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TMI Blog1993 (6) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... of the term "cast iron castings" and whether the goods involved were in fact cast iron castings or were different finished commercial products. The Tribunal relied on G.O. Ms. No. 383, Revenue(S) dated April 17, 1985, of the Government of Andhra Pradesh wherein the Government clarified under sub-section (2) of section 42 of the Act that "the 'cast iron castings' were covered by the term 'cast iron including ingot moulds, bottom plates' occurring in sub-item (i) of item 2 of the Third Schedule" to the Act. The said clarification was issued by the Government of Andhra Pradesh on the basis of the clarification issued by the Ministry of Finance, Department of Revenue, Government of India, in their Letter F. No. 24/10/80-CT dated January 31, 1984 to the effect that "cast iron castings" were covered by the term "cast iron". The Tribunal also noticed that entry 2 of the Third Schedule to the Act was a verbatim reproduction of section 14(iv)(i) of the Central Sales Tax Act, 1956 and that Government of India in their Letter No. 24/14/76-ST Department of Revenue and Banking, dated February 28, 1977, addressed to all the Finance and Revenue Secretaries of all State Governments and Union Terr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the judgment of a Division Bench of this Court in Adarsh Foundries v. Commissioner of Commercial Taxes [1988] 70 STC 151, rendered in special appeals under section 23 of the Act. The question that fell for decision in that case was whether the Commissioner of Commercial Taxes in exercise of his revisional powers under section 20 of the Act was justified in holding that cast iron castings were not "cast iron" falling within item No. 2(i) of the Third Schedule to the Act and that they were liable to be taxed under section 5(1) of the Act. This Court referred to the said G.O. Ms. No. 383 dated April 17, 1985 and held as follows: "We are directly confronted with the question as to whether, where a clarification under section 42(2) of the Act has been issued by the Government, it is open to the Commissioner to take a view contrary to that and make an assessment according to his interpretation of the provisions in the Schedule or in the section. We are definitely of the view that the Commissioner is bound by the clarification issued by the Government under section 42(2) of the Act. We find support for this view that we take, in the Division Bench ruling of this Court in Munaga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Supreme Court in Pyare Lal Malhotra's case [1976] 37 STC 319 and to a Bench decision of this Court in Surana Industries v. State of Andhra Pradesh [1985] 11 STJ 282 wherein this Court had taken the view that wire made out of wire rod was a distinct commercial commodity and liable to be taxed separately. And then the Bench held as follows: "Coming to the entry in this case the language used is 'cast iron including ingot moulds, bottom plates......." The entry does not speak of any cast iron castings, and uses the word 'including'. Admittedly what the assessee is selling are not cast iron ingot moulds or bottom plates. This particular entry (iv)(i) indicates a reference to declared goods which are in an unfinished form, like pig iron, cast iron, including ingot moulds, bottom plates, iron scrap, etc. Commodities like C.I. pipes or manhole coverings or C.I. bends are finished products for use." Thereafter, the Bench considered the import of the word "including" and held as follows: "In the light of what is said above, the word 'including' in the said entry in section 14 cannot be said to extend to any commodity other than specified therein. Cast iron will i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court upheld the view of the Tribunal that articles sold by the assessee in that case, like C.I. pipes, manhole covers were different commodities from cast iron which was the raw material, and were liable to tax. The question once again arose in Sri Rama Malleable Engineering Works v. State of Andhra Pradesh (W.P. No. 6772 of 1991 decided on 20th June, 1991Andhra Pradesh High Court). In that case, the assessee preferred a writ petition questioning the show cause notice issued by the Joint Commissioner (Legal), Commercial Taxes, proposing to revise under section 20 of the Act the orders of the Appellate Deputy Commissioner (CT) in the assessee's case relating to the assessment year 1980-81. Dismissing the said writ petition at the admission stage, a Division Bench of this Court held as follows: "The Division Bench ruling of this Court in Deccan Engineers v. State Of Andhra Pradesh [1992] 84 STC 92 is binding on this Court. Learned counsel for the petitioner invited our attention to an earlier Division Bench ruling of this Court in Special Appeals Nos. 40, 41 and 47 to 52 of 1984, dated June 18, 1987 (Adarsh Foundries v. Commissioner of Commercial Taxes [1988] 70 STC 151)." Goi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n G.O. 383 Revenue dated April 17, 1985 in coming to the conclusion that the disputed turnover relating to cast iron castings manufactured out of tax-suffered pig iron, cast iron or iron scrap could not be subjected to tax under the Andhra Pradesh General Sales Tax Act. We are in agreement with the Tribunal that G.O. 383 dated April 17, 1984, is fully applicable to this case. The tax revision case consequently fails and it is dismissed." More recently the question again arose in Writ Petition No. 9315 of 1992 (Bengal Iron Corporation v. Commercial Tax Officer). The petitioner in that case claimed to be manufacturer and dealer of the products like cast iron pipes, manhole covers, bends, etc. Its turnover for the assessment year 1989-90 comprising of the sales of the said articles was brought to tax by the Commercial Tax Officer and the petitioner in that case appealed against the same. Pending the said appeal, it sought the quashing of the demand notice in that writ petition. Its contention was that it had collected tax only at the rate of 4 per cent relying on G.O. Ms. No. 383 dated April 17, 1985 and treating the goods manufactured and sold by it as "declared goods" and that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n T.A. No. 766 of 1984 dated April 30, 1986 against which T.R.C. No. 74 of 1987 arises before us. The assessment year in that case was 1980-81. The assessment order dated June 23, 1981, of the assessing authority states that a check of the accounts maintained by the assessee revealed the following turnovers "1. 1st sales of cast iron castings (rice mill Rs. 9,09,794.46 spare parts) 2. Sales tax collections on the above sales Rs. 46,206.50 3. Surcharge collections on the above Rs. 982.49 4. Transport charges collected Rs. 2,847.20 5. 1st sales of cast iron valves. Rs. 28,354.00 6. Sales tax collections on the above. Rs. 2,091.25 7. Surcharge collections on the above Rs. 46.18 8. Transport charges collected Rs. 68.00 9. Collections of amount on job work Rs. 14,117.50 ----------------- Total Rs. 10,04,507.58." ----------------- It further states that the assessee (the respondent herein) claimed exemption in respect of the turnover of Rs. 9,90,390.08 describing the same as "1st sales of cast iron castings, viz., rice mill spare parts and valves" on the ground that the assessee purchased pig iron and iron scrap from the registered dealers in the State and man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iron" used in section 14(iv)(i) of the Central Act would include cast iron castings also. Regarding the process of manufacture, the assessee stated that the cast iron scrap and pig iron would be melted in furnace along with hard coke and only some silicon would be added for certain cast iron casting moulds and the molten liquid would be poured into the moulding boxes of various shapes and sizes. Graphite and bonatite would be used only for the mouldings and other processing but not in the melting. The said castings lifted from the melting boxes would be sold as cast iron castings and these cast iron rough castings would be put to use for particular purpose according to the shapes in which it was moulded-for instance if it was for rice mill parts, it would be used for rice mill parts after grinding, polishing, machining further to the said rough castings and with the assembly of other accessories such as rubber bushes, bolts and nuts and then it would be called finished product of rice mill part which would fall under the category of machinery parts. The assessee also contended that as per the judgment of the Supreme Court in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lds of cast iron and are therefore liable to be taxed even though the raw material from which they are made, i.e., pig iron or cast iron melt or cast iron scrap, have suffered tax earlier. Even the clarifications issued by the Government of India do not say that pig iron and cast iron are one and the same commodities. Therefore, the Commercial Tax Officer was in error in exempting cast iron goods on the ground that pig iron and scrap iron from which they were manufactured, suffered tax. According to him, even if the process of manufacture described by the assessee was taken into consideration, what was manufactured by the assessee from pig iron was entirely a different commodity which was given at the rough stage from the raw material, i.e., pig iron or cast iron melt or cast iron scrap; after grinding, polishing and with the assembly of other accessories referred to by the assessee yet another finished product arose. If the dealer sold the final product that would be liable to tax and if he sold at the rough stage, then also it would be liable to tax at the rough stage. The Deputy Commissioner also relied on the judgment of the Supreme Court in Pyare Lal Malhotra case [1976] 37 ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dule to the Andhra Pradesh General Sales Tax Act, 1957'. This position could not be disputed by the learned State Representative. In the circumstances we answer the question in favour of the assessee and against the department. In the result the appeal is allowed and the disputed turnover is directed to be excluded from the taxable turnover." The assessee in T.R.C. No. 20 of 1989 is the same as the assessee in T.R.C. No. 74 of 1987 and it relates to the next assessment year, i.e., 1981-82. By order dated September 30, 1982, the assessing authority brought to tax the turnover of Rs. 8,38,624.46 relating to sales of cast iron castings including sales tax, surcharge and transport charges collected. The assessee claimed exemption as regards the said turnover on the plea that it purchased pig iron and iron scrap from registered dealers in the State and manufactured cast iron castings after melting the pig iron and scrap iron and that the said cast iron castings were only mouldings of tax-paid pig iron and scrap. The assessing authority rejected the said claim. The assessee appealed to the Appellate Deputy Commissioner questioning the same and the appellate authority allowed the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections on such sales, cartage and forwarding charges, etc., from May 6, 1980 to March 31, 1981. In the appeal before the Appellate Deputy Commissioner, the assessee questioned tax on the turnover of Rs. 1,93,059 on the ground that it related to sales of iron rough castings and mouldings from tax-paid pig iron and iron scrap. The appellate authority after scrutinising the bills found that of the said turnover, a sum of Rs. 75,308 related to sales of finished goods like flanges, pressing machines, etc., which were machine parts liable to tax at 4 per cent as per entry 83 of the First Schedule to the Act and that the remaining turnover of Rs. 1,17,751 related to rough castings or mouldings and would not be liable to tax in view of the clarification of the Central Government that cast iron included cast iron castings. The Joint Commissioner of Commercial Taxes by his order dated May 5, 1986, in exercise of his revisional powers under sub-section (2) of section 20 of the Act set aside the order of the Appellate Deputy Commissioner and brought back the said turnover of Rs. 1,17,751 to tax relying on the decision of the Supreme Court in Pyare Lal Malhotra case [1976] 37 STC 319 and holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso held that the conversion of pig iron into the said goods involved a manufacturing process and that in the said manufacturing process, pig iron and scrap iron completely lost their identity and new commercial commodity, i.e., C.I. pipes and fittings came into being. The assessing authority relied on the judgments of the Supreme Court in Pyare Lal Malhotra case [1976] 37 STC 319 and in Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh [1981] 48 STC 411 and in Ganesh Trading Co. v. State of Haryana [1973] 32 STC 623. The Appellate Deputy Commissioner dismissed the appeals preferred by the assessee against the assessment orders in respect of both the assessment years confirming the assessment orders and holding that the cast iron pipes and specials were manufactured and sold by the assessee and were used for water drainage purposes and that they could not be called as cast iron castings and that the clarification of the Central Government in its letter dated February 28, 1977, referring to cast iron castings did not apply to the said goods. He also held that cast iron specials and pipes were not rough castings. The Tribunal allowed the appeals preferred by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder sub-section (2) of section 20 of the Act by a detailed order dated September 5, 1984. The Sales Tax Appellate Tribunal allowed T.A. No. 769 of 1984 preferred by the assessee against the said revisional order of the Deputy Commissioner, merely following its earlier order in T.A. No. 766 of 1984 without any discussion as regards the nature of the goods involved. In T.R.C. No. 35 of 1987 which relates to the assessment year 1982-83, the business of the assessee was described as rough "cast iron castings" and the disputed turnover related to sales of rough cast iron castings. The assessment order does not state from what material the said rough cast iron castings were made and whether the said material suffered tax. The Deputy Commissioner of Commercial Taxes in exercise of his revisional powers under sub-section (2) of section 20 of the Act, brought the said turnover to tax by his order dated September 5, 1984. That order seems to proceed on the basis that the cast iron castings sold by the assessee in that case were made from pig iron and some other additives. T.A. No. 767 of 1984 preferred by the assessee against the said revisional order of the Deputy Commissioner was allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er railway drawings. Thus the facts of these cases disclose that the assessees/respondents herein were dealing in goods made out of pig iron and iron scrap with some other additives. In T.R.C. No. 28 of 1987 the Deputy Commissioner stated that the goods dealt with by the assessee were rice mill spares and machinery parts; in T.R.C. No. 190 of 1990 the Deputy Commissioner found that the assessee manufactured various types of rope wheels, radial guides, point indicators, break shoes for diesel loco, inter locking frame lever shoe, base surfaces, etc.; and in T.R.C. Nos. 24 and 44 of 1987 the assessing authority as well as the first appellate authority found that the assessee manufactured C.I. pipes, specials and fittings and that the said goods were sold as finished goods and that they were not rough castings. The full facts were not forthcoming in some cases. In none of these cases, the Tribunal considered the nature of the goods involved and proceeded on the assumption that they were all "cast iron castings" without any discussion as to whether they were rough castings or finished castings or distinct commercial commodities which could no longer be described as iron and steel goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of its powers under sub-section (2) of section 42 of the Act directly came up for consideration in Munaga Singaraiah Sreshty and Sons [1977] 40 STC 89. In that case, a Division Bench of this Court was considering the nature and effect of the letter dated August 13, 1969, of the State Government accepting the clarification issued by the Government of India that if the weight of the fabric content of leather cloth, rexine or mackintosh was not less than 40 per cent, it continued to be a fabric for all purposes and the levy of sales tax thereon would not be proper and that if the weight of the fabric contents of the finished products, viz., leather cloth, rexine or mackintosh, was less than 40 per cent, the finished product ceased to be a fabric and that there would be no objection to tax being charged even though the base material already suffered additional duty of excise. The Division Bench held that the said acceptance by the State Government was in exercise of its powers under sub-section (2) of section 42 of the Act: "............because by an order, the State Government has made provisions not inconsistent with the purposes of the Andhra Pradesh General Sales Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 37 STC 583, the Supreme Court has considered the effect of the notification of the Ministry of Finance, Department of Economic Affairs, Government of India wherein coriander seeds (dhania) among other commodities were stated to be included in the term "oil-seeds" under item (vi) of section 14 of the Central Act, and whether the High Court of Orissa was right in relying on the same. The Supreme Court has held as follows: "It is true the High Court (of Orissa) has rightly observed that the aforesaid notification of the Government of India has no statutory force and as such is not binding on the Sales Tax Officer. It cannot, however, be denied that the Ministry of Finance, Department of Economic Affairs, is intimately conversant not only with the policy of legislation for the purpose of implementation of the provisions of the Central Act but is also familiar with the nature and quality of the commodities as also their use from time to time. If, therefore, such an authority issued a notification including certain commodities under the head of 'oil-seeds', as defined under the Central Act, it cannot be said that the Tribunal (Orissa Sales Tax Tribunal) and the High Court were not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment of Andhra Pradesh and the Board of Revenue following the clarification of the Government of India, in its letter of 15th October, 1968, will have a considerable weight so far as the present case is concerned." From these decisions, it is therefore clear that the clarifications issued by the Government of India are relevant and important guides to the interpretation of the expressions used in the items of declared goods in section 14 of the Central Act. The said circular letter dated February 28, 1977, of the Government of India was also relied upon by the West Bengal Taxation Tribunal for interpreting the expression "cast iron" in section 14(iv)(i) of the Central Act in Indian Wire Steel Products v. Additional Commissioner of Commercial Taxes [1991] 80 STC 21. The Tribunal held as follows: "......... Mr. Sasanka Sen, the learned advocate for the applicant, relied on the clarificatory circular dated February 28, 1977 issued by the Department of Revenue and Banking, Government of India, in which it was clearly stated that 'cast iron' mentioned in section 14(iv)(i) of the Central Sales Tax Act, 1956, includes 'cast iron castings'. It was issued in consultation with the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gray-coloured fracture when broken and accounts for the name gray cast iron. The strength of gray cast iron is increased by reducing the carbon content and by alloying it with nickel, chromium, copper, molybdenum, vanadium and titanium. The alloy content of ordinary cast iron generally does not exceed 3 per cent to 4 per cent. Special types of corrosion-resistant iron are made with greater alloy contents, for example 11 per cent to 17 per cent silicon, 25 per cent to 30 per cent chromium or 20 per cent to 30 per cent nickel. The silicon content of gray cast iron is normally 1.5 per cent to 3.0 per cent. When the silicon content of gray cast iron is substantially reduced a new type of cast iron which is called white iron is produced. Chilled cast iron is a variety of white iron. Castings made out of chilled iron are used as freight car wheels and brake shoes and plowshares, pulverizer equipment parts and rolls for steel mills. Another variety of cast iron is malleable cast iron. It is used for making a variety of small or thinwalled industrial castings such as automotive, agricultural machinery and railroad equipment parts, electrical and small pipe fittings, hardware and small tool ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition) of Encyclopaedia Britannica, Volume 9, it is stated that cast iron is a generic term describing a family of iron alloys containing 1.8 to 4.5 per cent carbon and these alloys are usually made into specified shapes for direct use or for further processing by machining or heat treating. It is also stated that gray iron is produced from pig iron and scrap, or from scrap iron alone and that various additives to enhance its properties may be introduced into the cupola, after the iron is molten, or into the ladle, before pouring it into moulds. It is also stated that gray iron has become an important engineering material whose composition, structure, and physical and mechanical properties can be carefully controlled to obtain the best combination of strength and service and that its mechanical properties such as tensile strength can be improved to a moderate extent by natural aging, heat treatment followed by quenching and tempering and that its surface can be hardened by flame or induction heating. It is also stated that white iron with certain additives like chromium can be used in the "as cast" condition. In the Indian Standard IS: 2763-1964 dealing with glossary of terms r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that now arises is whether all varieties and kinds of cast iron castings are covered by the expression "cast iron" in section 14(iv)(i) of the Central Act and in sub-item (i) of item 2 of the Third Schedule to the Act in view of the clarification issued by the State Government in G.O. Ms. No. 383 dated April 17, 1985 and in view of the letters of Government of India dated February 28, 1977 and January 31, 1984. The learned counsel for the respondents contend that all types of cast iron castings are covered by the expression "cast iron" and that no exception can be made and rely on Adarsh Foundries case [1988] 70 STC 151 (AP). On the other hand, the learned Government Pleader contends that in view of the decisions of this Court in Deccan Engineers case [1992] 84 STC 92 and Sri Rama Malleable Engineering Works case (W.P. No. 6772 of 1991 decided on 20th June, 1991), cast iron castings are not covered by the expression "cast iron" in the said provisions. In Adarsh Foundries case [1988] 70 STC 151 (AP), the only question that arose was whether the departmental authorities including the Commissioner of Commercial Taxes were bound by G.O. Ms. No. 383 dated April 17, 1985, issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in only "goods which are in an unfinished form" and not commodities which are "finished products for use". In Deccan Engineers case [1992] 84 STC 92, this Court has referred to the decision of the West Bengal Taxation Tribunal in Indian Wire Steel Products case [1991] 80 STC 21 and observed as follows: "It has been clarified by the Tribunal, after referring to the Supreme Court decision in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319 that where an assessee manufactures articles like G.I. pipes and manhole covers out of cast iron purchased by him, he is liable to pay sales tax on them because they are distinct commodities." This Court also referred to the judgment of the Allahabad High Court in Commissioner of Sales Tax v. Vishwa Engineering Co. [1992] 84 STC 100 [App.] wherein it was held relying on the two letters of the Government of India that manhole covers were the same as iron castings and cast iron. This Court did not agree with that view and held that the said letters did not lead to such a conclusion and they did not have any effect of amending the statutory provision. Incidentally it is to be noted that the Supreme Court granted special leave agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... infree plates; (xiii) fish plate bars, bearing plate bars, crossing sleeper bars, fish plates, bearing plates, crossing sleepers and pressed steel sleepers, rails-heavy and light crane rails; (xiv) wheels, tyres, axles, and wheel sets; (xv) wire rods and wires-rolled, drawn, galvanised, aluminised, tinned or coated such as by copper; (xvi) defectives, rejects, cuttings or end pieces of any of the above categories;" What immediately strikes is that in sub-item (i) pig iron and cast iron are mentioned without specifying any form or shape, whereas in the other sub-items like sub-items (ii) to (viii) and (xi) to (xv) commodities are mentioned with definite form and shape implicit in their description. Sub-item (ix) is tool, alloy and special steels of any of the above categories. The expression "above category" in subitem (ix) obviously refers to sub-items (ii) to (viii) which mention steel in different shapes varying from semis like ingots, slabs, blooms and billets to steel castings. Sub-item (x) is steel melting scrap in all forms and sub-item (xvi) also mentions scrap articles like defectives, rejects, cuttings or end pieces of the above categories-the expression "above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... craps containing only any of the metals, copper, tin, zinc, or nickel except those included in any other notification issued under the Act" [notification dated May 30, 1975, as amended by U.P. Sales Tax (Amendment and Validation) Act, 1975]. The assessee, who was the appellant before the Supreme Court, was carrying on the business of manufacturing and dealing in aluminium metal and various aluminium products and contended that the aluminium ingots, billets, rolled products, extrusions and other aluminium products manufactured and sold by it fell within the said items. The sales tax authorities treated the aluminium ingots only as metal and not the other products. The assessee questioned the same before the Allahabad High Court by way of a writ petition. The Allahabad High Court held that while aluminium ingots, wire bars and billets would fall in the category of "metals and alloys", rolled products prepared by rolling ingots and extrusions manufactured from billets must be regarded as different commercial commodities from the ingots and billets and therefore outside the category of "metals and alloys". The rolled products included plates, coils, sheets, circles and strips. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... metals, i.e., "pig iron" and "cast iron" in the primary and the original form in which they are saleable and not to any subsequently fabricated forms. We have noticed already that "pig iron" and "cast iron" are mentioned as declared goods without reference to any form and without specifying any shape. Pig iron is available in the form of pigs or blocks or irregular shaped lumps or in the granulated form. (See Commissioner of Income-tax v. Krishna Copper and Steel Rolling Mills [1992] 193 ITR 281 at 287; [1992] Supp 1 SCC 733 at page 741. It is stated that "'cast irons' as the name implies are intended to be cast to shape rather than formed in the solid state". [See Amar Roller Flour Mills case [1991] 51 ELT 613 at page 6161. Therefore, unless sold in the molten state, it will be available in "as cast" condition. We have already observed that the type of cast iron and the shape of the casting may depend on the requirements and specifications of the intended end-product. It therefore follows that the primary and original form in which cast iron is usually available is in the form of rough castings and thus the term "cast iron" occurring in item (iv) of section 14 of the Central Act d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferromanganese, ferro-phosphorus, ferro-chromium, etc., the tax leviable under the said Act on the rough castings (suitable for the automobile cylinder liners) manufactured within the State from out of such materials by the units situated within the State of Andhra Pradesh and sold inside the State shall be reduced by the amount of tax levied and collected on such materials with effect from the 1st January, 1986." A fresh notification has been issued in G.O. Ms. No. 575, Revenue (CT-11) dated June 9, 1989 to the same effect only omitting "where a tax has been levied and collected". The State Government also issued G.O. Ms. No. 1512, Revenue(S) Department dated November 22, 1986, directing: "that where a tax has been levied and collected under the said Act (Andhra Pradesh General Sales Tax Act) in respect of the sale or purchase inside the State of rough castings, the tax leviable under the said Act on the cylinder liners (finished products) manufactured within the State from out of such rough castings by the units situated within the State of Andhra Pradesh and sold inside the State, shall be reduced by the amount of tax levied and collected on such rough castings." Fresh G.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was supplied by the appellant to the Railways it could be subjected to duty. According to the appellant till its final processing by the Railways it did not become a machine part. It continued to be iron casting. It is claimed that merely because it was supplied to Railways or that it became identifiable as a machine part no duty was attracted as no excisable commodity came into being The main plank of the argument was that till cylinder liner was finally processed by the Railways it was incapable of being used as a machine part. ............ In the classification list exemption was sought on cylinder liner by describing it at serial No. 4 as under: '4. Cylinder liners to part No. 10123416 which is not identifiable part in that it is partially machined only and not ready for use.' The description of the goods as, partially machined, does not appear to be correct. The Tribunal found that contract in pursuance of which the goods were manufactured was for the supply of, 'fully machined cylinder liner'. And in absence of any material it was obvious that the Railways would not have accepted the cylinder unless it tallied with the specification. There was no dispute before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rat Steel Tubes Ltd. v. State of Kerala [1989] 74 STC 176 (SC)]. It is also to be noticed that in the case of steel articles enumerated as declared goods, there is a separate sub-item, i.e., sub-item (viii) wherein "steel castings" are specifically mentioned. Even in such a case, the West Bengal Commercial Taxes Tribunal has held in Bengal Ingot Co. Ltd. v. West Bengal Commercial Taxes Tribunal [1990] 79 STC 212, that steel castings processed and machined resulting in different articles of various shapes and sizes having different trade names in the market to meet various mechanical and engineering needs are not "steel castings" and not declared goods. The goods in question in that case were bushes, valves and impellers, etc., and the assessee contended that they were manufactured out of steel castings without using or mixing any other metal or material. The Tribunal has held that "the fact that no other metal or materials was used cannot be the sole criterion to determine whether the commodities sold and marketed by the applicant in different trade names were still known in trade circles as mere steel castings". The Tribunal further observed that "it is well-settled that where n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and leftovers of processes of manufacturing to 'wires' and 'wheels, tyres, axles and wheel sets'. Some of the enumerated items like 'melting scrap' or 'tool alloys' and 'special steels' could serve as raw material out of which other goods are made and others are definitely varieties of manufactured goods. If the subsequent amendment only clarifies the original intentions of Parliament, it would appear that heading (iv) in section 14, as originally worded, was also meant to enumerate separately taxable goods and not just to illustrate what is just one taxable substance: 'iron and steel'. The reason given, in the Statement of Objects and Reasons of the 1972 Act, for an elucidation of the 'definition' of iron and steel was that the 'definition' had led to varying interpretations by assessing authorities and the courts so that a comprehensive list of specified declared iron and steel goods would remove ambiguity. The Select Committee, which recommended the amendment, called each specified category 'a sub-item' falling under 'iron and steel'. Apparently, the intention was to consider each 'sub-item' as a separate taxable commodity for purpose of sales tax. Perhaps some items could overl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance or raw material out of which it is made has also been taxed in some other form, when it was sold as a separate commercial commodity, would make no difference for purposes of the law of sales tax. The object appears to us to be to tax sales of goods of each variety and not the sale of the substance out of which they are made. As we all know, sales tax law is intended to tax sales of different commercial commodities and not to tax the production or manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of sales tax. Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing or are merely joined together, they may remain commercially the goods which cannot be taxed again, in a series of sales, so long as they retain their identity as goods of a particular type....... ........In the cases before us now, the object of single point taxation is the commercial commodities and not the substance out of which it is made. Each commercial commodity here be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India dated February 28, 1977 and January 31, 1984 clarify that the item "cast iron" covered "cast iron castings". The clarification of DirectorGeneral, Technical Development in the note dated November 19, 1983, referred to in Deccan Engineers case [1992] 84 STC 92 states: "Cast iron is an alloy iron of carbon, silicon and other alloying elements if required, i.e., cast iron castings are covered under the term 'cast iron'. It may also be clarified that 'cast iron' includes grey iron, white iron, chilled malleable and nodular iron. Ingot moulds and bottom plates are nothing but cast iron castings." We have made it clear that "cast iron castings" referred to in the said G.O., and letters of Government of India and by the Director-General, Technical Development can only be rough castings or castings in their crude form and not (i) separate commercial commodities emerging or coming into existence, may be by the process of casting; and (ii) subsequently fabricated forms or finished products, i.e., finished castings which become distinct and separate commercial commodities. Therefore, only rough castings continue to be declared goods under sub-item (i) of item (iv) of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: "Though 'include' is generally used in interpretation clauses as a word of enlargement, in some cases the context might suggest a different intention It seems to us that the word 'includes' has been used here in the sense of 'means'; this is the only construction that the word can bear in the context. In that sense it is not a word of extension, but limitation; it is exhaustive of the meaning which must be given to potteries industry for the purpose of entry 22. The use of the word 'includes' in the restrictive sense is not unknown.........". The Supreme Court was enquiring in that case as to the meaning to be given to the word "includes" in the expression "potteries industry includes" in the explanation to entry 22 in Part I of the Schedule to the Minimum Wages Act, 1948. In Hindustan Aluminium Corporation case [1981] 48 STC 411 (SC) which was referred to earlier, while interpreting "all kinds of minerals, ores, metals, and alloys including sheets and circles used in the manufacture of brasswares and scraps........." in item No. 1 in the notification dated May 30, 1975, as amended by the U.P. Sales Tax (Amendment and Validation) Act, 1975, the Supreme Court has held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y have to be treated as one commercial commodity just as iron scrap and cast iron scrap cannot be treated same as pig iron. Each of them is a separate commercial commodity by itself. In the Third Schedule to the Act as it is now, iron scrap, cast iron scrap, runner scrap and iron skull scrap are found in subitem (i) of item 2-A under the heading "iron and steel scrap, that is to say"; steel melting scrap in all forms including steel skulls, turnings and borings is found in sub-item (ii) of item 2-A. They are not found in item 2 of the Third Schedule as it is now. They were taken out of sub-item (i) and sub-item (x) and put in separately as item 2-A by Act 4 of 1989 with effect from February 15, 1989. This supports the view that iron scrap, cast iron scrap, etc., are commercial commodities different from cast iron. In Surana Industries case [1985] 11 STJ 282 a Division Bench of this Court has considered the question whether wires derived from wire-rods that had earlier suffered sales tax under the Act can again be subjected to sales tax. The assessee in that case, has contended that wirerods and wires occur in the same sub-item (xv) of item 2 of the Third Schedule to the Act which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is really a camouflaged attempt to by-pass the judgment of the Supreme Court in Pyare Lal Malhotra's case [1976] 37 STC 319." The respondents before us did not question the correctness of the judgment of the Division Bench in Surana Industries case [1985] 11 STJ 282. The view taken by the Division Bench of this Court finds support in the decision of the Division Bench of the Madras High Court in State of Tamil Nadu v. India Metal Industries [1980] 46 STC 304. In that case, the Madras High Court has considered section 14 of the Central Act prior to the amendment of 1972 and after the judgment of the Supreme Court in Pyare Lal Malhotra's case [1976] 37 STC 319. The contention on behalf of the assessees in that case was noted by the Madras High Court as follows: "His point was that clause (iv) of section 14 described 4 categories of iron and steel and that out of the 4 categories, the category coming under sub-clause (c) would be a single item. His submission was that any conversion of steel scrap into steel ingots or steel billets or steel bars and rods, would not make the converted goods into different categories. While this Court in Pyare Lal Malhotra v. Joint Commercial Tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from steel ingots, steel billets, steel bars and rods. The fact that the steel scrap had already suffered tax at some point earlier would not confer immunity from taxation, when the steel scrap was converted into steel ingots, steel billets, steel bars and rods and sold. Thus the levy of tax in this case on the sale of converted items would not be wrong." A different view was taken by the Division Bench of the Karnataka High Court in Bahri Steel Wires v. Additional Commercial Tax Officer [1992] 84 STC 418 assuming as follows: "Having regard to the scheme of sections 14 and 15 of the Central Act and the purpose behind it being to minimise the tax burden on the declared goods, it can be assumed that each sub-item forms one category of goods and any goods falling within the same sub-item cannot be treated as a different taxable commodity just because the said goods are produced out of another goods which also fall within the same sub-item. Each sub-item comprised within itself a particular category of taxable commodity for the purpose of section 14 of the Central Act." However, in Surana Industries case [1985] 11 STJ 282 it has been held as follows: "Finally, it is argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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