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TMI Blog2016 (4) TMI 877X X X X Extracts X X X X X X X X Extracts X X X X ..... he captioned original petitions are not called for. They also stand concluded by the findings herein. Therefore, the petitioner/assessee is entitled to the benefit of SRO 641/81 notwithstanding SRO 1516/90 and is therefore bound to pay tax only at reduced rate on the purchase of rubber for the manufacture of its product through its unit to which the assessments leading to the captioned sales tax revisions relate; be the product called `compound of rubber' or `rubber compound'. - Decided partly in favour of petitioner - ST. Rev. No. 213 of 2006, STRV.Nos. 224, 225, 231 & 262 of 2006 and O.P.Nos.3444 & 12020 of 1998 - - - Dated:- 6-1-2016 - Thottathil B. Radhakrishnan And C. T. Ravikumar, JJ. For the Petitioner : Sri K P Dandapani, Adv General Govt Pleader, Sri Sojan James For the Respondent : Sri F S Nariman, Sr Adv, Sri E K Nandakumar, Sri K John Mathai, Sri P Benny Thomas, Sri P Gopinath, Sri Kuryan Thomas JUDGMENT Thottathil B. Radhakrishnan, J. 1. These revisions under Section 41 of the Kerala General Sales Tax Act, 1963 and original petitions stand remitted by the Hon'ble Supreme Court of India as per the remand order dated 28.4.2011 in Civil App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions. This Court turned down the plea of the assessee that the rubber compound or compound of rubber made by the assessee is not any compound of rubber referred to in the notifications. Contextually, it is apposite to quote the relevant portion of the judgment dated 18.12.2008 in STRV.No.213 of 2006 and connections. It reads as follows: Since assessee raised a contention that rubber compound made after processing is different from rubber compound made as manufactured product, we requested the assessee to inform us whether any other form of rubber compound other than what is made by the assessee is available in the market which is fit for use in the manufacture of tyre. The assessee fairly conceded that all through they were making one and the same item that is rubber compound which is made by mixing of rubber with chemicals like carbon black, processing oil, etc. and it is an intermediary for manufacture of tyre. In other words, after the finality of first round of litigation through judgment of this Court, confirmed by the judgment of Supreme Court, the assessee has not changed the pattern of production or made any change in the product to claim the benefit of notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Division Bench of the Kerala High Court on 18.12.2008 allowing the Sales Tax Revision filed by the respondent State and thereby setting aside the judgment and order passed by the Sales Tax Tribunal. 3. The issue that is being considered is as to whether or not the appellant assessee is entitled to concessional rate of sales tax on the purchase of rubber used in the production of compound rubber. Various contentions were urged at different stages and finally by the impugned judgment and order, the High Court held that the appellant herein is not entitled to such benefit of concessional rate of tax. 4. Having heard the learned counsel appearing for the parties, we are of the considered opinion that in order to decide the entire dispute between the parties effectively, a finding has to be recorded as to whether or not rubber compound and compound of rubber are two different and distinct articles or they are the same article. In order to decide the aforesaid issue which appears to be very technical, we feel that sufficient evidence is required to be led. Although in the present case evidence has been led by way of affidavits on behalf of the appellant, we do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate Bench after allotment for early hearing. We also request the High Court to hear the matter as expeditiously as possible, preferably within a period of six months from the date of receipt of the records of this case. 11. So far the amount of ₹ 13,19,11,404/- (Rupees thirteen crores nineteen lakhs eleven thousand four hundred and four only), which was deposited by MRF in terms of order of this Court dated 27.1.2009 in SLP(C) No.909 of 2009 is concerned, the said amount shall continue to remain with the Department as deposit till the matter is finally decided by the High Court. The liberty is also granted to the parties to apply to this Court for appropriate orders, if there be any occasion for the same, but only after October 31, 2011. 12. Civil appeals are disposed of in terms of the aforesaid order and observations. 5. On behalf of the State, the learned Advocate General argued that the materials on record show that the practice being followed by the assessee is that they purchase rubber and use the same in the manufacture of compound rubber and compound rubber so manufactured is transferred to their units outside the State of Kerala from where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation is construed in the manner in which it has been done by the Department, that would amount to hostile discrimination violative of the equality doctrine in Article 14 of the Constitution of India. It is further argued that the impugned decisions were issued without reference to the grounds raised before the authority concerned, while reference has been made therein to different matters which were never raised or relevant for consideration. He also adopted the submissions made on behalf of the assessee by the learned Senior counsel in the revisions. 8. It is settled principle that where the order of remand lays down limits for the enquiry to be made by the lower court, that court ought to confine to questions which fall within those limits. The exercise of jurisdiction by the lower court to which an order of remand is made depends on specifications of the order of remand. It is not open to any of the parties or to the court below to enlarge the scope of the remand order. To do otherwise would be destructive of all tenets of judicial discipline and will strike at the root of the efficacy and binding nature of an order of a superior court. Even when a matter is remitted to Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejoinders thereto. The State and the assessee were given liberty to file such additional documents or affidavits in furtherance to that order of remand and also in response to further documents that may be produced by either side. The High Court was directed to accept such additional documents and affidavits. It was also left open to the parties to raise additional issues / questions of law before the High Court by filing proper affidavits in that regard. The judgment/order dated 18.12.2008 issued by this Court was accordingly set aside and the order of remand was issued. The scope of enquiry following such order of remand would necessarily stand guided by the directions contained in the order of remand. 10. In obedience to the terms of the remand order, the documents and affidavits placed on record by the State and the assessee have been received and incorporated. The liberty given to the parties through the order of remand to raise additional issues/questions of law has been effectuated permitting three additional questions of law being raised. The question of law suggested for consideration through these memorandum of revisions is as to whether the Tribunal had erred in fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Kerala, from where they are manufacturing tyres and tubes, and that, in short, the manufacturing activity carried on within the State is that of compound rubber which is not a finished product as defined in the notification granting concessional rate. It is pointed out that the question for decision is as to whether the assessee is entitled to concessional rate of tax on the purchase of rubber which is used for the manufacture of compound rubber. The order of remand issued by the Honourable Supreme Court is reiterated pointing out that what is required is that a finding has to be rendered as to whether or not 'rubber compound' and 'compound of rubber' are two different and distinct articles or they are the same article. Annexures A1, A2, A3 and A4 are returns and statements filed by the assessee to show that the assessee uses the words 'compound of rubber' and 'rubber compound'. Annexure A5 is a certificate issued by the Additional Director of Industries and Commerce stating that the term Rubber Product is generally meant for finished rubber products such as tyres, moulded rubber goods, footwear, hoses etc. and rubber compound is a semi-process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... davit, he was the Head of the Department of Polymer Science and Rubber Technology in the Cochin University of Science and Technology and by then, had 28 years of experience in teaching Rubber Technology and that he has indepth knowledge in processing and manufacturing of Compound Rubber. He says that he had read the relevant notifications while he was requested by the assessee to provide an affidavit of his use. He states therein that compound rubber is a rubber product and says that it is universally accepted as a rubber product manufactured from natural rubber, scientific rubber, chemicals, including activators, curatives, fillers like carbon black, silica and process oil as raw materials. He elaborates on the process and further, enumerates Fillers and their application, and also the Processing Aids like process oil, wax etc., which are petroleum products used in the manufacture of compound rubber. He concludes his affidavit by specifically stating as follows: Hence, the Compound Rubber is a product manufactured from Rubber (both Natural and Synthetic), Chemicals, Fillers and Process Aids. Compound Rubber cannot be manufactured by mixing rubber with chemicals alone. Compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Institute (Kerala Branch) and Executive Director of Rubber Research Institute of India. He holds Masters Degree in Chemistry from Kerala University and Ph.D in Rubber Technology from Indian Institute of Technology, Kharagpur and is a Licentiate of Plastics and Rubber Institute, U.K. He has described the various Institutions and the posts in which he has worked. He affirms that he had visited the factory of the assessee with a view to observe the processes adopted by them for the manufacture of compound rubber. It is apposite to quote the following from Annexure R1(c) affidavit: 3. I further state that, at the request of MRF Limited, I had visited their factory at Kottayam, on 8th June 2011 with a view to observe the processes adopted by them for the manufacture of compound rubber. I found that the following processes are being adopted by them for this purpose. The manufacture of compound rubber consists of different stages. The first stage is subjecting the raw rubber to mastication, crushing or breaking down between two rotating rollers using mechanical friction which is hastened by adding chemicals called peptizers and softening agents. The broken down (BD) or masti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orous process control tests are conducted at every stage of manufacture using sophisticated testing equipment such as Mooney viscometer, Moving Die Rheometer, Tensile Testing Machine, density measuring system etc. in order to ensure that the product conforms to the specified quality standards. Thus the manufacture of Compound Rubber is done in different stages in different types of machinery and using precise process control and quality control systems. This material is black in colour and is entirely different from the original compound of rubber in chemical composition, molecular weight, molecular weight distribution, specific gravity, processability etc. I find that the manpower employed is about 600 and investment over 50 crore for this manufacturing plant with huge Banbury machines of different capacities and a series of other machines/equipment. 4. Based on my knowledge of rubber products and technical expertise in the subject, I state that the Compound Rubber manufactured by MRF Limited at their factory in Kottayam is technically and commercially different and distinct from the raw materials used in its manufacture. The said product can only be produced by a ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd. He says that during his initial years at Mahatma Gandhi University, he was post-doctoral fellow at the Molecular Science and Engineering Research Centre of Laval University, Canada and was an invited visiting Professor to many Polymer Research Laboratories in Europe and Asia, and that he is a fellow of the Royal Society of Chemistry, London; member of the American Chemical Society, Rubber Division; member of New York Academy of Sciences and a lifetime member of the Society of Polymer Technologists, Cochin University of Science and Technology. He says that he has supervised 60 Ph.D thesis, 15 M.Phil thesis and 15 Master thesis and has published papers to his credit. He has also more than 25 years of experience in the field of Polymer Science and Technology and is conversant with rubber and its various processing and manufacturing. The affidavit is filed differing with the contents of Annexure A5 certificate of Dr.K.A.Jose, Additional Director of Industries and Commerce, which was referred to him by the assessee for opinion. He has differed with the conclusion of Dr.K.A.Jose and has stated that rubber products could also be made without vulcanization. He further states tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be held to be of more evidentiary value on comparison by competitive evaluation by a duly informed adjudicator. See for support, the decision of the Honourable Supreme Court of India in Collector of Central Excise, Baroda v. Ambalal Sarabhai Enterprises Pvt. Ltd. [1989 (43) ELT 214]. There is no rebuttal evidence from the side of the State discharging its burden which it carried following the clear terms of the order of remand made by the Apex Court. 17. There is a suggestion through the additional questions of law sought to be raised by the State that the term any other similar process occurred in SRO 641/81 is expansive in content and, therefore, the exclusion from out of the term finished rubber product as contained in SRO 1516/90 should be understood as much more than those materials which would fall within processing by mixing with chemicals, gas, fumigation etc. . This does not appeal to us because the views of the experts which are on record through the affidavits noted above categorically point to the fact that the process of manufacture of compounded rubber is itself a manufacturing process and stands resulting in the manufacture of a product which is a finished p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o define the terms in that statute, it is worthwhile for the purpose of this case to look into few definitions under Section 3 of the Rubber Act, since that is a comprehensive legislation dealing with matters relating to different aspects of rubber including pricing, marketing and all measures as are to be promoted for the development of the rubber industry. Clause (h) of Section 3 of the Rubber Act provides the definition for rubber: rubber, means- (i) crude rubber, that is to say, rubber prepared from the leaves, bark or latex of any rubber plant; (ii) the latex of any rubber plant whether fluid or coagulated, in any stage of the treatment to which it is subjected during the process of conversion into rubber; (iii) latex (dry rubber content) in any state of concentration, and includes scrap rubber, sheet rubber, rubber in powder and all forms and varieties of crepe rubber, but does not include rubber contained in any manufactured article. Section 3(e) defines manufacturer. It reads as follows: manufacturer means any person engaged in the manufacture of any article in the making of which rubber is used. The term 'dealer' is def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sments were made is a finished product, by whatever name it is called, and such finished rubber product is one that does not fall within the exclusion made by SRO 1516/90 and hence, the assessee is entitled to reduced rate of tax on the purchase of rubber for the manufacture of that product which is manufactured in its unit within the State of Kerala. Having held as aforesaid, on an interpretation of the notifications and by answering the questions formulated and remitted for consideration through the remand order of the Honourable Supreme Court of India, an independent consideration of the grounds raised in the captioned original petitions are not called for. They also stand concluded by the findings herein. In the result, the captioned sales tax revisions are dismissed confirming the impugned decision of the Tribunal; and, the original petitions are allowed in part declaring that the petitioner/assessee is entitled to the benefit of SRO 641/81 notwithstanding SRO 1516/90 and is therefore bound to pay tax only at reduced rate on the purchase of rubber for the manufacture of its product through its unit to which the assessments leading to the captioned sales tax revisions relate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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