ORDER <NAME>, J.

1. This appeal by the defendant is directed against the judgment and decree of eviction passed by the Additional District Judge, <ORG>, Ali-pore, affirming the judgment and decree of the trial Court in a suit for eviction of the defendant on revocation of his licence as a licensee,

2. The case of the plaintiff/respondent, in short, was that he was a monthly tenant in respect of entire premises No. 19, Gopal Chandra Chatterjee Road at a monthly rental of Rs. 70/- under <NAME> and his brothers. On being approached by the defendant, in need of accommodation in September, 1979, the plaintiff/respondent allowed the defendant/appellant to live in one room of the suit premises for a period of four months from September 1979. On compassionate ground as a licensee, without any licence fee or consideration whatsoever, and on his refusal to vacate it after the expiry of the said period of four months, the respondent revoked his licence and brought this suit.

3. The defendant contested the suit by filing a written statement. His defence, in short, was that he was a tenant or for the matter of that, a sub-tenant under the plaintiff who was a tenant at a monthly rental of Rs. 20/- payable according to English calendar month and not a licensee at all. It was alleged that the father of the defendant was also a tenant in the suit premises and that the plaintiff accepted the defendant as a tenant in respect of the said room only after taking a sum of Rs. 2,000/- as advance subject to adjustment against the rent payable by the defendant/appellant. It was alleged that as because the defendant/appellant demanded rent receipt the plaintiff started harassment and also demanded higher rate of rent which the appellant refused to pay.

4. The trial Court, on a consideration of the materials on record, held that the defendant was a licence under the plaintiff and decreed the suit. Being aggrieved the defendant/appellant preferred an appeal before the lower appellate Court and the judgment and decree of the trial <ORG> were also affirmed by such Court. Defendant/ appellant has thereafter preferred this second appeal on, among other grounds, that finding of both the <ORG> below is manifestly unjust and illegal as both the <ORG> below mis-directed themselves in not taking into account important evidence bearing on the disputed issue and that the same is also perverse.

5. Judgment of the lower appellate Court has been assailed before this Court on several grounds. Firstly, it has been urged that both the Courts below misplaced the onus of initially proving that the burden lies on the plaintiff to show prima facie that the defendant was a licensee. Secondly, it has been urged that both the Courts below mis-directed themselves by not taking into account very important and material evidence bearing on the status of the defendant as to whether he was a licensee or a tenant and thereby came to a wrong finding regarding the status of the defendant. Thirdly, it has been urged that such finding regarding the status of the defendant/appellant as a licensee is unjust also as the "essential ingredients" necessary for finding of such fact have not been found by both the Courts below.

6. As against this, Mr. <NAME>, appearing on behalf of the plaintiff/respondent, contended that findings of both the courts below regarding the status of the defendant as a licensee is a concurrent finding of fact and should not be ordinarily interfered with in this second appeal, as the scope of this appeal in terms of the provisions of Section 100 of the Code of Civil Procedure, is to be confined only to substantial question of law. It is, therefore, urged that as because the defendant-appellant has been found by both the courts below to be a licensee, the same should not be ordinarily interfered with by this Court as it does not involve substantial question of law.

7. Before we enter into the merits of this case on the questions as addressed by the learned Advocates of both sides, let Us Iook into the admitted facts of this case. Un-disputably, the plaintiff was a tenant In respect of the entire suit premises, i.e.. 19, Gopal Chandra Chatterjee Road, at a monthly rental of Rs. 70/-. It is also an undisputed fact that the defendant/appellant is actualy occupying a room of such premises having the facility of a kitchen together with the further facility of joint user of toilet of such premises. Undisputedly also, the status of the plaintiff/ respondent was that of a tenant at the time the defendant was allegedly inducted as a licensee in September, 1979. It is further undisputed that the plaintiff/respondent became the owner of this premises by virtue of his purchase by a registered deed dated 22nd April, 1985, from the previous landlord. So the fact remains, that the plaintiff/respondent was still a tenant and not the owner of the suit premises at the time the suit was instituted in the year 1981.

8. Be it stated here at the very outset that in a case of concurrent findings of fact by both the courts below, the scope of interference by <ORG> is very limited and <ORG> should not interfere with the concurrent findings of facts of the Courts below on the ground of perversity unless the court concerned misdirected itself In coming to its finding on the question of fact. Such concurrent finding of fact, however, as observed by <ORG> can be interfered with only where it is manifestly unjust or where the essential ingredients for such a finding of fact have not been found by the Courts below. It is true, in an ejectment suit a finding on the question whether the defendant is a tenant or a licensee, the finding of the lower appellate Court on a consideration of the evidence is a finding of fact. Reference may be made in this connection to the decision of <ORG> . However, it has also been observed by <ORG> in another decision reported in AIR 1989 SC 1 that the question whether there is a tenancy or sub-tenancy or licence or parting with possession in any particular case, must depend upon the quality of occupation given to the licensee or the transferee. Of course, in the case referred to, dispute arose regarding the occupation of a holder to dis-

play his holding and as such the vital question in that case was whether occupation itself will amount to a question of tenancy or that of a licence. Mere occupation is not sufficient to infer either sub-tenancy or parting with the possession. Facts of the instant case are somewhat different from the one referred to, as because parting of possession in favour of the defendant/appellant is an undisputed fact, though it is claimed on behalf of the plaintiff/ respondent that the respondent was in actual legal possession of the suit property. In other words it is sought to be urged and emphasised that the possession of the defendant/appellant was not exclusive possession in this case. It is, therefore, urged that although the defendant/appellant was permitted to occupy a room, it was the possession of a licensee.

9. In view of the contentions of the learned Advocate for the defendant/appellant, it will be necessary to see as to whether the possession which was given to the defendant/appellant was that of a licensee or that of a tenant. Further, in view of the points raised by the learned Advocate for the defendant/appellant, the entire relevant evidence on record is to be considered to see that the <ORG> below considered all such important evidence having direct bearing on the disputed issue. If, on such examination we find that the courts' below made such a mistake, then in that case this Court is fully authorised to set aside such finding. To make it clear once again, it is true that <ORG>, while hearing second appeal under Sec. 100, C.P. Code, has not the jurisdiction to examine the evidence and reverse or reject the conclusion reached by the first appellate Court. But we should also bear in mind that it has the power to interfere with such finding, when the lower appellate Court made a mistake of the nature as stated, and can decide the issue, treating such finding as unwarranted and then it can be looked into as a substantial question of law. If any authority is needed on this point even after the amendment of 1976, we may refer to the decision , <CITATION> and also the decision of <ORG> , <CITATION> .

10.In the case of this nature where the plaintiff alleges that the defendant/appellant is a licensee and where the defendant/appellant asserts that he is a tenant, the initial onus is upon the plaintiff/landlord to prove that the defendant was inducted as a licensee. The question of onus, however, loses its importance once the parties enter into the evidence. Once the plaintiff/respondent tenders evidence showing that the defendant was inducted as a licensee, onus shifted upon the defendant to show that his status is that of a tenant and not a licensee as claimed by him.

11.On a perusal of the judgments of both the courts below, unfortunately we find that both the Courts below, misplaced the onus on the defendant/ appellant to prove his case that he was a tenant and not a licensee. Admittedly, there is no document of lease or agreement of tenancy between the parties. Sub-letting has not been defined in the Rent Act or in other words, in the Premises Tenancy Act. There is no paper showing payment of rent by the defendant/appellant to the plaintiff in respect of the suit room. Nor there is any paper whatsoever showing payment of a sum of Rs. 2,000/- by the defendant/appellant either as advance or as security money. But at the same time, there is also no good evidence adduced on the part of the plaintiff/respondent showing that the defendant/appellant was inducted as a licensee in September, 1979. Admittedly, nobody was present at the time of such induction of the defendant/ appellant as a licensee. Barring the uncorroborated testimony of the plaintiff/ respondent there is no evidence whatsoever of induction of the defendant/appellant as a licensee for a period of four months in the disputed room of the suit premises. A proper scrutiny of the evidence on record in this case would be necessary in view of the manner of approach made by both the courts below with regard to the evidence to determine the status of the defendant/appellant. We find from the admitted evidence of the plaintiff/respondent (P. W. 1) that he did not know the father of the defendant. There is no evidence that the parties are related to each other or that they had any previous acquintance. Plaintiffs case in this regard is short and simple that he allowed the defendant/appellant to say in, though for a specific period as the defendant/appellant was in need of such accommodation. It seems unlikely when the parties are not related to each other or there is not even any acquintance with each other, one party would go to the extent of accommodating the other by way of granting gratuitous licence to have exclusive possession of the particular premises without any consideration whatsoever. This is against normal human conduct or experience, unless of course the plaintiff/respondent can show it otherwise. It is true that the plaintiff/res-pondent has led evidence, both oral and documentary, to show that the defendant/ appellant came into the premises only in September, 1979 and not before that as it is the case of the defendant/ appellant. We have already seen that it is the specific defence case that his father was there in that house for a long time and that after demise of his father in 1970, he was accepted as a tenant at a monthly rental of Rs. 20/-and further on a payment of Rs. 2.000/ - as advance. So, the viital question for determination of the status of the defendant/appellant would be whether he was there in the suit premises since before the alleged induction in September, 1979. If we find positive evidence on record that he was there since before that time, it would demolish the case of the plaintiff/respondent that the defendant was inducted as a licensee only in September, 1979 and not before.

12. <ORG> started with this question on an analysis of the evidence led by the defendant and that too from a wrong angle; or in other words, he mis-directed himself in assessing the oral evidence led by the defendant/appellant on an assumption that no case of prior occupation before 1979, either by the defendant or by his father was made out in the written statement. We have already seen that the defendant made a specific case that his father <NAME> was occupying the suit premises as a tenant and after his death the defendant continued to occupy the same. Both the Courts below con-

sidered the same as a case not made out in the pleading itself. All the four witnesses examined by the defendant including the defendant/appellant himself were disbelieved and their eidence brushed aside on this sweeping assumption that no such case made out in the written statement, though there is such a case in the written statement, itself. According to <ORG>, <NAME> and <NAME> were the witnesses who saw payment of rent to the plaintiff/respondent by the defendant. <ORG> observed that none of these two witnesses was examined by the defendant although they were alive. As a matter of fact <NAME> was examined by the defendant as D.W. 3 who was a private tutor in the family of <NAME>, father of the defendant/appellant in the same house 20/25 years before ago, and he stated that he saw payment of rent by the father of the defendant to the plaintiff/ respondent. D. Ws. examined by the defendant are also the neighbours living in close proximity to the disputed premises and as such they are expected to know and to be acquinted with the inmates of that house and to witness any payment of rent or otherwise or the relationship between the parties in dispute. On a careful perusal of the judgment of <ORG> it will appear that he placed no reliance upon the testimony of the witnesses examined by the defendant or the credibility of such witnesses in the context of their making statement that the defendant's father was also there in the suit premises and the court below assumed it to be a case not made out in the written statement itself. In other words, he disbelieved the testimony of such witnesses, as if the same was contrary to the case made out in the written statement.

13. I have gone through the written statement very carefully to find that there is actually such a case in the written statement. Both the courts below made this apparent error in not looking properly into the written statement and, therefore, mis-directed themselves in assessing the oral evidence adduced by the parties. Therefore, it can be said that both the courts below, while recording their finding regarding the status of the defendant/ appellant, acted on an assumption not sup-

ported by evidence and failed to consider the oral and also the documentary evidence in coming such finding.

14. Coming to the evidence of the witnesses examined by the plaintiff, we have already seen that the plaintiff admitted that he did not know the father of the defendant/ appellant and he could not say if the defendant's father was the tenant in the suit premises. He did not enquire admittedly about the antecedents of the defendant when he was inducting him as a licensee. Admittedly, the defendant was given not only a room, but also a kitchen and the facility to use the toilet and the common tap water. Thereby, exclusive possession of the portion of the suit premises was given to the defendant. There is nothing to show that the plaintiff/landlord retained legal possession of the same in the sense allowing the defendant/tenant to occupy it only as a licensee or an invitee for a period of four months. The other witness (P.W. 2) was examined by the plaintiff to prove that the defendant/appellant was a tenant in their house, i.e., in the house of P.W. 2, since before his occupation of the suit premises as a licensee. In other words, P.W. 2 was examined to prove that the defendant/ appellant was living as a tenant in their house, and, was therefore, living elsewhere than in the suit premises before September, 1979. If there is convincing evidence on record to show that really the defendant was living elsewhere, then in that case the defendant will have no case as a tenant in the suit premises. On a scrutiny of the evidence of P.W. 2 we find that he is completely an interested witness and admitted to have come to the dock at the request of the plaintiff, as his father's friend and thereby brought the rent counterfoils which he was requested so to do. He did not know the defendant's father or where he lived. P.W. 2 cannot say when the defendant was inducted as a tenant in their house in 5, Sashibhusan Basak Lane. He cannot say in his evidence how old he was when the defendant was inducted as a tenant in their house, although he says he used to collect rent when the defendant was inducted as a tenant.

15.P.W. 3 is apparently an interested witnesses as admittedly he is a friend of the plaintiff/ respondent. It is true, he was once a tenant in this house, but he left it long ago and purchased a house site and built a house in the name of his wife away from this place, although he claims that he shifted from this house in 1966. As a matter of fact we find that he purchased the house site in which, he says, he built a house long before.

16. Nextly, turning to the documentary evidence on record, the plaintiff has placed much reliance on the rent counterfoils produced by P.W. 2. Genuineness of such rent counterfoils and also the factum of such alleged tenancy right in the said house, have been challenged on behalf of the defendant/ appellant. We have already seen that P.W. 2 as the son of the friend of the plaintiff/ respondent was requested to bring those rent counterfoils and he admittedly produced the same on such request. Allegedly, such rent counterfoils, at least two of the rent counterfoils are said to bear the initial of the defendant/appellant showing payment of rent when he was supposed to be occupying the said premises. <ORG> compared the said initials with the admitted signature of the defendant put in the deposition sheet. The defendant has already categorically denied that either he was a tenant in the said premises or that he ever paid rent to the father of the P.W. 2 or that the rent counterfoils (Exts. 7 and 7(a)) bear his initial or signature. 1 am at a loss to understand as to how <ORG> could come to the conclusion that the signatures are identical or of the same person. A casual look at the initials contained in Exts, 7 and 7(a) will show that they are completely distinct and different from those admitted signatures of the defendant/appellant in the deposition sheet. Forming an opinion even by the court as to the nature of such signature, made on the basis of the comparison between the admitted signature and the disputed one is extremely hazardous as has been held by this <ORG> as well as by the Supreme <ORG>. It is with utmost caution that such comparison is to be made and a finding is to be arried at on that basis. In the context of unreliable nature of the oral evidence of P.W. 2, it will be all the more risky to rely upon such rent counterfoils containing suspicious initials, far less proving convincingly that the defendant;appellant was a tenant in that building, namely, 5, Sashibhushan Basak Lane before September, (979. It is true, the plaintiff has produced the certified copy of the death certificate showing that in 1970, the defendant's father <NAME>'s address, as given therein, is other than the disputed premises. But such noting of address as appearing in the death certificate has been said to be incorrect one by the defendant (<NAME>) in his evidence. No doubt, this entry in the death certificate goes to show that the defendant's father was at least living in a different place at the time of his death. But there is overwhelming evidence on record to show that the defendant was living with his family in the suit premises even long before his induction as licensee in 1979. <ORG> has placed no reliance on the documentary evidence adduced by the defendant showing his residential address in the suit premises. Even, if we disbelieve the other documents, (Exts. B series) the postal receipts, (Ext. C series), postcards (Ext. D), inland letter (Ext. E). the transfer certificate, cannot be lighly brushed aside in the manner as <ORG> has done and dittoed by the court of appeal below. There will be no manner of doubt that at least some of these were addressed to the defendant or his mother before 1979 showing thereby that they were living in this house before the alleged induction as a licensee by the plaintiff. Postal marks clearly show the years before 1979 and even in spite of the alleged interpolations the name of the defendant and the address are discernible. So also the original school leaving certificate by the defendant (Ext. E) showing that his address as long back as 1965 was given in this disputed premises and showing thereby that the defendant/appellant was living in this house since before 1979. All these volumes of oral and documentary evidence are distinct pointer to the fact that the defendant/appellant was occupying such premises with the members ot his family since before 1979. This can only be done not as a licensee, but in the capacity other than that as a licensee. If this prior occupation of the defendant is believed, it fits with the case of the defendant that no rent receipt was granted to him because the plaintiff/ respondent was himself a tenant and that he would be liable to eviction for creating sub-tenancy. This is the specific case of the defendant and is borne out as such by the facts and circumstances of the case.

17. As already stated, the first court of appeal, also approached the whole case from a wrong angle misdirecting itself as that of <ORG>, in a way prejudicial to the interest of the defendant/appellant. In short, <ORG> judgment is also based on surmise and conjectures, as that of <ORG>. He simply brushed aside the documentary evidence adduced by the defendant/ appellant as suspicious in nature and placed no reliance on the same without carefully examining the same and trying to arrive at a finding based on his independent judgment and reasoning. He simply dittoed and endorsed the finding of <ORG> that such documents were created for the purpose of this suit, without trying to weigh and assess the evidentiary value of the same. In that view of the matter, I am constrained to observe that the court of appeal below failed altogether to comply with the statutory provisions of Order 41, Rule 31 of the Code of Civil Procedure. The judgment of the appeal Court should not be the mere endorsement of the findings of <ORG>, not containing the reasons for the decisions arrived at by him independently of that of <ORG>.

18. So, in view of what has been discussed above, it is clear from the volume of oral and documentary evidence on record that the defendant/appellant was there in the suit premises long before his alleged induction in such premises by the plaintiff/respondent in September, 1979. When this fact is established convincingly, it fits in with the case of the defendant/appellant that he was there obviously in the capacity not attributed to him by the plaintiff/respondent. In other words, this fits in with the case of the defendant/appellant that he was there as a tenant and that this fact was not given a stamp of legality or authority as because the plain-

tiff/ respondent's status was that of a tenant. No sub-tenancy was sought to be created, presumably to avert a suit for eviction to be filed by the landlord against the tenant. I find, therefore, that the plaintiff has failed singularly to prove his case of induction of defendant/ appellant as licensee and the finding of the lower appellate Court based on that of <ORG> should be set aside as stated above.

19. The result is, the appeal is allowed. The judgment and decree of the court of appeal below are set aside and the plaintiffs suit is dismissed.

20.Theie will be no order as to costs.

21. Appeal allowed.


PETITIONER: BIHAR STATE ELECTRICITY BOARD & ANR. Vs. RESPONDENT: DHANAWAT RICE AND OIL MILLS DATE OF JUDGMENT17/01/1989 BENCH: OZA, G.L. (J) BENCH: OZA, G.L. (J) SAIKIA, K.N. (J) CITATION: 1989 AIR 1030 1989 SCR (1) 168 1989 SCC (1) 452 JT 1989 (1) 425 1989 SCALE (1)162 ACT: Electricity (Supply) Act , 1948: Sections 18 , 26 , 28 , 29 , 49 , 54 & 60- -Agreement to supply electrical energy--Clauses 1, 4 and 13 of the agreement--Provision for constant supply of electricity--Constant supply whether continuous supply--Minimum annual guarantee payment-Tripping, load- shedding and power cut--Failure to supply continuous elec- tricity--Circumstances beyond control of <ORG>--Consequent non-consumption by consumer upto the level of minimum guarantee--Consumer entitled to proportionate reduction. HEADNOTE: Clause 1, of the agreement arrived at between the con- sumerrespondents and the appellant-<ORG>, pro- vided for constant supply of electrical energy to the con- sumers. Clause 4 provided that even if the consumer does not consume electricity above the minimum guarantee then it will be incumbent upon the consumer to pay annual minimum charges. Clause 13 provided for the contingency that if the consumer is prevented from receiving or using the electrical energy due to strikes, riots, fire, floods, explosions, act of God or any other case reasonably beyond the control of the <ORG> or if the <ORG> is prevented from supplying such electrical energy owing to any of the causes mentioned then the consumer was entitled to a proportionate reduction of the annual minimum guarantee bill as determined by the Chief Engineer. The respondents were served with the hills for annual minimum guarantee for the years 1973-74 to 1982-83 by <ORG>. The respondents filed their claims, under clause 13, with the Chief Engineer denying their liability to pay any such charges because the <ORG> did not supply constant supply as provided in clause 1. It was alleged that during the period in question due to trip- pings, load-sheding and power-cut the respondents suffered a great loss. The Chief Engineer negatived the claims of the respondents. A batch of writ petitions was filed in <ORG>, challenging the order of the Chief Engineer. Although in these petitions relief sought was proportionate reduction of the annual minimum guarantee 169 bills but in view of the interpretation of clauses 1, 4 and 13 <ORG> quashed the demand made by the <ORG> by holding that under clause 1 it was incumbent for the <ORG> to supply constant electricity supply and that the consumers will be liable to pay annual minimum guarantee charges only if the <ORG> supplies the power as provided in the agreement but the consumer does not utilise the power. In these appeals by Special Leave, it was contended on behalf of the appellants that the 'constant supply' men- tioned in clause I cannot mean 'continuous supply'. The respondent-consumers could not deny the liability to pay annual minimum guarantee bills if the <ORG> could not supply power for all the 24 hours due to circum- stances beyond the control of the <ORG>. In case of shortage of supply due to circumstances beyond the con- trol of the <ORG> the consumers were entitled to a propor- tionate reduction under clause 13 of the agreement. Allowing the appeals, the <ORG>, HELD: 1. The High <ORG> was not right in coming to the conclusion that the respondents were not liable at all to pay the annual minimum guarantee charges. [175C] 1.1. The High <ORG> in its judgment clearly stated the hours every year in dispute when the power was not supplied and on this basis the respondent*consumers will only be entitled to proportionate reduction as ordinarily the con- sumers are expected to have continuous power supply. Clause 13 clearly provides for the proportionate reduction of the annual minimum guarantee bills. [175D] 2. Clause 1 talks of constant supply of electrical energy providing for voltage, cycles, phases and wires. It does not talk of either of continuous or non-continuons or intermittent supply. [173E] 3. The Respondent consumers are entitled to a propor- tionate reduction of the minimum guarantee bill. The inabil- ity of the <ORG> to supply electrical energy due to power cut or any other circumstance beyond its control as per the demand of the consumer according to the contract will be reflected in and considered as a circumstance beyond the control of the consumer which prevented it from consum- ing electricity as per the contract and to the extent-it wanted to consume. [173G] 170 Northern India Iron & Steel Co. etc. v. State of Haryana JUDGMENT:

4. The Chief Engineer of <ORG> shall accordingly assess the proportionate reduction of the annual minimum guarantee bills in respect of disputed years on the basis of non supply as indicated in the High Court Judgment. [175D-E] 4.1. Pending assessment, the power supply of the consum- ers will not be disconnected on the ground of failure to pay the annual minimum guarantee bills. [175E] 4.2. <ORG> will be entitled to take recourse to the normal procedure if the consumers fail to pay after the proportionate reduction is made and fresh demand is made. [175E- <CITATION> ,  1 SCR 636; M/s. Man Industrial Corpo- ration v. <ORG> and others, AIR 1986 Rajasthan 137 and <CITATION> , AIR 1982 Bombay 580, referred to.

& CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 156164 of 1989.

From the Judgment and Order dated 24.7.1987 and 7.4.1988 of <ORG> in C.W.J.C. Nos. 253, 266, 262,255,260 265, 555,254 of 1986 and C.W.J.C. No. 17 of 1988 respectively.

Dr. <NAME> and <NAME> for the Appellants. <NAME> and <NAME> for the Respondents. The Judgment of the Court was delivered by <ORG>, <NAME> granted.

These special leave petitions have been filed against the judgment of <ORG> by which several writ petitions were disposed of. All these special leave petitions have been preferred in this Court aggrieved by that judgment. The common question which arises in all these SLPs is that under the agreement arrived at between the consumers and <ORG> there is a clause Of payment of minimum guarantee which indicates that even if the consumer does not consume electricity above the minimum guarantee that it will be incumbent upon the consumer to pay charges for energy which is the annual minimum guarantee provided in the agreement pertaining to Industrial units. The relevant facts are that for the years 1973-74 to 1982-83 the bills for annual minimum guarantee were served on the appellants by <ORG>, Forbesganj and on receipt thereto the appellants filed their claims as provided under clause 13 of the agreement on the ground that appellant was not liable to pay any such charges because the appellant did not supply constant electricity as provided in the agreement during the period in question and there were tripping, load shedding, and power-cut which resulted in a great loss to the petitioners and as the supply was not in accordance with the agreement liability to pay annual minimum guarantee bills could not be fastened on the consumer. The Chief Engineer who was the authority under the agreement negatived the claim and so they filed writ petitions in <ORG>.

<ORG> by the impugned judgment came to the conclusion that under clause 1 of the agreement it was incumbent for <ORG> to supply constant electricity and the consumer will be liable to pay annual minimum guarantee charges only if in spite of the fact that the Board supplies power as contemplated in the agreement and the consumer does not utilise the power then the liabil- ity to pay annual minimum guarantee charges will arise and on this basis <ORG> quashed the demands made for these years on the basis of annual minimum guarantee as it found that power was not supplied according to the agree- ment.

Learned counsel appearing for <ORG> contended that clause 1 of the agreement does not in any manner mean that there should be a continuous supply. The term used in clause 1 of the agreement only talks of con- stant supply of electrical energy at the pressure of volts, cycles, 3 phase, 3 wire etc. but it does not talk of contin- uous supply without any break and it therefore could not be contended that if there was no supply for a few minutes it will amount to failure on the part of <ORG> to provide constant supply. It was contended that the con- stant supply cannot mean continuous supply. It was also contended that clause 4 of the agreement clearly talks of the payment of annual minimum guarantee charges and there- fore it could not be said that because of the power cut or situations beyond the control of <ORG> if the power could not be supplied for all the 24 hours every day the respondent consumer can deny the liability to pay annual minimum guar- antee bills. It was also contended that in view of clause 13 of the agreement which provides that if there was shortage of supply and that shortage resulted in short supply then the consumer was entitled to a proportionate reduction of the annual minimum guarantee bill as determined by the Chief Engineer, <ORG> and consequently the respondent in this case went to the Chief Engineer who ultimately decided on the basis of facts that respondents were not entitled to any proportionate reduction and it was because of this that the petitions were filed before <ORG>. It was contended that the learned Judges of <ORG> have failed to appreciate clause 13 of the agree- ment. Learned counsel also placed reliance on the decisions in <CITATION> ,  1 SCR 636; <ORG> etc. v. State of Haryana & Anr.,  2 SCR 677; <CITATION> - ty Board and others, AIR 1986 Rajasthan 137 and <CITATION> , AIR 1982 Bombay 580.

Learned counsel for the respondents on the other hand contended that clause 1 provides for constant supply of power, the variations permitted have been indicated in this clause itself and it is contended that it is only where <ORG> discharges its duty to supply power as contemplated in clause 1 and the consumer because of his difficulties is not able to utilise power even upto the level of minimum guarantee that the liability to pay annual minimum guarantee bills could be fastened on the consumer but if the <ORG> fails to discharge its responsibilities as contemplated in clause 1 of the agreement it could not compel the consumer to pay the annual minimum guarantee. It was frankly conceded that in the petition itself originally relief sought was proportionate reduction of the annual minimum guarantee bills but in view of the interpretation of clauses 1, 4 and 13 <ORG> came to the conclusion that there is no liability on the consumer to pay annual minimum guarantee bills as the Electricity <ORG> has failed to supply power as contemplated in clause 1 of the agree- ment. Learned counsel however contended that the Chief Engineer in his order has misunderstood the whole situation but before <ORG> the facts were not disputed and in each case average hours of supply per year during the dis- puted period have been stated which have not been disputed by the Electricity <ORG> and if at all <ORG> judg- ment is not maintained the respondents are entitled to proportionate reduction of the annual minimum guarantee bills in the light of the hours of supply per year which have been stated in <ORG> judgment and is not disputed.

Clause 1 of the agreement reads as under:

"1. (a) The Board shall furnish to the consum- er and the consumer shall accept at the point of supply mentioned in the schedule hereto, on and from the date on which the said premises shall be connected with the supply Distribut- ing mains and during the continuance of the agreement, a constant supply of electrical energy at the pressure of ......

Volts, 50 cycles, 3 phases, 3 wires, alternat- ing current system subject to standard varia- tions as provided in Indian Electricity Rules, 1956 or any other statutory modifica- tion thereof as may be in force from time to time for the purpose and upto the maximum specified (hereinafter referred to as the contract demand) and under the conditions laid down in the Schedule."

This clause talks of constant supply of electrical energy providing for voltage, cycles, phases and wires. It is clear that it does not talk of continuous supply nor does it talk of non-continuous or intermittent supply. In fact this clause in our opinion is not very material for the decision of the case as the sole controversy pertains to interpreta- tion of clause 13.

Clause 4 of the agreement provides for the minimum guarantee and there is no dispute that if the consumer is not able to utilise electricity even upto the level of minimum guarantee. This clause provides for payment of charges of minimum guarantee. The real controversy pertains to the interpretation of clause 13. In fact in <ORG> case. [1976] 2 SCR 677 this <ORG> had the occasion to consider a situation of this kind where this <ORG> on this aspect of the matter has observed that where <ORG> fails to supply power because of shortage of energy, power cut or any other circumstances as per demand of the consumer according to the contract it will be considered as a circumstance beyond the control of the consumer which prevented it from consuming electricity as per the contract.

Their Lordships observed as under:

"We are, therefore, of the view that the inability of the <ORG> to supply electric energy due to power cut or any other circum- stance beyond its control as per the demand of the consumer according to the contract will be reflected in and considered as a circumstance beyond the control of the consumer which prevented it from consuming electricity as per the contract and to the extent it wanted to consume. The monthly demand charge for a particular month will have to be assessed in accordance with subclause (b) of clause 4 of the tariff and therefore from a proportionate reduction will have to be made as per sub- clause (f). We hope, in the light of the judgment, there will be no difficulty in working out the figures of the proportionate reduction in any of the cases and for any period. In case of any difference or dispute as to the quantum of the demand charge or the proportionate reduction, parties will be at liberty to pursue their remedy as may be available to them in accordance with law."

It appears that reading clause 13 in the present case clear- ly provides for the contingency and it provides for the failure on the part of the supplier and also failure on the part of consumer in the circumstances like strike, riot, fire, flood, explosion or act of God or any other reason beyond the control of either of the parties. Clause 13 of the agreement reads:

"If at any time the consumer is prevented from receiving or using the electrical energy to be supplied under this agreement either in whole, or in part due to strikes, riots, fire, floods, explosions, act of God or any other case reasonably beyond control or if the <ORG> is prevented from supplying or unable to supply such electrical energy owing to any or all of the causes mentioned above then the demand charge and guaranteed energy charge set out in the schedule shall be reduced in pro- portion to the ability of the consumer to take or the <ORG> to supply such power and the decision of the Chief Engineer, Bihar State Electricity <ORG>, in this respect shall be final."

In view of this language of the clause clearly providing for the proportionate reduction of the annual minimum guarantee bills it could not be doubted that <ORG> was not right in coming to the conclusion that the respondents were not liable to pay annual minimum guarantee bills at all. The judgment of this Court also clearly indicated that the respondents consumers. are enti- tled to a proportionate reduction of the minimum guarantee bills. In clause 13 of the agreement this is clearly stated that the authority competent to determine the proportionate reduction is the Chief Engineer and it appears that it was because of this that the respondents consumers approached the Chief Engineer for consideration. But it appears that the learned Chief Engineer also did not clearly understand the meaning of clause 13. The judgment of <ORG> on which reliance is placed have only followed the judgment referred to above.

In our opinion, therefore, <ORG> was not right in coming to the conclusion that the respondents were not liable at all to pay annual minimum guarantee charges. In fact they are only entitled to the proportionate reduction. The judgment of <ORG> clearly states the hours every year in dispute when the power was not supplied and on this basis the respondents consumers will be entitled to proportionate reduction as ordinarily the consumers are expected to have continuous power supply. It is therefore directed that the Chief Engineer of <ORG> on the basis of hours of non supply as indicated in <ORG> judgment and not disputed in <ORG> will assess the proportionate reduction of the annual minimum guarantee bills in respect of disputed years indicated above and it is also directed that until this is not done the power supply will not be disconnected on the basis of fail- ure to pay the annual minimum guarantee bills for the peri- ods stated above. However,-after the proportionate reduction is made and fresh demand is made, <ORG> will be entitled to take recourse to the normal procedure if the consumers fail to pay.

In the circumstances no order as to costs.

T.N.A. Appeals allowed.


JUDGMENT <NAME>, J.

1. This petition under Articles 226 and 227 of the Constitution of India by <ORG>, a Company incorporated under the Indian Companies Act and having its registered office at No. 8, Shoorji Vallabhdas Marg, Bombay-1, has been filed against <ORG>, the Collector of <ORG>, Hyderabad and Assistant Collector of <ORG>, <ORG> Visakhapatnam for the issue of a writ of certiorari or any other appropriate writ, direction or order to the respondents herein, calling for the records and proceedings of the case and after looking into the question of legality and/or propriety thereof to quash and set aside orders dated 14-6-1965 (Exhibit 'H' to the petition), 3-9-1965 (Exhibit 'I' to the petition), 22-3-1966 (Exhibit 'J' to the petition), and 31-10-1969 (Exhibit 'K' to the petition); (b) for issue of a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, direction or orders against the respondents, their officers, subordinates servants and agents directing them, (i) to withdraw and/or cancel the impugned orders dated 14th June, 1965 in so far as it rejects Claim IB and Claim 2 (Exhibit 'H' hereto) 3rd September, 1965 (Exhibit T hereto) 22nd March, 1966 (Exhibit 'J' hereto) and 31st October, 1969 (Exhibit 'K' hereto), and further directing them (ii) to refund to the petitioners Rs. 50,25,027 85 illegally collected as excise duty.

2. The impugned orders relate to the claims made by the petitioner for refund of excise duty earlier paid by the petitioner allegedly by mistake or misapprehension or on an incorrect interpretation of the relevant law on what the petitioner describes as Burner Fuel Oil, the duty whereon was charged treating it to be a finished product, called Furnace Oil. The total amount claimed by the petitioner was Rs. 49,47,047.13 The claim of the petitioner company having been rejected, it has now filed the present petition for quashing the orders of the various authorities and for a direction by way of mandamus that the amount be refunded to it by the respondents.

3. In order to appreciate the contentions of the parties it will be advantageous to go into the history of the payment of the levy in question as well as the process of manufacture of the commodity in question.

4. The petitioner has a refinery to process Crude Oil for production of various petroleum products. To run this refinery a plant has been installed at Visakhapatnam which commenced production in May, 1957 At various stages of production oil is used as fuel in furnaces and for heating the plant On 29th July, 1959 Low Sulpher Fuel Oil if sold to <ORG> through <ORG> for use only by <ORG>, was exempted from additional duty. Low Sulpher Fue1 Oil is one of the finished products produced by the petitioner after processing Crude Oil. On 24-2-1962 item 11-A was introduced in the tariff by the Finance Act of 1962. On 31-7-1962 a representation was made by the petitioner to <ORG> for exemption of levy of excise duty on Burner Fuel Oil consumed in the refinery. On 18th May, 1963 a notification was issued by <ORG> exempting from excise duty intermediate petroleum products falling under, item 11-A of the Tariff if used as fuel within the refinery for the manufacture of finished petroleum products. On 4th June, 1963 a trade notice was issued by <ORG> at Bombay to the effect that intermediate petroleum products such as Burner Fuel Oil were not liable to excise duty prior to 24-4-1962 On 5-7-1963 <ORG> at Hyderabad issued a standing order to the effect that intermediate petroleum products were not liable to central excise duty prior to 24th April 1962. The petitioner was informed by a letter dated 3rd August, 1963 by the Deputy Superintendent, <ORG>, Visakhapatnam that no excise duty was chargeable on Burner Fuel Oil prior to 24th April 1962. Thereafter in 1963 the petitioner filed a claim for refund of excise duty paid till 24th April, 1962 on what it described as Burner Fuel Oil There were meetings between the representatives of the petitioner and the <ORG> authorities which resulted in the claim of the petitioner being split up into three claims (described for convenience as claims 1A, 1B and 2) on 14th August, 1964.

5. Claim 1A was in respect of excise duty paid on oil transferred from <ORG> directly and not via propane. <ORG> (hereinafter called 'Tanks 170 and 171'). The amount under this claim was Rs. 24,22,547.14 and the refund claimed was for excise duty paid from 1st January, 1957 to 31st July 1963.

6. Claim 1B related to excise duty paid on transfers of oil from <ORG> only to tanks 170 and 171 declared at the time of payment of duty as Low Sulpher Furnace Oil. The amount claimed under this head was Rs. 4,79,844.67 and the period for which the refund was claimed was July, 1959 to 31st December, 1960. Claim No. 2 related to excise duty on transfer of Oil from the Bonded Blending-cum-Storage Tanks to tanks Nos. 170 and 171. The amount claimed under this head was Rs. 20,44,655.32. The period for which refund was claimed under this head was from 1st January, 1957 to 13st July, 1963.

7. The three claims were duly considered by the Assistant Collector at Visakhapatnam. On 14th Jute, 1965 the Assistant Collector, Visakhapatnam passed his order (Annexure 'H' to the petition) by which the claim under the head 1A was sent for pre-audit while the claims under the heads 1B and 2 were rejected. On 3rd September, 1965 another Assistant Collector of Excise at Visakhapatnam passed an order rejecting claim 1A also (Annexure 'I' to the petition). Thereupon the petitioner filed an appeal on 4th September, 1965 to the Collector against the rejection of claims 1B and 2 and on 30th October, 1965 against the rejection of claim 1 A. These appeals were rejected by the Collector, <ORG>, Hydrabad by his order dated 22nd March, 1966 (Annexure 'J' to the petition). The petitioner thereupon preferred revision applications to <ORG> on 16th July, 1966 which were heard on 2nd February, 1968. During the hearing of the revision petitions directions were given for further investigations of the case and a report regarding this investigation was submitted to <ORG> on 5th March, 1968. A further hearing was given to the petitioner on 25th October, 1968. <ORG> thereupon passed its order in revision on 31st October, 1969 (Annexure 'K' to the petition) by which both the revision petitions filed by the petitioner were dismissed by a detailed order. Aggrieved, the petitioner has now come to this Court for the reliefs already mentioned above.

8. The plant of the petitioner at Visakhapatnam generally speaking works in the following manner : There is a Crude Unit in which Crude Oil is first processed resulting in six basic products, namely, (i) Gas, (ii) Napatha Base Stock/Motor Gasoline, (iii) Kerosene Base Stock, (iv) Diesel Base Stock, (v) Fluid Catalytic Cracking Unit Feed Stock, and (vi) Intermediate Non-marketable Fuel Oil. We are concerned with this sixth product. This oil is then transmitted through pipelines to all or any of the three units of the plant namely (a) P.D. Unit or (b) Bonded Tank or (c) Tanks 170 and 171 The contention of the petitioner is that this intermediate non-marketable fuel oil, if sent to <ORG>, is for the purpose of further processing but may be sent from <ORG> to Tanks 170 and 171 for storage. If this oil is directly sent to Tanks 170 and 171, it is only for the purpose of storing the same for being transmitted there from either to the furnace for heating <ORG> or to the furnace for heating the Crude Unit. The Intermediate Non-marketable Fuel Oil may also be sent to the Bonded Tank via <ORG> either for being transmitted as such to Tanks 170 and 171 or for marketing the same after adding to it what is called Cutter Stock, without adding which, according to the petitioner, the oil is not marketable, due to a high viscosity, but can be used and has been used internally for heating the plant of the petitioner to produce various marketable products. According to the petitioner it paid excise duty on such oil stored in Tanks 170 and 171 on its transmission either directly from the Crude Unit or from <ORG> or from the Bonded Tank, which it was not liable to pay inasmuch as in that state the oil was what is described as Burner Fuel Oil and not Furnace Oil.

9. The learned counsel for the petitioner formulated seven propositions requiring court's determination. These may be summarised a follows: -

1. Expressions used in the Excise Act must be understood in the commercial or the trade sense and not the scientific or laboratory sense. According to trade and market, Furnace Oil is only that mineral oil which is of low viscocity grade i.e. 540-630 seconds by Redwood I Viscometer at 100 F. Burner Fuel Oil consumed in the petitioner's Refinery was of high viscocity. Mineral oil having such high viscocity is not known or considered by trade as furnace oil.

2. Excise duty is on production and not on stages of production. Burner Fuel Oil is an intermediate product derived at art intermediate stage in the process of manufacture of finished petroleum product. Burner Fuel Oil is not marketable as such without further' processing or blending with other oil, i.e. cutter stock. Therefore, Burner Fuel Oil is not excisable goods and there is no manufacture of goods within the meaning of the said Act.

3. There is no removal of Burner Fuel Oil within the meaning of Rule 49 of the said Rules. Rule 49 is a condition precedent to the recovery of excise duty.

4. The order dated 3rd September, 1965 passed by Assistant Collector, Visakhapatnam, is without jurisdiction because he had no power of review or revision of the order passed by his predecessor.

5. There is no question of any estoppel against statute. There is no inherent power of review.

6. In the case of a fiscal statute the the burden is on the <ORG> to prove all necessary ingredients justifying the tax.

7. In the case of a fiscal statute and a penal statute, there should be strict construction and the doubt, if any, should be resolved in favor of the citizen. An interpretation favorable to the citizen should be put by the court.

10. The respondents by way of return to the rule nisi have filed a counter-affidavit sworn by <NAME>, Under Secretary to <ORG>, <ORG>, <ORG>, New Delhi and during the course of the hearing of this case an application supported by an affidavit of <NAME>, was taken on record with the consent of the learned counsel for the petitioner. It is the respondents' case that the oil in question was not consumed by the petitioner as an inseparable part of an unbroken, continuous and uninterrupted process of manufacturing, and that what the petitioner describes as Burner Fuel Oil was actually Furnace Oil, the process of manufacture of which ended prior to removal for consumption. In other words, once the said oil had been separated from Crude Oil, whether it was used in the refinery or was marketed by addition of cutter stock or otherwise, it was a finished product which was liable to excise duty. So, the duty was rightly collected, the moment it was removed from the place of manufacture within the meaning of Rules 9 and 49 of the Central Excise Rules ; and the petitioner had always treated the same to be a removal attracting the payment of excise duty. It is also contended that at no time was any specific claim of the petitioner allowed and all the three claims were rejected after due inquiry and proper hearing. The counter-affidavits filed on behalf of the respondents also set out that the refinery or the manufacturing unit of the petitioner is the specified place of manufacture under Rule 9 of the Excise Rules and that Tanks 110 and of are outside the manufacturing unit which are not within the control of the Excise Authorities. Considerable stress is laid on the petitioner's own conduct in filing necessary declarations on what are called A.R. 1 forms that the oil question was Furnace Oil which attracted levy of excise duty * * * *

14. Mr <NAME> who opened the case for the petitioner formulated the 7 propositions which, according to him, arose for consideration in this case. Mr <NAME> who took over, however, primarily pressed only propositions 2 and 3 on behalf of the petitioner which we have already set out earlier. The points for determination, therefore, are : Whether the consumption of the oil in question is by way of an uninterrupted integrated continuous processor manufacture, and whether there is any removal of it from the place of manufacture under Rules 9 and 49 ?

15. Keeping in mind the definitions of the terms "excisable goods", "manufacture" and "factory" in Section 2 of the Excise Act it has first to be noted that Section 3 of the Act is the charging section under which excisable goods which are produced or manufactured become liable as attracting excise duty at the rates set out in the First Schedule to the Act. The duty is levied and collected in the manner set in the Excise Rules. The basic point for decision in this case, therefore, is whether this product which is claimed by the petitioner to be Burner Fuel Oil and which, according to the respondents was Furnace Oil, is a product "manufactured" in the "factory" of the petitioner as a manufactured product so as to become "excisable goods" attracting the levy of excise duty and if so whether payment of duty was required in respect of this product by virtue of the same being "issued out of the place or premises specified under Rule 9" or on being "removed from a store room or other place of storage approved by the Collector under Rule 47" in terms of Rule 49 of the Excise Rules.

16. Mr <NAME>'s contention is that the product in question (described by the petitioner as Burner Fuel Oil) is an intermediate product in the process of manufacture of finished petroleum product. It is not marketable as such without further processing and blending with cutter stock, and so, excise duty is not attracted in the case of this product as the duty is on production and not on stages of production. According to him if a product, even if attracting excise duty by itself, is obtained but is not removed or issued out as such and is utilised for obtaining another product, the first product does not attract levy of excise duty and it is only the end product which may attract excise duty. The intermediate non-marketable fuel oil which is the subject-matter of the present petition, according to the petitioner, remains in the pipeline throughout and is never removed or issued out. It is a part of a continuous uninterrupted integrated process of manufacture of the end product. It is not obtained by a distinct or independent process which comes to an end when this product is produced. There cannot be any duty levied at stages of a single process and the duty is leviable or can be collected only on the end product. Even if duty becomes leviable the stage for collecting the duty is not reached or, in other words, no assessment of duty takes place till a product is removed. Thus, though duty may be leviable it cannot be collected till the product is removed. Therefore, what has to be seen is whether the commodity in the present case attracts the levy of excise duty and even if it does whether there was removal within the meaning of the Excise Act and the Excise Rules for collecting excise duty or what may be called assessment of duty which becomes payable by the manufacturer.

17. The legislative intent for levy and collection of excise duty, on a reading of the Excise Act and the Excise Rules, appears to be that no duty is payable on intermediate products if the intermediate products by themselves are not the end products being manufactured by a particular factory provided, however, the intermediate products and the end products are obtained by one continuous uninterrupted integrated process as opposed to distinct or independent processes. We find force in Mr <NAME>'s contention that the concept of making assessment only at the stage of removal supports this legislative intent. Indeed though a particular article produced may attract levy pf excise duty, as contemplated by Section 3 of the Act, which is the charging section, removal is the essence of the crystalisation of the charge as would be apparent from a reading of Section 4 of the Act and Rule 49 of the Excise Rules. The quantum of the charge is on the value at the time of removal and the value, at the time of removal is the yard-stick for quantifying the charge. Though levy is attracted on production the power to collect duty is only on removal. There may be circumstances where production may take place and yet the product may not be issued out utilised, or marketed in which case the scheme of the Act and the Rules teed to show that no excise duty would be collected on the product. For example the glut of a particular article in the market may make it expedient for a manufacturer to hold back his product or financial circumstances may prevent the finished product to be marketed. It is in this context, therefore that the provisions of Section 3 of the Act and Rules 9 and 49 of the Excise Rules have to be harmonised. Indeed, these provisions complement each other. Section 3 lays down the legislative policy on what products excise duty may be levied. Rule 9 is an injunction on the manufacturer that he has not to remove any excisable goods from the place of manufacture or any specified premises appurtenant thereto, whether for consumption, export or manufacture of any other commodity in or outside such place unless he first pays the excise duty leviable on those goods. Rule 49 is a direction to the excise authorities that the payment of excise duty shall not be demanded until excisable goods are about to be issued out of place or premises specified under Rule 9 or are about to be removed from a tore room or other place or storage approved by the Collector under Rule 47. Thus, the point of time when duty must be paid or may be collected is clearly given. Similarly, it is provided that there must be removal from the specified place to attract the payment of duty. If there is no removal there would be no question pf payment. Removal is a positive act and cannot have any reference to disappearance of the product. For example evaporation would not be removal for that takes place by natural causes in the process of manufacture or even afterwards. Similarly, waste of product while in the pipe-line or in storage may take place on account of natural causes or otherwise. We have, therefore, to see whether in the present case the product in question is (a) only an intermediate product obtained in the process of manufacturing of any other finished petroleum product, (b) whether this product is treated as an end product or only an intermediate product by processing of which any other product is to be obtained, and (c) whether this product can be regarded as having been removed at any stage for any of the purposes mentioned in Rule 9 of the Excise Rules.

18. We have already noticed earlier how the product in question is obtained from crude oil. There can be no doubt that if this type of oil is first sent to <ORG> and from there to <ORG> and on being blended with cutter stock is marketed as Marketable Fuel. Oil, it will be a part of a continuous uninterrupted process of manufacture and will not attract the levy or assessment of excise duty by itself and the product which will be subject to duty will be the end product, namely, the Marketable Fuel Oil. As long as the oil in question is in this manner in the pipeline of the petitioner's refinery it continues to be the intermediate product being utilised in one single process for the manufacture of another product and would be the product to fit in with the type of product about which Mr. <NAME> has addressed us There is no dispute between the parties about this aspect. The difference of opinion is only about this type of oil which comes into the Tanks 170 and 171 from the three sources which we have already noticed, namely, either directly from <ORG>, or from <ORG>, or from the Bonded Tanks, and after coming into Tanks 170 and 171 either goes to Crude Unit Furnaces or <ORG> Furnaces.

19. From what we have been told about the process of manufacture and even in accordance with the contention of the petitioner there can be no manner of doubt that the oil coming into Tanks 170 and 171, even if non-marketable, is utilised for the purposes of heating the furnaces of the various units in the refinery of the petitioner. It has not been shown to us that the oil coming out from tanks 170 and 171 is further processed to be converted into any other product. As already noticed earlier, this very oil if it goes from the Crude Unit to the P.D. Unit and further on to the Fluid Catalytic Cracking Unit and thence for addition of cutter stock or blending with cutter stock the oil is being utilised for being converted into some other product but if it comes into tanks 170 and 171 either directly from the Crude Unit or Via the P.D. Unit or the Bonded Tank it is not being utilised for being converted into another product but is thereafter utilised for heating purposes. Oil thus obtained for use as a heating medium either by separating it from Crude Oil and other base stocks in the Crude Unit or when this very type of oil goes from the Crude Unit to the P.D. Unit or blending unit to tanks 170 and 171. it is only for one purpose and is to use it as fuel. Therefore, it must be held that the oil which comes into tanks 170 and 171 is really an end product and distinct from an intermediately product utilised in an uninterrupted process of manufacture for obtaining another product.

20. It was urged that oil used for heating purposes it really self-generating fuel obtained in the process of manufacture of various petroleum products and even if it is consumed for heating, it is part of an integrated uninterrupted continuous process of manufacture, for the self-generating fuel is a necessity for the running of the plant in order to make an end product the process of manufacture must come to an end if the entry of this oil in tanks 170 and 171 amounts to a stage of production coming loan end it would mean that one process terminates and another has to start. This, according to Mr <NAME>, does not happen or the oil in question is consumed for manufacture of the same commodity and not any other commodity. Production, according to him, must be given the commercial meaning of the term or as in Cost Accountancy net produce has to be taken into account and not what all is produced for part of the product may be utilised for production of the product which can qualify for being called a product commercially produced. There may be something in what the learned counsel says but excise duty is attracted on all excisable goods which ire produced as and when the same are removed within the meaning of Rules 9 and 49 of the Excise Rules. Further as we have already observed earlier the product which is not excisable is the product which itself gets converted into another product which may be excisable in a single continuous process. In the present case we do not find such to be the case.

21. Our attention was invited to an unreported judgment of <ORG> (Coram : Tulzapurkar, J.) in miscellaneous case No. 491 of 1964, <ORG> v. <NAME>, Assistant Collector and <ORG>., rendered on 30-4-1970. In that case the contention of Mr <NAME> who appeared for the petitioner was that since the petitioner-company had employed a continuous and integrated process for the manufacture of Nylon yarn and since the Polymer Chips that are obtained at an intermediate stage are used or consumed in the further manufacture of the said Nylon yarn without the said Chips being taken out of the equipment, the Polymer Chips did not attract levy of excise duty as the same were utilised in a continuous and integrated process for the manufacture of Nylon yarn and also there was no removal within the meaning of Rule 49 read with Rule 9 of the Excise Rules. After noticing the various provisions of the Act and the Rules and the process of manufacture in that particular case the 1earned Judge repelled the contention of the Counsel for the Respondents that the Polymer Chips attracted duty and held that inasmuch as the Polymer Chips that were obtained by the petitioner-company did not go out of the manufacturing equipment until the final product of Nylon yarn was obtained the said Polymer Chips formed part of an uninterrupted integrated process of manufacturing Nylon yarn and there was no removal or issuing out of the Polymer Chips within the meaning of Rule 49 read with Rule 9 of the Excise Rules. The decision is not helpful in the circumstances of the present case for there can be no dispute with the proposition that an intermediately product used for obtaining an end product in a single uninterrupted process would not attract duty. The intermediate product would, however, attract duty if it is obtained by one process and is used for being converted into another product by a separate distinct process. In the present case, as we have already held, the oil in question itself was not converted into any other product and its production come to an end once it reached tanks 170 and 171. Whether there would be a removal in this case is a different matter to which we shall presently advert but it cannot be said that the oil in question can be equated to Polymer Chips in the Bombay case.

22. Reference was then made to the decision of a learned Single Judge of this Court in Civil Writ No. 115-D of 1963, <ORG>, Kota v. The Collector of <ORG>, Delhi, Central Revenue Buildings, Mathura Road, Delhi, decided on 28th August, 1979. This was a case in which the petitioner-company which has a factory at Kota for manufacturing Nylon-6 Yarn was assessed to duty on the import of 'Caprolactum' under Item No. 28 of the I.C.T. and the end product i.e. Nylon-6 Yarn was again assessed to <ORG> Duty. The imported Carprolactum has to be first ploymerised and from the polymerised chips thus obtained the Nylon yarn is manufactured. The Polymer Chips are not sold as such in the market and the petitioner used the same entirely in the process of manufacture of Nylon yarn. It was contended that the Polymer Chips could not be regarded as plastics not other-vise specified under Item No 15A(iii) of Schedule I of the Excise Act and so, no duty was payable on Polymer Chips. The question in the case was whether the Polymer Chips fell under Item No. 15A (iii) i.e. "Plastics not otherwise specified". It was also urged that in the process of manufacture of Nylon yarn adopted by the petitioner-company there was no removal of the Polymer Chips and so, in any case, duty cannot be levied on the same in view of the provisions of Rule 49 read with Rule 9, <NAME> held that Polymer Chips produced by the petitioner-company were not covered by Item No. 15A(iii) of the First Schedule to the Excise Act and on this ground allowed the petition. The learned Judge, however, observed that it was not necessary to give any decision on the point of removal but did notice the judgment of <NAME>, J. of <ORG> to which reference has been made earlier and observed that judgment proceeded on the basis that the Excise Act did not contemplate the imposition of excise levy on a continuous and integrated process until the Rules were amended by the introduction of Rule 173A and 173K. in May, 1969. Therefore the judgment in Civil writ No. 155-D of 1963 is also of no avail to the petitioner.

23. We may now advert to the question of removal which is pertinent in view of Rule 9 of the Excise Rules for collection of Excise Duty.

24. Rule 9, which we have read earlier, in terms lays down that no excisable goods shall be removed from any place where they are produced, or any specified premises appurtenant thereto, whether for consumption, export or manufacture of any other commodity in or outside such place until the excise duty leviable has been paid. The Rule thus contemplates the city on manufacture as the place from where removal has to take place whether for consumption, export or manufacture of any other commodity. It obviously makes no reference to the plant or equipment. But where there are two distinct plants within the same factory premises removal can take place either outside the factory premises or within the factory premises if the product obtained by working of one plant is sent to another plant for obtaining another product. There can be no removal of a product within the plant itself so long as the product is in the process of manufacture. There can be removal only if the product goes out of one stream of production into another stream of production or if the product is issued out of or taken out or consumed if no further processing of that product is to be done. The Rule also contemplates that consumption within the place of manufacture would also amount to removal. The consumption of the product contemplated by Rule 9 is consumption of the product by itself and not for converting it into another product, as in the case of Polymer Chips. The integrated continuous process content plated by Rule 9 read with Rules in Chapter 7A comes to an end when no further processing is to be done of that particular product and thereafter If such product is utilised for consumption or what in excise parlance is known as "home consumption" or exported or used for manufacture of any other commodity in or outside the place of manufacture the excise levy is attracted. We cannot persuade ourselves to agree with the contention raised on behalf Of the petitioner that the consumption of this oil for heating purposes is part of the process of manufacture and no removal takes places from the plant. The moment oil goes out of the pipe-line for consumption as fuel for furnaces and not for being converted into any other product whether within or out of the factory it amounts to removal within the meaning Rule 49 read with Of Rule 9. The continuous process of manufacture comes to an end or as Mr. <NAME>, the learned counsel for <ORG> contended, it snaps. There is no putting back of this oil into the process of manufacture if it is consumed for lighting furnaces or for heating the equipment. It is no longer in the line of production like part of the oil going from <ORG> to <ORG> and thereafter to the bonded tanks after being blended with cutter stock. In that view of the matter whether this oil is described as furnace oil or Burner Fuel Oil is immaterial and is the question of its marketability. Accordingly, the meaning to be given to the word "production" as commercial production has also no relevance. It is not in dispute that in the present case the entire refinery was "the place" within the meaning of Rule 9. Tanks 170 and 171 are obviously storage tanks and not a pipe or plant or equipment in which any processing is done. We, are, therefore, of the view that the oil in question was not only a finished product, it not only went out of the continuous integrated process of manufacture of other petroleum products but also that when it was removed to or from tanks 170 and 171 "excisable goods" would be removed for consumption within the factory or the place of manufacture : but this very oil when it goes to <ORG> via <ORG> is not being removed within the meaning of Rule 49 read with Rule 9 and continues to be in the pipe-line for manufacture of an end product. Where, however, such oil, whether blended or not blended with cuter stock flows into tanks 170 and 171 from the Bonded Tank, it again attracts the levy, for the flow into tasks 170 and 171 is not for the purposes of congesting the oil into any other product but only for being stored to be consumed in the furnace.

25. Mr. <NAME> mentioned by way of illustration the use of bagasse in sugar mills which is obtained as a by-product in crushing sugarcane. Bagasse, as is commonly known, is used as fuel for heating the boilers in sugar mills. It has not been shown to us whether bagasse attracts excise levy but even if it did, it will make no difference to the proposition of law for if in a particular plant use of bagasse forms an integrated process, it would attract levy.

26. We may mention one other point which was urged on behalf of the petitioner and that is that claim 1A having been allowed by the order dated 14th June, 1965 the same could not be rejected by the order of another Assistant Collector passed on 3rd September, 1965. The contention is that the statute gives no power of review to any officer and so the order of 3rd September, 1965 was without jurisdiction inasmuch as this order could not review the earlier order dated 14th June, 1965. In this behalf our attention was invited to the decision of <ORG> in <CITATION> ., A.I.R. 1966 <ORG> 641. It was held in construing the scheme of the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948 that inasmuch as no court or authority has power of setting aside an order which has been properly made unless it is given by statute, an order once made by an authority cannot be reviewed unless there is a specific provision giving the power of review. If the order of 3rd September, 1965 amounts to a review of the order dated 14th June, 1965 as far as it relates to claim 1A then no doubt it must be set aside but in our view the order of 14th June, 1965 makes it clear that Claims 1B and 2 were specifically rejected and against that the petitioner could file an appeal, as it did. Regarding claim 1A it is in terms stated that the claim was being sent for pre-audit and the petitioner would hear about it again. The contention that claim 1A was with regard to undisputed items which were separated at the instance of the excise authorities from the disputed items comprised in claims 1B and 2 has no force for as would be evident claim 1A relates to the oil received in tanks 170 and 171 direct from <ORG> and which did not undergo any other or further process of manufacture as could be claimed for oil coming into tanks 170 and 171 either from <ORG> or through the Bonded Tank via <ORG> and <ORG>. It is the oil covered by claims 1B and 2 about which there was some dispute of further processing and this dispute not being there in respect of oil coming direct from <ORG> to tanks 170 and 171 the same was separated from the consolidated claims earlier made by the petitioner. The very fact that this claim 1A was sent for pre-audit shows that the claim was not admitted till pre-audit was done as was required under the various financial regulations. Indeed, as would be clear on a reading of Rule 136 of the Treasury Rules of the Central Government no claims against the Government, other than those by one department against another or by a State Government, not preferred within a year of their becoming due can be presented without an authority from the Accountant-General with certain exceptions. The petitioner's claim undoubtedly was more than one year old and before any sanction for payment of the same could be issued the authority of the Accountant-General was necessary and that is what is meant by pre-audit. Therefore, the claim could not have been admitted by the Assistant Collector on 14th June, 1965 and the fact of his sending the claim for pre-audit shows that in order to entertain that claim or make that claim the excise authorities had first to send that claim for pre-audit and thereafter pass orders sanctioning or refusing the claim. No question of review, therefore, arises and the order of 3rd September, 1965 cannot be regarded as one passed reviewing the order dated 14th June, 1965. Indeed, no such point was ever taken by the petitioner either before <ORG> or <ORG>.

27. Mr <NAME>, who appeared for the Collector of Excise raised some technical objections to any relief being granted to the petitioner. These are not very relevant in the view that we have taken but all the same we may briefly notice the same.

28. The first contention on behalf of the Collector was based on Rule 11 of the Excise Rules which provides that no duties or charges which have been paid or have been adjusted in an account current maintained with the Collector under Rule 9 and of which repayment, wholly or in part, is claimed in consequence of the same having been paid through inadvertence error or misconstruction shall be refunded unless the claimant makes an application for such refund within three months from the date of such payment or adjustment, as the case may be. Admittedly, the various amounts claimed had been paid more than three months prior to the lodging of the claim. It was therefore, urged that inasmuch as the petitioner's case is that it paid the amount through inadvertence, error or misconstruction and the application for refund has been made more than three months from the date of payment, the duty is not refundable and there is no power to condone the delay in making the application similar to Section 5 of the Limitation Act. The contention is that reliefs contrary to a statutory provision like Rule 11 cannot be given. This plea has not been specifically taken in the affidavit filed on behalf of the Collector but in paragraph 4 of the counter-affidavit there is a mention of laches and delay. It is contended that law as such need not be pleaded and the specific provisions of the statue could always be relied upon if pleaded only generally. There being no right to claim a refund there is no legal duty cast upon the respondents which can be enforced by mandamus. To this the reply of the respondent is that .the Government itself invited claims by its letter dated 4th June, 1963 which would amount to relaxation on 3rd August, 1963 and in that very month the consolidated claim was preferred. Indeed, none of the excise authorities rejected the claim of the petitioner by invoking Rule 11.

29. On behalf of the Collector our attention was invited to a decision of <ORG> in <CITATION> ., A.I.R. 1968 <ORG> 1183. This was a case under the Motor Vehicles Act wherein the question arose whether the rights of the appellant were extinguished by promulgation of a scheme and issue of notification cancelling the appellant's permit. It was observed that after the cancellation of his permit tee permittee appellant could not maintain a petition under Article 226 of the Constitution because the right to maintain such a petition postulates a subsisting personal right in the claim which the petitioner makes and in the protection of which he is personally interested. Inasmuch as the permit was validly terminated the appellant had no right which he could enforce when he moved the court. It may be, as provided in Section 39 of the Limitation Act that the limitation for moving such an application for refund would be three months but then we would not like to comment on this aspect. Admittedly, the petitioner was paying duty on the oil in question as furnace oil right till 1962/1963 and it was only after the relaxation was made in 1963 and claims were invited by the letter dated 3rd August, 1963, addressed to the petitioner, that the question of claiming the refund arose. On receipt of the letter dated 3rd August, 1963 the petitioner lost no time in preferring a consolidated claim. The authorities concerned also did not invoke Rule 11. In that view of the matter we cannot reject the contention of the petition outright on the basis of Rule 11 or on the ground of laches and delay. A suit for recovery of the amount may today be barred and may tend to bar the remedy under Article 226 of the Constitution also keeping with the rule laid down by <ORG> in <CITATION> ., 1969 (2) S.C.R. 824 but then the circumstances of the case in which the applications for refund were invited have also to be kept in mind. Therefore we are not inclined to reject the petition on these technical objections. Indeed, as was observed by a Bench of <ORG> in <CITATION> 40 Sub-section (2) of the Excise Act bars the institution of any suit or legal proceedings only when such a suit or legal proceedings relates to or is directed against anything done or ordered to be done under the Act and Rule 11 is attracted only if there is inadvertence, error or misconstruction and may not be attracted if refund is claimed on equitable grounds. Further, as was observed in <CITATION> , , the rule may only be a rule of procedure and not a condition precedent to the marking of a claim and the rule may only entitle the excise authorities to decline to refund the duty departmentally and relegate the claimant to a suit.

30. It was also urged on behalf of the respondents that there is no manifest error in the impugned orders which "shock the conscience of the court" so as to call for interference under writ jurisdiction. In the view that we have taken it is not necessary to dilate upon this aspect.

31. The result is that this petition fails and is dismissed with costs.


PETITIONER: <ORG> Vs. RESPONDENT: UNION OF INDIA & OTHERS DATE OF JUDGMENT24/08/1972 BENCH: <NAME>, A.N. BENCH: <NAME>, A.N. HEGDE, K.S. <NAME>, D.G. CITATION: 1972 AIR 2551 1973 SCR (1) 997 CITATOR INFO : R 1977 SC 597 (34) R 1979 SC 397 (3,4,6,9) D 1985 SC1201 (12) ACT: Indian Tariff Act--Import Tariff--Annexure L--Entries 26, 70(7) & 87-Wolfram Concentrate with 65% WO3 concentration- Whether lmportable, duly free as Metallic ore-Normally acceptable merchantable quality of 'ore' alone relevant. Interpretation of statutes--Taxing statutes-Meaning in commercial sense and not in scientific sense should be followed. HEADNOTE: The appellant imported 200 metric tons of wolfram concentrate, under a contract which prescribed minimum contents of 65% of WO3 in the concentrate. The <ORG> authorities levied duty at the rate of 60% amount under item 87 of the First Schedule. The appellant claimed refund on the ground that no duty was leviable as the goods imported was an "ore" and fell under item 26 or 70(7) of the Import tariff. The Assistant Collector of <ORG> held that the appellant was not entitled to refund because the term 'ore' mentioned in the text of item 26 is confined to articles which are in 'form and condition in which they are mined and not as wolfram ore concentrate in powder form as in the present case. On appeal by the appellant the Appellate Collector held that the goods in question were in the manufactured form made by special specifications by dressing and were thus not "ores". <ORG> rejected the revision application filed by the appellant holding that the examination by the Chemists showed that. the uniform granules of the material were not only separated from rock but also from various impurities and had been subjected to such processing as would take them out of the category of metallic ore mentioned in entry 26. In appeal to this Court the appellant contended that for the purposes of levy of ditty under entry 26 the normally acceptable merchantable quality of wolfram (containing a minimum 65% W03) is relevant and riot wolfram in mined form. Allowing the appeals, HELD : Wolfram ore when mined contains only 5 to 2 per cent W03 and in order to make it usable and merchantable ore with minimum 65% W03, Concentration is necessary. If item 26 of the Import Tariff is to be restricted to wolfram being material containing 5 to 2 per cent W03, it would be mainly rock which can not be imported in large quantity and it will have no market. It is only usable ore with 65% W03 concentration that is relevant for levy of duty. What has to be seen is what is meant in International trade and in the market by Wolfram ore containing 65% or more W03. The said concentrate is achieved by selective mining and washing or magnetic separation. It does not involve any manufacturing or processing with chemical for removing impurities. The concentrate, therefore, does not cease to be an 'ore'.within the meaning of item 26. [1002C-F] HELD, further, that in interpreting items in taxing statutes, resort should be had not to the scientific or technical meaning but to the meaning attached to them by those dealing in them in their commercial sense. [1002H] 998 JUDGMENT:

CIVIL APPELLATE JURISDICTION : C.A. Nos. 877-879 of 1967. Appeal by special leave under Article 136(1) of the Consti- tution of India from the order No. 2846-2848 of 1966, dated 25th and 29th November, 1966 of the <ORG>, <ORG> in Custom Revision Application. <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, for the appellant.

<NAME>, Solicitor-General of India, <NAME>, <NAME> and <NAME>, for the respondents. <NAME>, <NAME> Engineer <NAME> and <NAME>, for the interveners.

The Judgment of the Court was delivered by <NAME>, J. These appeals by special leave are from an order of <ORG> passed in November 1966 refusing to refund the duty charged on 200 metric tons of Wolfram Ore imported by the appellant <ORG> from the U.S.S.R. The facts are not in dispute. In October 1953 the appellant entered into a contract with a Moscow concern for the purchase of 200 metric tons of Wolfram Concentrate. The chemical composition of the goods apart from other components was to contain W03 the minimum percentage being 65%. <ORG>, <ORG>, granted an import license on November 21, 1963 permitting import of the aforesaid Wolfram Ore. The goods arrived in Bombay on January 14, 1964. It appears that certain tests were carried out by the Deputy Chief Chemist of <ORG>. The customs authorities levied duty under item 87 of the First Schedule-Import Tariff, at the rate of 60% amounting to Rs. 4.13. 796.24. The appellant paid that amount under protest. The appellant claimed refund on the ground that no duty was leviable as the goods imported fell either under item 28 or 70(7) of the said Schedule. On September 14, 1964 the Assistant Collector of <ORG> (Refund Section) held that the "goods imported were in powder form and were found to be mainly composed of Tung- ston Oxide with small portion of iron and manganese oxides. The term 'ore' mentioned in the text of item 26 I.C.T. is confined to articles which are in the form of condition in which they are mined. As such, ores in powder form cannot qualify for assessment u/i 26 I.C.T. as they are not in the condition in which they are mined. Further the goods imported are Wolfram Ore Concentrate and not Wolfarm Ore as mixed. Concentration of ore is considered a manufacturing process which will exclude its assessment u/i 26 T.C.T.

Three orders were passed by the Assistant Collector because the goods had been imported in three consignments. The matter was taken in appeal to the Appellate Collector of <ORG>. He disposed of the matter in January 1965. Before him a good deal of evidence was produced both from authoritative books and in the shape of certificates from experts that the goods were metallic ore. The Appellate Collector, however, held that the ,'goods in question were not subjected to simple washing with water but were made of special specifications by "dressing" and are therefore not classifiable as 'ores' ". The appellant then took the matter in revision to the Government. The order of the Government was passed by the Joint Secretary on November 25, 1966. According to his view examination of the sample of goods showed that the goods were in the form of fairly uniform granules. Further they had been separated not only from the rock but also from various other impurities and had been subjected to such processing as would take them out of the category of metallic ore. Thus the correct position was that the goods imported were intermediary articles between ore and metal and had been 'correctly assessed under item

87. The relevant entries in the Import Tariff contained in An- nexure-L of the special leave petition may be set out: ____________________________________________________________ Item Name of Article Nature of Standard No. duty rate of _____________________________________________________________ MINERAL PRODUCTS

26. Metallic ores all sorts except ochres and other pig-

ments ores and antimony ore x Free x 70(7)Cobalt chromium tungsten magnesium and all other non-ferrous virgin metals not otherwise specified x Free cified.

SECTION XXII (ARTICIES NOT OTHERWISE SPECIFIED)

87. All other articles not otherwise specified Revenue 60percent ad valcrem"

_______________________________________________________________ The short question that has to be decided is whether <ORG> Ore W03 65% falls within item 26 which covers metalic ores of all sorts with the exceptions mentioned therein. It is and cannot be disputed that <ORG> ore which was imported does not fall within the exceptions. All that had, therefore, to be determined by the authorities was whether such ore was a metallic ore. In Stroud's Judicial Dictionary, Vol. 3 page 2020. It is stated that "ore" is a metal in its crude state separated from the rock. In the well known treatise on TUNGSTEN, its Metallurgy, Properties and Applications by <NAME>, 3rd Edition., it is stated that Tungsten ores rarely occur in massive form. These ores are usually found in narrow veins. "The tungsten content of the ore as it is mined is usually 0.5 to 2 per cent., although it amounts to 6 per cent. in rare instances. The concentration of tungsten ores depends chiefly on gravity methods, taking advantage of the high density of the, metal, although floa tation methods are also used. The concentrates, which contain 60-70 per cent W03" . . . . . . . . " On page 12 of <NAME>' book it is stated that tungstens are sold in Europe under Contracts A and B given in Appendix 1. The form of Contract A in the Ap- pendix reads as follows:--

"Messrs We have this day..................... you the following Chinese Wolfram Ore of good merchantable quality, containing minimum 65% W03 ....

The certificate dated January 13, 1965 of <ORG> contains the following statement :

" In accordance with International <ORG>' Ore Contract 'B' which is the standard form, on which the vast majority of <ORG> ore concentrates are based, such ore of normally acceptable merchantable quality contains a minimum of 65% W03.

Wolfram bearing material as mined, contains frequently less than 0.5% of W03 and asmuch as a content of 2% of W03 is rare. In order to produce a usable ore concentration operations are necessary which involve crushing, washing and similar process separating the useless gangue to bring it to a minimum 65% W03 content without which it is not regarded as an acceptable wolfram ore or wolfram concentrate and useless to consuming industries. Basic operations bringing the material to such a standard are not a manufacturing process but form part of normal wolframite mining activities".

According to a letter dated February 3, 1965 from the Director of <ORG> to the Controller of <ORG> wolfram ore is always selectively mined in the technical terminology. The selectively mined tungsten contains about 7% W03. Such selective mining does not constitute a manufactoring process. Unless selective mining is done the tungsten ore cannot be exported or even sold in the country of its origin. Thus the import of selectively mined tungsten ore containing 65% W03 or more should not be regarded as the import of a product which has been manufactured overseas and has passed through the manufacturing,process. The expression "selectively mined" means that the wolfram ore is detached and taken out from the rock in which it is embedded and this is done by crushing the rock and sorting out pieces of wolfram either by hand or by washing or magnetic separation. The appellant produced certificates from well known analytical <ORG>. According to <ORG> who claim to have been analysingvarious ores and minerals including wolframite for over sixyears this ore is always concentrated as part of the mining operations. The normal method is by washing the crushed ore, thereby freeing the mineral from the gangue. The certificate from <ORG> has already been referred to. Alongwith with the appellants statement of the case an extract from the Brussels Tariffnomenclature has been attached as annexure A. In Chapter XXVI with the heading Metallic Ore etc. para 26.01 deals with Metallic Ores and Concentrates........ The relevant and material portions from these extracts may be reproduced :

"Ores are, seldom marketed before "preparation" for subsequent metallurgical operations. The most important preparatory processes are those aimed at concentrating the ores.

For the purposes of the present hearing, the term concentrates" applies to ores which have had part or all of the foreign matter removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport.

Processes to which products, physic-chemical or chemical operations, provided that they are normal to the preparation of the ores for the extraction of metal. With the exception of changes resulting from calcination, roasting or firing (with or without agglomeration), such operations must not alter the chemical composition of the basic compound which furnishes the desired metal.

The physical or physico-chemical operations include crushing, grinding, magnetic separation, gravimetric separation, floatation, screening, grading, agglomeration of powers (e.g., by sintering or pelleting) into grains, balls or briquettes (whether or not with the addition of small-quantities of binders), drying, calcination, roasting to oxidise or magnetise the ore, etc. (but not roasting for purposes of sulphating, chloridating, etc.) The chemical processes are aimed at eliminating the unwanted matter (e.g.

dissolution)."

Among the ores specifically mentioned to which the labove statement applies is Tungsten "or Wolfram". As against this the only evidence put in by the revenue consisted of the test report of the, Deputy Chief Chemist (Annexure E). After giving the necessary particulars it was stated by him 'that the samples were not ore as mined.

We are wholly unable to comprehend how in order to fall under item 26 the ore has to be ,as mined. There is a good deal of force in the argument of Mr. <NAME> for the appellant that the normally acceptable merchantable quality of wolfram or tungsten contains a minimum 65% W03. This is the unable ore and it is in that sense that it is commercially understood. wolfram ore when mined contains only 5 to 2 per cent W03 and in order to make it usable and merchantable ore with minimum 65% W03, concentration is necessary. if items 26 of the Import Tariff is to be restricted to Wolfram being material containing 5 to 2 per cent W03 it would be mainly rock which can neither be imported in large quantity and which will have no market. The separating of wolfram ore from the rock to make it usable ore is a process of selective mining. It is not a manufacturing process. The important test is that the chemical structure of the ore should remain the same. Whether the ore imported is in powder or granule form is wholly immaterial. What has to be seen is what is meant in international trade and in the market by wolfram ore containing 60% or more W03. On that there is a preponderation weight of authority both of experts and book,, and of writings on the subject which show that wolfram. ore when detached and taken out from the rock in which it is embedded either by crushing the rock and sorting out pieces of wolfram or by washing or magnetic separation and other similar ,and necessary process it becomes a concentrate but does not cease to be ore. Unless the ore is roasted or treated with any chemical it cannot be classed as processed.

It is common ground that the wolfram ore which was imported by the appellants was never subjected to any process of roasting or treatment with chemicals to remove the impurities. It thus remained wolfram ore concentrate containing 65% W03 which was of the merchantable quality and was known commercially as such and imported as ore. Apart from all this it must be remembered that in interpreting items in Taxing Statutes resort should be had not to the scientific or technical meaning but to the meaning attached to them by those dealing in them in their commercial sense. There can, therefore. be no manner of doubt that the goods imported by the appellants fell within item 26 of the Import Tariff and no duty was leviable on them. The appellants were entitled to the refund of the amounts which were paid by them by way of duty.

For the reasons given above the appeals are allowed with costs and the impugned orders including that of <ORG> dated 25/29th November 1966 are hereby set aside. The respondents are directed to make appropriate orders for refunding the amounts collected from the appellants by way_ of duty on the goods in question. One hearing fee.

S.B.W. Appeals allowed.