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SUPREME COURT OF INDIA
A.C. GUPTA AND P.S. KAILASAM, JJ.
Kathiawar Industries Ltd., Appellant
Versus
Jaffrabad Municipality, Respondent.
Civil Appeal Nos. 2330-2331 of 1969, D/- 8-8-1979.
Advocates appeared
Mr. H. S. Parihar, Advocate for Mr. I. N. Shroff, Advocate, for Appellant; Mr. K. J. John, Advocate, for Respondent.
Saurashtra State and the Bombay District Municipal Act, 1901 – Sections 2, 3 – Octori Duty – Civil Appeals are by Kathiawar Industries Ltd. by special leave against judgment of Gujarat High Court holding that appellants are liable to pay octori duty on uncrushed salt which is brought by appellant to factory situate within octroi limits and crushed there – Whether salt manufactured by appellant outside octroi limits of respondent and brought by appellant within those limits for purpose of being crushed into powder in appellants factory situate within those limits and then exported is liable to octroi – Held, In considering the meaning of the words "consumption" and "use" this Court observed in Burmah Shell case (supra) that the word consumption in its primary sense means the act of consuming and in ordinary parlance means the use of an article in a way which destroys, wastes or uses up that article. – But in some legal contexts, the word "consumption" has a wider meaning. – It is not necessary that by the act of consumption the commodity must be destroyed or used up. – In Anwarkhan Mahboob Co. v. State of Bombay (now Maharashtra) (1961) 1 SCR 709 the question that arose was whether conversion of one commodity into another commercially different article would amount to consumption. – Facts of case were that tobacco was purchased and in Bombay State stem and dust from tobacco was removed. – It was contended that removing stem and dust from the tobacco did not amount to consumption of tobacco or had the effect of converting tobacco into an article commercially different. – Court held that when the tobacco was delivered in the State of Bombay for the purpose of changing it into a commercially different article, viz., bidi patti, the delivery was for the purpose of consumption. – Court followed the decision in State of Travancore Cochin v. Shanmugha Vilas Cashew Nut Factory 1954 SCR 53 wherein it was held that the raw cashew nuts were put through a process and new articles of commerce, namely cashew nut oil and edible cashew nut kernels were obtained. – Court expressed the view that the raw cashews nut is consumed in the process. – On facts High Court found after referring to different processes of baking or roasting shelling, pressing, pealing etc. that although most of the process is done by hand, part of it is also done mechanically by drums. – Oil is extracted out of outer shells as a result of roasting. – After roasting outer shells are broken and nuts are obtained. – Poison is eliminated by pealing off inner skin. – By this process of manufacture the respondents really consume raw cashew and produce new commodities. – Court accepted this finding and observed at p. 113 that raw cashew nuts, after they reach the respondents, are put through a process and new articles of commerce, namely, cashew-not oil and edible cashew nut kernels, are obtained. – In Anwarkhan Mahboob Co. (supra) this Court gave example of process through which cotton is put through before ultimately final product, wearing apparel is consumed by men, women and children. – Court observed "But before cotton has become a wearing apparel, it passes, through the hands of different producers, each of whom adds some utility to the commodity received by him. – There is first the act of ginning; ginned cotton is spun into yarn by the spinner; the spun yarn is woven into cloth by the weaver; the woven cloth is made into wearing apparel by the tailor." – At each of these stages distinct utilities are produced and what is produced is at the next stage consumed. – It is usual, and correct to speak of raw cotton being consumed in ginning. – Word "use" is of wider import than "consumption". It cannot be denied that the uncrushed salt has been used and by the user a new product, crushed salt has come into existence. – Appeals Dismissed
Judgment
KAILASAM, J.:- These two Civil Appeals are by the Kathiawar Industries Ltd. by special leave against the judgment of the Gujarat High Court holding that the appellants are liable to pay octori duty on uncrushed salt which is brought by the appellant to the factory situate within the octroi limits and crushed there.
2. The appellant is running a salt manufacturing works at Jaffrabad called "Newabsidi Mohmad Khan Salt Works". The company had constructed salt works, grinding mills, trolly tracks and a jetty at the port site. The major portion of the salt works is situate out of the municipal limits. The salt is manufactured outside the municipal limits. The grinding mills and the part of the trolly-track leading to jetty come within the municipal limits of the respondent Jaffrabad Municipality. The Municipality by a notice dated 3-11-1955 demanded from the appellant Rupees 7289-6-0 as arrears of octroi. The appellant paid under protest and filed the suit out of which this appeal arises before the Civil Judge Gohilwad, District Bhavangar, against the respondent for a declaration that the salt manufactured by the appellant at its salt works at Jaffrabad and exported uncrushed and/or crushed was not liable to octori duty and that the goods passing through municipal limits from the salt works are not liable to octori duty, and for an injunction restraining the respondent from recovering an amount of Rs. 7289-6-0 and for a further injunction restraining the Municipality from hindering or obstructing the free passage of salt and goods and for the refund of Rs. 250/-. The appellant also filed another suit for the refund of Rs. 1271-14-0 paid under protest. These two suits were decreed, the court declaring that the salt manufactured by the appellant company is not liable to octroi duty. The court also granted an injunction as prayed for. The Municipality preferred appeals. The appellate court while dismissing the appeals and confirming the decree of the trial court observed that the perpetual injunction granted by the trial court would not apply to the salt entering the octroi limits for consumption or use for the factory situated within the octroi limits of the municipality. The municipality preferred two Second Appeals to the High Court of Gujarat at Ahmedabad. A Bench of the High Court allowed the appeals except to the extent of confirming the declaration that uncrushed salt of the appellant company which is directly sent from the stacking ground to the Jetty is not liable to octroi provided the plaintiff company followed the prescribed rules and formalities. The other claims in the suits were dismissed. Against the judgment of the High Court the plaintiff company has preferred these two appeals.
3. The only question that falls for consideration in these civil appeals is whether the salt manufactured by the appellant outside the octroi limits of the respondent and brought by the appellant within those limits for the purpose of being crushed into powder in the appellants factory situate within those limits and then exported is liable to octroi. The facts as found by the High Court and which cannot be questioned, are that the salt works consists of (i) salt pans; (ii) stacking ground for the salt collected from the pans; (iii) trolly track for carrying salt from stacking ground to the factory within the octroi limits of the Municipality and to the jetty which is outside the octroi limits; (iv) Jetty; (v) Power house; (vi) store-room; (vii) workshop and (viii) grinding mill which is referred to in the evidence as the crushing factory. Of these, the crushing factory and part of the trolly track (about 1400 feet) are within the octroi limits of the Municipality and the rest outside those limits. Thus it is not in dispute that only the crushing factory and part of the trolly-track are within the octroi limits. The salt is prepared in the salt pans outside the octroi limit and the salt which is to be crushed is taken to the crushing fa
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