IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP.No. 30015 of 2002(W)
1. M/S. INVINCIBLE CHEMICALS PVT. LTD.,
... Petitioner
Vs
1. GENERAL MANAGER, DISTRICT INDUSTRIES
... Respondent
2. DIRECTOR OF INDUSTRIES AND COMMERCE,
3. STATE OF KERALA, REPRESENTED BY
For Petitioner :SRI.E.K.NANDAKUMAR
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice P.R.RAMACHANDRA MENON
Dated :19/05/2010
O R D E R
P.R. RAMACHANDRA MENON, J.
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O.P.No. 30015 OF 2002
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Dated this the 19th May , 2010
J U D G M E N T
Sustainability of Ext.P2 order passed by the first
respondent and Ext.P5 order passed by the appellate
authority/second respondent rejecting the claim for exemption
raised by the petitioner forms the subject matter of challenge in
this Writ Petition.
2. The petitioner is a Small Scale Industrial Unit
engaged in the manufacture of Carbonated Silicate and
production was started on 16.08.1996. The case of the petitioner
is that petitioner is entitled to get exemption from payment of
tax by virtue of stipulation in SRO. 1729 /93. On filing an
application for exemption , the matter was considered by the
first respondent and holding that there was no manufacturing
process as defined in Ext.P1 notification , the claim was rejected,
which was subjected to challenge by filing Ext. P3 before the
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second respondent. The reason for rejection as evident from Ext.
P2 is that Carbonated Silicate and Sodium Silicate are one and
the same products, viz, Soap Grade Sodium Silicate, since it is
stipulated in Ext. P1 notification under Clause (d) of exemption
from the definition of ‘Manufacture’ that ‘Converting Sodium
silicate into liquid silicate’ is not a process involving manufacture,
the application was rejected .
3. During the pendency of the proceedings before the
second respondent/appellate authority, the petitioner had
submitted samples of both the products to be examined by the
expert bodies i.e, Regional Research Laboratory,
Thiruvananthapuram of the CSIR , which is a Govt. of India
Institution. As per Ext.P4 it was certified that samples of
Sodium Silicate and Carbonated Silicate are chemically different
products. The said report was produced by the petitioner, which
however is stated as not considered by the second
respondent/appellate authority. Instead, the said auhority
sought to obtain opinion from elsewhere, based on which a
decision was taken that both are the same products and
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accordingly Ext.P3 appeal was rejected confirming Ext.P2, as
per Ext.P5, which is under challenge.
4. The learned Counsel for the petitioner submitted that
the finding and reasoning given by the appellate authority are
not corret, due to many a reason. It is stated that Ext.P5 order
was passed without considering Ext.P4 report submitted by the
Regional Research Laboratory owned by the Central
Government, while placing undue reliance on the alleged report
submitted by the Head of Department of Chemical Engineering,
Govt. Engineering College, Thrissur. It is also pointed out that
neither a copy of the said report was given to the petitioner nor
was he given an opportunity of hearing to question the contents
and credibility of the said report.
5. The learned Government Pleader appearing for the
respondents conceded that there is no reference in Ext. P5 as to
the veracity or credibility of Ext. P4 report submitted by the
Regional Research Laboratory or as to why it was not
acceptable . That apart, it is also not discernible from Ext. P5
whether a copy of the alleged expert report obtained from the
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Department of Chemical Engineering was served to the petitioner
giving opportunity of hearing so as to sustain the case. What is
stated in Ext. P5 is only that the State Level Committee held on
29.07.2002 discussed the issue in detail and accepted the expert
opinion of the Professor and Head of the Department of Chemical
Engineering, Govt. Engineering College, Thrissur and resolved to
reject the appeal, as ‘Soap Grade Sodium Silicate’ is in the
‘negative list’ and carbonated silicate is nothing but liquid sodium
silicate.
6. It is submitted by the learned Government Pleader that
both the products ie., carbonated silicate as well as sodium
silicate are used for the very same purpose and since utility is
same both are considered as the same product . This Court
finds it very difficult to accept the proposition. Similarly, the
submission that both, ‘carbonated silicate’ and ‘sodium silicate’
contain very same components also does not appear to be
palatable to this court. This is for the reason that the very same
components may give rise to different products. For example,
two atoms of Oxygen and one atom of Sulphur will give rise to
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one molecule of Sulphur Dioxide (SO2) while one atom of
Sulphur and three atoms of Oxygen will give rise to one molecule
of Sulphur Trioxide (SO3), though the components remain to be
same in both the products.
7. As borne by Ext.P1 notification, the term ‘Manufacture’
is defined as follows:
“Manufacture’ shall mean the use of raw
materials and production of goods commercially
different from the raw materials used but shall
not include mere packing of goods, polishing,
cleaning, grading, drying, blending or mixing
different varieties of the same goods, sawing,
garbling, processing one form of goods into
another form of the same goods by mixing with
chemicals or gas, fumigation or any other
processing applied for preserving the goods in
good condition or for easy transportation. The
process of producing desiccated coconut out of
coconut, (chemical treatment of rubber wood
and production of dressed or tanned hides out
of raw hides) shall be deemed to be
‘manufacture’ for the purpose of this
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notification.
8. The circumstance under which a process will not be
deemed as manufacturing process is also specified in the very
same notification , which is extracted below:
.”Thefollowing proceesing shall not be deemed
to be ‘manufacture’ for the purpose of this
notification.
(a) Crushing copra and producing coconut oil
and coconut oil cake.
(b) Converting timber logs into timber sizes
(c) Crushing rubble into small metal pieces.
(d) Converting sodium silicate into liquid
silicate
(e) Tyre-retreading.
(f) Cutting granite or marble slabs into smaller
pieces and/or polishing them.
(g) Such other processes as may be notified by
Government in this behalf.
[(h) Conversion of rubber latex into centrifugal
latex, raw rubber sheet, ammoniated latex,
crepe rubber, crumb rubber or any other item
falling under entry 110 of the First Schedule to
the Kerala General Sales Tax Act, 1963 or
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treating the raw rubber in any form with
chemicals to form a compound of rubber by
whatever name called. ]
9. Clause (d) of the term ‘Manufacture’ provides for
exclusion of a specified instance from the purview of the
manufacture such as ‘converting Sodium Silicate into liquid
silicate will not be deemed as manufcturing process. But here,
the process involved is manufcature of ‘Carbonated silicate.
Prima facie, it cannot be said that it is a simple convervison of
sodium silicate into liquid silicate. This is for the reason that
the process of ‘Manufacture ‘ of carbonated silicate is clearly
explained by the petitioner in paragraph 3 of the Original petition
which is as follows:
“……..Carbonated silicate is manufactured by
dissolving soluble glass in water under steam
pressure and temperature. Thereafter certain
percentage of soda ash and sodium hypo
chlorite is also added to make the product
carbonated silicate. Mere addition of these raw
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materials does not result in the end product of
carbonated silicate. These raw materials are to
be heated at 165 degree centigrade by
introducing steam produced by the boiler and
stirred. Ext. P1 contemplates that conversion of
sodium silicate into liquid silicate is not a
manufacturing process.”
10. The process of ‘manufacture’ as above is not disputed
by the respondents in the counter affidavit. On the other hand,
the only assertion in the counter affidavit is that the
‘carbonated silicate’ produced by the petitioner is mainly used
presumably in the soap industry, in place of ‘liquid sodium
silicate’, which by itself cannot be a reason to hold that the
products are one and the same, especially when it is certified
otherwise as borne by Ext. P4. Anyhow, this Court does not
propose to go into the technical aspects or correctness as to the
findings or reasoning given by the experts, but for expressing
the doubts as to the correctness of the stand revealed from the
proceedings and the pleadings on record. When there is a clear
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report given by the Regional Research Laboratory owned by the
Council of Scientific and Industrial Research, an Institution of
the Central Govt. of India as borne by Ext. P4, certifying that
‘Carbonated Silicate’ as well as the ‘Sodium Silicate’ are two
different products, how both the items could be considered as
the same product is not discernible from the materials on record.
Since there is no reference with regard to Ext.P4 report in Ext.
P5, what prompted the said authority to obtain another opinion
from the Department of Chemical Engineering, Govt.
Engineering College, Thrissur is quite obscure. That apart,
since there is a contention raised from the part the petitioner
that copy of the expert opinion stated as received by the State
Level Committee is not supplied to the petitioner and the
petitioner was not given any opportunity of hearing before
passing Ext. P5, this Court finds that the order cannot stand the
test of law. Accordingly, Ext.P5 is set aside. This Court finds
that the matter requires to be considered by the second
respondent in the light of the observations made above and
also with specific reference to Ext.P4. The second respondent is
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at liberty to obtain expert opinion from still higher authority, if
so necessitated and the matter shall be finalised in accordance
with law, giving clear and effective opportunity of hearing to the
petitioner. Final orders shall be passed as expeditiously as
possible, at any rate, within a period of three months from the
date of receipt of a copy of the judgment
The Writ Petition is allowed to the above extent. No cost.
P.R. RAMACHANDRA MENON,
JUDGE.
lk
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P.R. RAMACHANDRA MENON, J.
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O.P. No. 30015 of 2002
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Dated this the 19th May, 2010
J U D G M E N T