the Ministry of Commerce and Industry whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi Stock Exchange, 1979 - 4 SCC 565, and Vorghese v. ITO, (1981) 131 ITR 597 that a contemporaneous exposition by the administrative authorities is a very useful and relevant guide to the interpretation of the expressions used in a statute. Considering that the above clarification was sought for at the earliest point of time when a doubt arose as to the scope of the expression used by the statute and given after considering the technicalities of the processes employed in the manufacture of finished leather by the department fully conversant with this branch of trade and in the context of the provisions of this very statute, the terms of the statute can well be construed by reference to such exposition, in the absence of anything in the statute to indicate the contrary. Indeed, "such interpretation should be shown to be clearly wrong before it is overturned." Can it then be said that the view expressed above is clearly wrong ? We think not; on the contrary, it is seen to be quite correct. The statutory expression refers to "hides and skins in a dressed state". The guidelines issued for identification of 'finished' leather for exports by the Indian Standards Institution (ISI) ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it is practically the same as giving finishing touches to the leather and making it suitable for the manufacture of particular types of goods. 10. Sri Sen invited our attention, apart from the contemporaneous exposition by the Department, to the findings of the Tribunal in this regard in an earlier case which had not been appealed against by the Department. The Tribunal had said : We have carefully considered the records as well as the arguments. We have seen the specimens of the articles sold. Bits of the same are also on record. We have carefully scrutinised the same. We are unable to say that what the appellants had sold is not leather or in other words dressed hides and skins. The fact that the appellant has done some more finishing would not take away the resultant product from the classification. We do find that the clarification issued by the Board of Revenue, Madras and the Government of India supports the appellants case. The expert opinion which only says that the resultant product has undergone some chemical changes observed as under : "It is surely a different product, because it is a finished leather. It however, retains the leathery properties of the dressed le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing) in order to make it suitable for the purpose for which it is required in commercial usage. Part V of the "Wealth of India", a publication of the Council of Scientific and Industrial Research (1966), dealing with leather under "Industrial Products" explains that "hides and skins are liable to putrefaction and loss unless suitably treated and converted into leather.'' Structurally, hides and skins have a thick middle layer called corium, which is converted to leather by tanning. The operations involved in leather manufacture however fall into three groups. Pre-tanning operations include soaking, liming, deliming, bating and pickling, and post tanning operations are splitting and shaving, neutralising, bleaching, dyeing, fat-liquoring and stuffing, setting out, samming, drying, staking and finishing. These operations bring about chemical changes in the leather substance and influence the physical characteristics of the leather, and different varieties of commercial leather are obtained by suitably adjusting the manufacturing operations. These processes need not be gone into in detail but the passages relied upon clearly show that hides and skins are termed 'leather' even as so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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