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2011 DIGILAW 131 (GUJ)

STATE OF GUJARAT v. VADILAL GASES PVT LTD

2011-02-25

K.M.THAKER, SUDHANSU JYOTI MUKHOPADHAYA

body2011
JUDGMENT S.J. MUKHOPADHAYA The appeal has been preferred by the State against the judgment and order passed by the learned Single Judge dated 18.11.2 the said order, learned Single Judge allowed the writ petition preferred by the respondent-company, Vadilal Gases Private (hereinafter referred to as `the petitioner-company') holding that the petitioner-company being a `manufacturing unit' is req pay only 10% of the duty charges and not 60% as demanded by the appellants and set aside the demand order dated 06 issued by the Assessing Officer, Officer of Commissioner of Electricity Duty, Gandhinagar. 2. The writ petition was preferred by the petitioner-company claiming that it's unit is manufacturing various kinds of gas m registered as small scale industry unit is with the Department of Industries. Two electric meters, one for industrial purpose a for domestic purpose are installed in the unit. It has already been classified under the category of 10% electricity duty ev 1992. 3. Sometime in the year 1998, the 3rd appellant Assessment Officer visited the said unit and thereafter issued no 12.11.1998 to show cause as to why 60% of electricity duty be not made applicable to the petitioner-compan petitioner-company by its reply informed that it is a manufacturing industry, therefore, it is liable to pay on electricity duty as per law. On 26.11.1998 the 2nd appellant -Collector of Electricity Duty, Gandhinagar, instruc Gujarat State Electricity Board to revert to 10% electricity duty. However, on the basis of a subsequent report su by the officers from Gujarat Electricity Board, 2nd appellant Collector of Electricity Duty again issued a secon cause notice to which petitioner-company replied. It has provided the details of manufacturing of gas made by it. 4. The case of the petitioner-company was that the 2nd appellant -Collector of Electricity Duty once again vis respondent-unit and issued a show cause notice to which petitioner-company replied. Same question was raised notice also. Subsequently, by letter dated 22.07.2000 the 2nd appellant asked for details regarding preparati process of gas mixtures, which was also replied by respondent on 29.07.2000. 5. Finally, the appellant-authority issued final order on 18.08.2000 and raised the bills towards both the electric and the petitioner-company was directed to pay 60% of the electricity duty. 6. Aforesaid order and bills were challenged before the learned Single Judge. 5. Finally, the appellant-authority issued final order on 18.08.2000 and raised the bills towards both the electric and the petitioner-company was directed to pay 60% of the electricity duty. 6. Aforesaid order and bills were challenged before the learned Single Judge. The petitioner-company contend they are transporting liquid nitrogen and liquid argon from Reliance Industries Limited, Hazira and GSFC Baroda mobile cryogenic tankers with average temperature of liquids at 196oC. Said tanker is then directly conne displacement pump, which helps it to pass through the Natural Vaporizer and ultimately the end product is proc took specific plea before the learned Single Judge that the petitioner-company is governed by Gas Cylinder Rule and fall within the definition of `manufacture' as defined thereunder. 7. Learned Single Judge noticed the relevant provisions and held that the petitioner-company is manufactur mixture and therefore is required to pay only 10% duty charges and not 60% as demanded by the appellant-Sta order dated 07.06.2000 and the bills were set aside. 8. Learned counsel appearing on behalf of the appellant-State would contend that the petitioner-company manufacturing gas, and therefore do not come within the definition of `industrial undertaking' and it is simply r cylinders and no manufacturing process is undertaken by the petitioner-company. 9. On behalf of the State, learned counsel for the appellant would contend that `manufacturing of goods' would n include the entire process of manufacture. If it brings out a complete transformation for the whole components produce a commercially different article or a commodity then only it may be called manufacturing process, wh learned Single Judge has failed to notice. 10. He would further contend that the definition `manufacture' given in some other enactment cannot be applie interpreting the expression `manufacture' in relation to the provisions of the Bombay Electricity Duty Act, 1958. L Single failed to appreciate that under Schedule-1 of Part 2 of the Bombay Electricity Duty Act, 1958, there is a pr of appeal against the order of assessment and therefore instead of deciding the case on merit, he ought to have r the matter to the appellate authority for its decision. 11. According to learned counsel for the State, the conversion of liquified gas into a gaseous form as is underta way of modulating the temperature cannot come within the definition of "manufacturing process". 12. 11. According to learned counsel for the State, the conversion of liquified gas into a gaseous form as is underta way of modulating the temperature cannot come within the definition of "manufacturing process". 12. Learned counsel for the appellant-State further submitted that when Electricity Duty Inspector visited the prem the petitioner-company after the show cause notice, before whom the authorized signatory of the petitioner-co submitted a letter on 28.12.1998, wherein they have accepted that the process adopted by the petitioner-compan refilling the cylinders and no other manufacturing process is undertaken. The conversion of liquified gas into a g is undertaken by way of modulating temperature. 13. We have heard counsel for the appellant-State and petitioner-company and perused the record. 14. The petitioner-company had taken specific plea before the authorities that the liquid organic and nitrogen ga used as raw materials which are converted into gaseous form and the end products have different quality, d physical properties, different characteristics and different usage because argon and nitrogen in liquid form h industrial application. The mechanized process by which liquid gases are converted into gaseous form, which i compression of high pressure, removing impurities during the process and by using vaporizer for removal of m By using heat treatment also the moisture is removed. All such processes show the petitioner-compan manufacturing unit. 15. Rates of duty payable by the consumer other than those referred to in Section 2(a)(i) and (ii) as per Sec.3(1)(a Bombay Electricity Duty Act, 1958 is prescribed under Schedule 1. Under Part 1 of the Schedule at Entry prescription for energy consumed by an industrial undertaking has been made, relevant portion of which is hereunder: "(5) For energy consumed by an industrial undertaking, not being an undertaking to which item (2) applies, other than energy consumed in respect of any of its premises used for residential purposes- (a) where an industrial undertaking consumes high tension energy - 20 per cent of consumption charges. (b) where an industrial undertaking consumes exclusively low tension energy -10 per cent of cons charges." 16. The petitioner-company has been provided with low tension energy as per Entry No. 5(b) of Schedule 1. (b) where an industrial undertaking consumes exclusively low tension energy -10 per cent of cons charges." 16. The petitioner-company has been provided with low tension energy as per Entry No. 5(b) of Schedule 1. Trea petitioner-company as industrial undertaking, the Electricity Board was charging 10% of consumption charges Entry No. 7 of Schedule 1 for energy consumed in respect of any premises not falling under any of the Entries No (6), 60% of consumption charges has been prescribed to be charged. The appellant-State after notice to the res petitioner and on receipt of reply held that the petitioner-company do not fall under any of the Entries Nos. (1) t Schedule 1, and as such, the petitioner unit is liable to be charged 60% of the consumption charges. 17. `Industrial undertaking' has been defined u/Sec.2(bb) of the Bombay Electricity Duty Act, 1958, as under: "2(bb) "Industrial undertaking" means an undertaking engaged predominantly in - (i) the manufacture or production of goods, or (ii) any job work which results in the manufacture or production of goods but does not include - (A) a service undertaking; and (B) an undertaking which manufactures or produces any kind of food or drinks or both meant ordina consumption on the premises of the undertaking." 18. According to petitioner-company it manufactures gas mixtures. Per contra according to appellant-State pe company is not a manufacturing unit, but refills gas. 19. The expression `manufacture' fell for consideration before the Supreme Court in the case of BPL India Commissioner of Central Excise, Cochin - (2002) 5 SCC 167 . The Supreme Court held that the manufactu product is a mixed question of law and fact. Nature and extent of manufacturing process may vary from case When a change takes place, a new and distinct commodity known to the consumers and commercial commun commercial product comes into existence and such a change constitutes a manufacturing process. 20. In the case of Sonebhadra Fuels Vs. Commissioner, Trade Tax, U.P., Lucknow - (2006) 7 SCC 322 the S Court observed that definition of `manufacture' is very wide, which include processing, treating or adapting any g covers not only such activities which bring into existence a new commercial commodity different from articles o that activity was carried on, but also such activities which do not necessarily result in bringing into existence a different from articles on which such activity was carried out. Therefore, the commercial identify of the goods su to the processing, treating or adapting changes or not, is not very material. 21. It is not in dispute that the petitioner-company is guided by the Gas Cylinders Rules, 2004 as it is dealing w cylinders and come within the purview of Explosives Act, 1884. The petitioner has specifically taken a plea t preparing gas mixtures of liquid argon and nitrogen gases which are the raw materials. They are converted into form and the end product has a different qualities, different physical properties, different characteristics and d usage. After mixing it cannot be segregated in two different forms of liquid argon or nitrogen gas. 22. Rule 2(v) of the Gas Cylinders Rules, 2004 defines `compressed gas', which reads as follows:- "2(v) "compressed gas" means any permanent gas, liquefiable gas or gas dissolved in liquid under pre gas mixture which in a closed gas cylinder exercises a pressure either exceeding 2.5 kgf/cm2 abs. (1.5 guage) at + 15oC or a pressure exceeding 3 Kgf/cm2 abs. (2 Kgf/cm2 guage) at +50oC or both. Explanation. - Hydrogen Fluoride falls within the scope of compressed gas although its vapour pressure is 1.7 to 1.8 atmospheric gauge. Rule 2(xxxii) defines `manufacture of gas" as under: "manufacture of gas" means filling of a cylinder with any compressed gas and also includes tran compressed gas from one cylinder to any other cylinder" 23. What is the claim petitioner-company raised or the appellant-State thinks is not the factor. The question is w petitioner-company is a manufacturer or not. From the definitions of the Gas Cylinder Rules, 2004, which co petitioner-company, as it is filling up gas from one cylinder to another and the compressed gas means any perman liquefiable gas or gas dissolved in liquid under pressure or gas mixture which in closed gas cylinders exer pressure, as per the rules the petitioner-Company come within the definition of `manufacturer of gas'. In absence definition separately given under the Bombay Electricity Duty Act, 1958, the petitioner-company, being a manu of gas, we hold that the petitioner-company is an "industrial undertaking" within the meaning of Sec.2(bb) Bombay Electricity Duty Act, 1958. 24. In absence definition separately given under the Bombay Electricity Duty Act, 1958, the petitioner-company, being a manu of gas, we hold that the petitioner-company is an "industrial undertaking" within the meaning of Sec.2(bb) Bombay Electricity Duty Act, 1958. 24. This apart even as per the decisions of Supreme Court referred to above, on mixture of two gases, as a chang place and a new and distinct commodity known to the consumer and commercial community comes into existen commercial product, we hold that the petitioner-company is a `manufacturer' and fall within the definition of `in undertaking'. Such finding having been given by the learned Single Judge, we find no case made out to interfere with the ju passed by the learned Single Judge. In absence of any merit, the Letters Patent Appeal is dismissed, but no costs.