ASSOCIATED CEMENT CO. LTD.versusSTATE OF M.P. AND ORS.

A                     ASSOCIATED CEMENT CO. LTD.
                                        v.
                          STATE OF M.P. AND ORS.

                                  MAY 5, 2004
B
              [RAJENDRA BABU, CJ. AND G.P. MATHUR, J.)

          Municipal Corporations :

          Export tax levied by Municipal Corporation-Levy on 'all types of
C cement '-Held : Refractory cement is different from cement and is used
    for entirely dijjerent purpose-It is not known as cement in cammon
    parlance and hence not exigible to export tax-Taxation.

          Interpretation ofstatutes-Fiscal statutes-While interpreting items
D In statutes like Sales Tax Acts, popular or commercial meaning ofthe term
    to be resorted to and not the scientific or technical meaning.

         The question which arose for consideration in this appeal· is
    whether refractory cement manufactured by appellant is cement so as
E   to attract liability of export tax levied by the Municipal Corporation.        ....
         Allowing the appeal, the Court



F
          HELD : 1. Refractory cement manufactured by the appellant.is
    l)ot cement and hence not liable to export tax.
                                                                                   ..
          2.1. It is well settled that while interpreting items in statutes like
    Sales Tax Acts, resort should be had not to be scientific or the technical
    meaning of such terms but to their popular meaning or the meaning
    attached to them by those dealing in them, that is to say, to their
G   commercial sense. Cement is exclusively used as a building material and
    is a commodity of everyday use. Therefore, it has to be construed only
    by the popular or commercial meaning of the term. (184-A, B; 185-A)

         2.2. The main property of refractory cement is that it can
H   withstand very high temperature, corrosion and abrasion. Anyone
                                         176
     ASSOCIATED-CEMENT CO. LTD. v. STATE [G.P. MATHUR, J.]       177

buying cement for building purpose would under no circumstance buy A
refractory. Similarly a mason or a supervisor would under no
circumstance us~ refractory material in making a normal construction.
The refractory material is used for entirely different purpose namely
for furnaces, linings and for insulation. A dealer would not supply
refractory to anyone wanting to buy cement. Therefore, refractory B
material produced by the appellant does not fall within the Entry 'all
types of cement' and consequently it is not exigible to levy of export
tax. (185-B-D)

      Commissioner of Sales Tax v. Mis. Jaswant Singh, AIR (1967) SC C
1454; Minerals and Metals Trading Corporation ofIndia v. Union ofIndia
& Ors., (1972) 2 SCC 620; Royal Hatcheries Pvt. Ltd. v. State of A.P. &
Ors., (1994) Supp. 1SCC429; Dunlop India Ltd. v. Union ofIndia, (1976)
2 SCC 241 and Indian Company Ltd. v. Collector of Central Excise,
(1994) 6 sec 610, relied on.
                                                                        D
    Cementa Corporation Ltd. v. Collector of Central Excise, (2002) 8
sec 139, referred to.
     CIVIL APPELLATE JURISDICTION. Civil Appeal No. 7188 of
1997.                                                       E:
     From the Judgment and Order dated 21.4.1997 of the Madhya
Pradesh High Court in L.P.A. No. 205 of 1996.

                               WITH
                                                                        F
    C.A. No. 2992 of 2004.

     T.R. Andhyarujina, Anoop, G. Choudhry, Rajiv Shakdher, U.A.
Rana, Sadeep Khare!, Ashok Kumar Gupta, Faruukh Rasheed, Sakesh
Kumar and Satish K. Agnihotri for the appearing parties.         G

    The Judgment of the Court was delivered by

    G.P. MATHUR, J.: I. Leave granted in SLP (c) No. 1186 of2000
(Municipal Corporation Katni v. Mis. Associated Cement Co. Ltd.). H
    178                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A        2. Civil appeal no. 7188 of 1997 has been preferred against the
    judgment and order dated 21.4.1997 of a Division Bench of Madhya
    Pradesh High Court deciding the issue relating to levy of export tax on
    certain products manufactured by M/s. Associated Cement Co. Ltd.

B        3. By a resolution published in M.P. Gazette dated 25.10.1991, the
    Municipal Corporation, Katni levied tax on export of goods from within
    the area of Municipal Corporation. Entry Nos. i and 2 in the Schedule
    appended to the Notification read as under:-


c                                  SCHEDULE

          S. No.    Name of Article                  Tax Proposed
           (I)           (2)                               (3)

           I.        All types of Cement             Y,% of the cost of the
D                                                    consignment

           2.        Materials made of cement        I% of the cost of article


           4. The appellants Associated Cement Co. Ltd. filed writ petition
E challenging the levy of export tax on refractory cement and Acco Proof
    basiClally on the ground that they were not covered by the Schedule as they
    were not cement. The writ petition was dismissed by a learned Single Judge
    but the Letters Patent Appeal was party allowed by a Division Bench and
    it was held that refractory cement is a1 cement so as to attract liability of
F export tax but Acco Proof being a water proofing compound was not
    cement and was therefore not exigible to export tax.

        5. The main question which requires consideration is whether refractory
    cement is cement so as to attract liability of export tax. Shri T.R.
G   Andhyarujina, learned senior counsel appearing for the appellant has
    submitted that the Associated Cement Co. (hereinafter referred to as 'the
    appellant') has several factories in different parts of the country including
    a manufacturing unit by the name ofKatni Refractory Works at Katni. This
    Unit manufactures (i) Firebricks; (ii) Ramming masses; (iii) Fireclay
H   mortors; (iv) High Alumina Refractory Binder; (v) Refractory Castables;
      ASSOCIATED CEMENT CO. LTD. v. STATE [G.P. MATHUR, J.]           179

(vi) Whytheat Castables. The aforesaid products in the commercial parlance A
are known as "Refractory material" and they are entirely different from
"cement" or material made "out of cement". Most of the Refractory
products are sold directly to the end users and only a small quantity is sold
by way of retail sale whereas cement is sold through warehouses and
cement stockists network. It has been submitted that the products B
manufactured by the appellant can by no stretch of imagination be equated
with or used for the purposes for which cement is used. The refractory
materials are used in furnaces and kilns to withstand high temperature,
corrosion and abrasion and they are not usable as a substitute of cement
or for construction activities. Learned counsel has further submitted that C
cement cannot be used for the purpose for which refractory material is used
and the process of manufacturing cement and refractories are entirely
different and the plant manufacturing refractories can neither be used nor
can be converted for manufacturing any type of cement. The raw materials
required for manufacturing refractory are also entirely different from those D
required for manufacturing cement. The main raw material required for
manufacture of cement is limestone, silicous clay and gypsum whereas for
manufacture of refractory products, the main raw material is bauxite,
kyanite and fire clays. Bauxite and fire clay are not used for manufacture
of cement and chemical composition and properties of the two products E
are entirely different. It has also been urged that so far as construction
activity is concerned the most important criteria applicable in the case of
cement is its strength in ordinary temperature but for refractory it is its
refractoriness at high temperature. Lastly learned counsel has submitted
that in common parlance and in trade, refractory can never be understood
as cement. It has thus been urged that the levy of export tax on refractory F
is wholly illegal as the said product is not covered by the relevant entries
in the schedule.

      6. Shri Anoop G. Choudhary, learned senior counsel appearing for
the Municipal Corporation, Katni, has submitted that Entry I in the G
Schedule mentions "all types of cement" and so long as the material is
cement whatever be its chemical composition, nature or characteristic it
will be covered by the said Entry. Learned counsel has laid emphasis on
the words "all types of" and has submitted that it is a very comprehensive
Entry and consequently irrespective of the purpose for which the article H
    180                 SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.

A is used on account of its special qualities and components etc. as long as
    it is cement it will be covered by the Entry. According to Shri Choudhary
    the fact that refractories are used in furnaces and are capable of withstanding
    very high temperature, corrosion and abrasion will make no difference as
    it is still a cement and therefore it is covered by the Entry. Learned counsel
B   has also submitted that being a taicing statute it has to be strictly construed
    and one has to look merely at what is clearly said and since the entry is
    all embracing which covers "all types of cement" it will take within its
    compass refractory as well as cement.

C         7. Learned counsel for the appellant has referred to some dictionaries
    and technical books to get an idea what "refractory" is and it will be useful
    to take note of the same.

          The Cambridge                 Mat1!rials which are neither deformed
          Encyclopedia                  nor chemically changed by exposure to
D                                       high temperatures. This makes them
                                        suitable for containers, structural
                                        materials, and components, particularly
                                        in metallurgical operations, such as
                                        furnace linings. Naturally occurring
E                                       refractories include silica, fireclay, and
                                        alumina. Synthetic refractories include
                                        the high-melting carbides and nitrides
                                        used in nuclear power plant.

F         The New Encyclopaedia         Material not deformed or damaged by
          Britannica                    high temperatures, used to make
                                        crucibles, incinerators, insulation and
                                        furnaces, particularly metallurgical
                                        furnaces. Refractories are produced in
G                                       several forms; molded bricks of various
                                        shapes(see firebrick); bulk granular
                                        materials; plastic mixtures consisting or
                                        moistened aggregate that are rammed
                                        into place: castables composed of dry
H                                       aggregates and a binder that can be
ASSOCIATED CEMENT CO. LTD. v. STATE [G.P. MATHUR, J.]            181

                           mixed with water and poured like A
                           concrete: and mortars and cements for
                           laying brickwork.

The Oxford Dictionary      (of a substance) hard to fuse or work,
and Thesaurus              substance especially resistant to heat, B
                           corrosion etc.

New Webster's              suitable for lining furnaces because of
Dictionary and             resistance to fusion at very high
Thesaurus                  temperature
                                                                        c
The Oxford Universal       Resisting the action of heat; difficult to
Dictionary Illustrated     fuse (or to work in any way)
on Historical Principles

Chambers Twentieth         esp. difficult offusion: fire-resisting-n. a D
Century Dictionary         substance that is able to resist high
                           temperatures etc., used in lining furnaces
                           etc.


Mc Graw-Hill               One of a number of ceramic materials E
Encyclopedia of            for use in high temperatures structures or
Science & Technology       equipment. The term high temperatures
                           is somewhat indefinite but usually means
                           above about 1800° F (I 000° C), or
                           temperatu~s at which, because cf melting
                                                                      F
                           or oxidation, the common metals cannot
                           be used. In some special high temperature
                           applications, the so-called refractory
                           metals such as tungsten, molybC:enum,
                           and tantalum are used.
                                                                        G
                           The greatest use of refractories is in the
                           steel industry, where they are used for
                           construction oflinings of equipment such
                           as blast furnact:s, hot stoves and open-
                                                                        H
    182                SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A                                      heaith furnaces. Other important uses of
                                       refractories are for cement kilns, glass
                                       tanks, noneferrous metallurgical furnaces,
                                       ceramic ki Ins, steam boilers, and paper
                                       plants. Special types of refractories are
B                                      used in rockets, jets and nuclear power
                                       plants. Many refractory materials, such
                                       as aluminium oxide and silicon carbide,
                                       are also very hard and are used as
                                       abrasives; some applications, for
c                                      example, aircraft brake lining, use both
                                       characteristics

                                       Refractory materials are commonly
                                       grouped into (I) those containing mainly
D                                      aluminosilicates; (2) those made
                                       predominately of silica; (3) those made
                                       of magnesite, dolomite, or chrome ore,
                                       termed basic refractories (because of
                                       their chemical behavior); and (4) a
                                       miscellaneous category usually referred
E
                                       to as special refractories.


          8, The appellant has also placed on record certain technical data
    regarding the refractories manufactured by it which are used in Iron and
F   Steel Industry and in Fertilizer Industry. This technical data shows that
    different varieties of refractories are manufactured for use in different kind
    of industries. Learned counsel has also laid emphasis upon the fact that for
    the purpose of levy of excise duty the Central Government has treated
    refractory as distinct from cement. Tariff Item 23 C.B.E.&C. Tariff Advice
G No.75/SO, dated 24. I 1.1980 reads as under:

                   "It is considered and clarified for the information of the trade
             and all others concerned that Fire clay/Refractory Mortars and
             Ramming Masses are classifiable under Item 68 and not under
             Item 23 of Central Excise Tariff.''
H
           ASSOCIATED CEMENT CO. LTD. v. STATE [G.P. MATHUR, J.]          183

--   The relevant tariff entries are as under:

     Item No. 23-Cement
                                                                                A


          Item No. Tariff Description                         Rate of Duty

          23.        Cement, all varieties -                Rupees two          B
                     (I) Grey port land cement (including   hundred per
                     ordinary portland cement, pozzolana    metric tonne
                     cement and blast furnace slag cement),
                     masonry cement, rapid hardening
                     cement, low heat cement and                                c
                     waterproof (hydrophobic) cemerit

                      (2) All others                          Forty per cent
                                                              ad valorem

     Item No.68-All other Goods, N.E.S.                                         D
          Item No. Tariff Descripton                          Rate of duty

          68.         All other goods, not elsewhere          Eight per cent
                      specified, but excluding                ad valorem
                                                                                E
                      (a) alcohol, all sorts including
                      alcoholic liquors for human
                      consumption.

          On the basis of above tariff entries it is submitted on behalf of the
     appellant that refractory is not cement.                                   F

           9. The technical material referred to above shows that refractories are
     basically materials which are used in high· temperature structures or
     equipment. They can withstand temperatures above one thousand degree
     centigrade when other metals will melt or oxide and they are generally used G
     for lining of furnaces etc.

          10. The principle to be applied for interpretation of taxing statutes
     which is relevant for the decision of the present case has been settled by
     a Catena of decisions of this Court. Jn Commissioner of Sales Tax v. H
    184               SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A Mis. Jaswant Singh, AIR (1967) SC 1454 it was held that while interpreting
  items in statutes like Sales Tax Acts resort should be had not to the
  scientific or the technical meaning of such terms but to their popular
  meaning or the meaning attached to them by those dealing in them, that
  is to say, to their commercial sense. The same view was taken in Minerals
B and Metals Trading Corporation ofIndia v. Union ofIndia & Ors., [1972]
  2 SCC 620; Royal Hatcheries Pvt. Ltd. v. State ofA.P. & Ors., [1994] Supp.
  1 SCC 429; Dunlop India Ltd. v. Union of India, [1976] 2 SCC 241. In
  Indian Cable Company Ltd. v. Collector of Central Excise, [1994] 6 SCC
  610 this principle was stated as under:-

c           " .......... But we would like to point out that in construing the
            relevant item or entry, in fiscal statutes if it is one of every day
            use, the authority concerned must normally, construe it, as to how
            it i~ understood in common parlance or in the commercial world
            or trade circles. It must be given its popular meaning. The
D           meaning given in the dictionary must not prevail. Nor should the
            entry be understood in any technical or botanical or scientific
            sense. In the case of technical words, it may call for a different
            approach. The approach to be made in such cases has been stated
            by Lord Esher in Unwin v. Hanson, [1891] 2 QB 115 thus:
E
                  "If the Act is riirected to :lealing with matters affecting
            everyoody generally, the words used have the meaning attached
            to them in the common and ordinary use of language. If the Act
            is one passed with reference to a particular trade, business, or
            transaction and words are used which everybody conversant with
F           that trade, business or transaction knows and understands to have
            a particular meaning in it then the words are to be construed as
            having that particular meaning, though it may differ from the
            common or ordinary meaning of the words."

G                We would only add that there should be material to enter
            appropriate finding in the case. The material may be either oral
            or documentary evidence."

         The word 'cement' has not been defined in the relevant notification.
H   Therefore it has to be understood in the same way as is understood in
       ASSOCIATED CEMENT CO. LTD. v. STATE [G.P. MATHUR, J.]             185

common parlance. Cement is exclusively used as a building material and A
is a commodity of everyday use. Therefore, we have to go only by the
popular or commercial meaning of the term. The main property of the
refractory is that it can withstand very high temperature, corrosion and
abrasion. Cement is used for building roads, bridges and dams etc. and also
by common people for building residential or commercial buildings. B
Anyone buying cement for building purpose would under no circumstance
buy refractory. Similarly a mason or a supervisor would under no
circumstance use refractory material in making a normal construction. The
refractory is used for entirely different purpose namely for furnaces, linings
and for insulation. A dealer would not supply refractory to anyone wanting
to buy cement. In Cementa Corporation Ltd. v. Collector ofCentral Excise, C
[2002] 8 SCC 139 it has been held that it is axiomatic that if the product
is not cement but can be used for some purposes like cement, such product
is not cement. We are, therefore, of the opinion that refractory material
produced by the appellant does not fall within the Entry "all types of
cement" and consequently it is not exigible to levy of export tax.             D
      11. The challenge in the appeal preferred by the Municipal Corporation,
Katni is to the order of the High Court in the matter relating to withdrawal
of the amount deposited by the Associated Cement Co. Ltd. In view of our
finding that refractory material is not exigible to export tax, the appeal is E
liable to be dismissed.

     12. In the result CA No.7188 of 1997 is allowed and the judgment
and order of the High Court in so far as it holds that refractory manufactured
by the appellant are cement and are exigible to export tax is set aside. CA
No. 2992 of 2004 @ SLP ©NO. 1186 of 2000 preferred by Municipal                  F
Corporation, Katni is dismissed.

D.G.                                            C.A. No. 7188/97 allowed.
                                              C.A. No. 2992/04 dismissed.