Hindustan Wires Limited vs State of Tamil Nadu

Venkataswami, J.—Except in T.C. No. 57 of 1991, in all other ten cases, the common question that arises for our consideration is, whether

stainless steel wires are declared goods falling under entry 4(xv) of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959

(hereinafter called ""the Act""). The question that arises for our consideration in T.C. No. 57 of 1991 is, whether stainless steel tube is an item of

declared goods falling under item 4(xi) of the Second Schedule to the Act.

Before going into the questions as such, a small preface is necessary. The Revenue as well as the Sales Tax Appellate Tribunal seem to have

taken different views at different stages on the above questions. The Tribunal, in T.A. Nos. 574 and 583 of 1978 dated December 2, 1978, in

T.A. No. 408 of 1986 dated October 31, 1988 and in T.A. No. 90 of 1986, etc., dated March 10, 1989, has taken the view that stainless steel

wires are declared goods, while in T.A. No. 1919 of 1983, etc., dated April 25, 1985 and T.A. No. 589 of 1987 dated August 10, 1988, the

Tribunal has taken the view that they (stainless steel wires) are not declared goods, against which all the present tax cases (revisions) are filed.

The Revenue, on their part, while issuing clarificatory letters or circulars, had taken the following stands at different times. In the following

instances, the Revenue has held that they are declared goods :

D.D. 7226/83 Acts Cell II dated February 27, 1984, D. Dis. 31050/86 dated March 7, 1986, L. Dis. Acts Cell II/461160/87 dated March 31,

1987 and L. Dis. No. 107159/87 Acts Cell II dated July 13, 1987.

On the other hand, in the following instances, the Revenue had taken the view that they are not declared goods :

Acts Cell II/29763/89 dated March 27, 1991, K. Dis. Acts Cell II/16460/88 dated August 3, 1988 and L. Dis. Acts Cell II/77766/88 dated

October 10, 1988.

T.C. Nos. 630 to 632 of 1985, 96 to 98 of 1986 and 57 of 1991 are filed by the assessees, aggrieved by the view taken by the Tribunal that

stainless steel wires and tubes are not declared goods, while T.C. Nos. 218 and 631 to 633 of 1989 are filed by the Revenue against the view of

the Tribunal that stainless steel wires are declared goods. The stand of the Revenue was not only that stainless steel tubes and stainless steel wires

will not come under the categories of declared goods, but also that they will fall under serial No. 109 of the First Schedule as ""articles made of

steel"" as inserted by the Tamil Nadu Act 23 of 1974 with effect from March 4, 1974 till it was deleted by Act 43 of 1986 with effect from July 4,

1986. The further stand of the Revenue was that these goods will fall under the First Schedule serial No. 109 as ""articles made of stainless steel

with effect from October 7, 1988, as inserted by the Tamil Nadu Act 17 of 1989. For the period in between, namely, July 4, 1986 and October

7, 1988, the Revenue contended that the goods will be classified as ""multi-point goods"" falling u/s 3(1) of the Act.

At the outset, we must make it clear that a Division Bench of this Court, in R.K. Manufacturers v. Board of Revenue reported in [1983] 54

STC 88, while disposing of the tax appeal at the admission stage, held as follows :

The point that is raised in this appeal is whether the stainless steel wires sold by the appellant herein would come under item 109 of the First

Schedule to the Tamil Nadu General Sales Tax Act, 1959 or under item 4(xv) of the Second Schedule to that Act. Item 109 of the First Schedule

reads :

''Articles made of stainless steel.''

Item 4(xv) of the Second Schedule reads :

''Wire-rods and wires-rolled, drawn, galvanised, aluminised, tinned or coated such as by copper.''

Before item 4(xv) of the Second Schedule can apply, the wires in the present case must be of iron and steel. Certainly item 4(xv) of the Second

Schedule cannot apply. Hence, the only item that will apply to the present case is item 109 of the First Schedule, because stainless steel wire is

certainly an article made of stainless steel.

Consequently, the conclusion of the Board of Revenue cannot be said to be erroneous. Hence the appeal is dismissed.

Strong reliance was placed by the learned Government Advocate (Taxes) on the above decision. We will consider at the end of our judgment

about the binding nature of the ratio laid down in the abovementioned case.

Mr. C. Natarajan, learned counsel appearing for the assessees in all these cases, had advanced very elaborate arguments by producing

necessary materials from various books, to support his case. His contention was that item No. 4 of the Second Schedule deals with various forms

of iron and steel. The sub-items falling under main item No. 4 should be basically either iron or steel. The goods which are not iron or steel cannot

fall under item No. 4 of the Second Schedule. Likewise, what is iron or steel cannot be denied coverage of item No. 4 of the Second Schedule. In

other words, according to the learned counsel, the expression ""iron and steel"" will mean the intrinsic definition for the various sub-items. His further

endeavour was that the expression ""steel"" would include alloy steel as well as non-alloy steel. If so, sub-items (xi) and (xv) would definitely cover

both non-alloy steel as well as alloy steel, tubes, rods and wires. Therefore, according to the learned counsel, the proper construction of sub-items

will depend upon the scope of the expression ""iron and steel, that is to say,"" as occurring in item No. 4. In support of that, he invited our attention

to Stroud''s Judicial Dictionary, explaining the words ""that is to say"". He also invited our attention to Indian Standard (IS : 1956-1962) Glossary of

Terms relating to Iron and Steel, Wire Encyclopaedia (from Wire Industry Year Book 1968) and Indian Standard Classification of Steel.

His next submission was that no material was placed either in the orders of assessment, or in any other order of the Appellate Assistant

Commissioner, nor even in the orders of the appellate authorities, to show that the expression ""steel"" in trade and common parlance will only mean

non-alloy steel and will not include alloy or special steel.

He also submitted that wires and tubes are marketed in length and, therefore, they cannot be treated as ""articles made of stainless steel"". If there

are two views possible, the construction that favours the subject ought to be accepted, rather than a construction which favours charge of higher

rate of tax. According to the learned counsel, the Revenue itself as seen earlier, at various times, held that stainless steel wires are items of declared

goods falling under the Second Schedule. He also informed the court that in all other States stainless steel wires are treated as declared goods.

Finally he submitted that the judgment in R.K. Manufacturers Vs. The Board of Revenue, Commercial Taxes, Madras, (R.K. Manufacturers v.

Board of Revenue), being one rendered at the admission stage, will not be a binding decision as no materials were placed before the court for

consideration that iron and steel will include alloy steel as well as non-alloy steel. Further, no ratio as such was laid down in that decision, except

the conclusion. He also submitted that the view taken by the Bench that stainless steel wires are articles made of stainless steel, will not be good

law in view of the recent judgment of the Supreme Court in Commissioner of Income Tax, Haryana Vs. M/s. Krishna Copper Steel Rolling Mills,

Jagadhri etc. etc., .

Mr. C. Natarajan, in support of his various contentions, cited number of authorities which we will refer to and discuss at the appropriate place.

Mr. A. K. Gopinath, learned Government Advocate (Taxes), submitted that though the decision rendered in [1983] 54 STC 88 (Mad.) (R.K.

Manufacturers v. Board of Revenue) was rendered at the admission stage of the tax case, it is still binding on this Court. According to the learned

Government Advocate, though stainless steel can be considered or classified as one of the items of declared goods, the further question is, whether

that can be stretched to stainless steel wires. Placing reliance on the words given in the sub-entry (xv), learned Government Advocate submits that

those words will not include wire-rods made of alloy steel. For this, he derived support from sub-entry (ix) which reads as follows :

tool, alloy and special steels of any of the above categories.

According to the learned Government Advocate, alloy and special steels, if at all, will apply to sub-items (i) to (viii) and not to sub-items (x) to

(xvi). The sub-items under our consideration, namely, (xi) and (xv) will not have the benefit of sub-item (ix). He also submitted that strict

interpretation must be applied in construing the words occurring in sub-items. Learned Government Advocate cited certain decisions which we will

consider at the appropriate place.

Mr. C. Natarajan, in reply, submitted that the scope and extent of one sub-item cannot be considered by referring to another sub-item.

According to the learned counsel, the main entry must be looked into to understand the meaning to be given to any one of the sub-items. He

alternatively contended that sub-items (i) to (viii) are in the nature of raw materials or primary steel and sub-items (x) to (xvi) are derivatives from

the primary materials mentioned in sub-items (i) to (viii). The fact that the Legislature inserted sub-item (ix) for tool, alloy and special steels, it will

have the effect of widening the scope and area of the primary materials for making further materials mentioned in items (X) to (xvi).

We have considered the rival submissions.

Let us consider them a in item and the relevant sub-items :

Item 4 - Second Schedule

Iron and steel, that is to say, -

(ix) tool, alloy and special steels of any of the above categories;

(xi) steel tubes, both welded and seamless, of all diameters and lengths, including tube fittings;

(xv) wire-rods and wires - rolled, drawn, galvanised, aluminised, tinned or coated such as by copper.

Our first endeavour will be to find out the meaning to be attached to the words ""iron and steel, that is to say"". We will refer to the meaning

given by the Indian Standard (IS : 1956-1962) Glossary of Terms relating to Iron and Steel, which is relevant for our purpose :

2.10. Alloy - A metallic substance consisting of two or more elements, one of which at least is a metal. It is generally obtained by melting together

the constituent elements.

2.12. Alloy steel - A steel containing one or more alloying elements as a result of which it develops specific characteristics.

2.347. Stainless steel - An alloy steel containing about 12 per cent or over of chromium with or without nickel together with other elements and is

characterized by its high resistance to corrosive media.

3.143. Steel - An iron-carbon alloy, with carbon chemically combined as iron carbide (Fe 3C), and contains varying amounts of other elements,

some being added intentionally to develop specially desired properties. The alloy is capable of withstanding a high degree of hot working for

making products of a wide variety of shapes and sizes, and even cold working in the form of sheets or small diameter rounds of suitable

composition.

4.63. Rod (wire-rod) - A semi-finished hot rolled product of relatively small cross section and very great length produced in coil form for cold-

drawing. In rounds the usual range of sizes in which wire rods are produced is from 5 to 14 mm.

6.114. Wire - The product of a wire-rod whose sectional area has been reduced at normal temperatures either by drawing through a specifically

prepared orifice or passing under pressure between suitably driven rolls.

9.125. Skelp -

(a) Hot rolled strip with square or slightly bevelled edges, used for making welded tubes.

(b) A strip or plate bent hot into a cylindrical shape with overlapping edges, before being welded to form a tube.

9.144. Tube (pipe) - A long, hollow, open-ended object of circular or other cross section. The terms ''tube and pipe are often used

synonymously.

Let us also refer to the Glossary of Terms relating to Iron and Steel (IS : 1956-1962 - Amendment No. 1 May, 1965) :

Red (wire-rod) - Wire-rod is of any shape, generally round and between 5 to 14 mm. in diameter, and is intended for conversion into wire. A rod

that has been sized would be classified as wire provided it is between 5 to 12.5 mm in diameter. It will be classified as a cold rolled bar if it is

above 12.5 mm in diameter. The term wire bar is the usual term which has later on come to be designated as wire-rod and hence wire bar and

wire-rod are synonyms.

We will now refer to Wire Encyclopaedia (from Wire Industry Year Book 1968) :

Stainless steel : High chromium steel, often including nickel, which is resistant to corrosive and oxidising influences. The best known form of

stainless steel is 18.8, an austenitic steel containing about 18 per cent, chromium, 8 per cent nickel, the carbon content being kept low. See also

entries for stainless steel under ''annealing, ''welding, and ''lubricants''. A suitable solution for cleaning 18.8 stainless and similar qualities is 35 per

cent hydrochloric acid, 5 per cent nitric acid, 5 per cent restrainer and 55 per cent water. See also ''chromium oxide scale''.

Wire-rod : Produced from a steel billet by passing, when hot, through a series of rolls by which it is reduced in cross-sectional area and

consequently elongated to form a coil; it is the semi-finished product from which wire is made, and is generally about 5 S.W.G. (0.212 inch) to

9.16 inch diameter. The higher alloy and stainless qualities are rolled in semi-continuous mills, but qualities up to at least 0.50 per cent carbon are

regularly rolled in continuous mills, the latest mills having four strands and weekly output of over 7,000 tons, at finishing speeds up to 8,500 ft. min.

on 0.212 inch rod, producing coils of 1,000 lb.

We will then refer to Indian Standard - Classification of Steel. The relevant portion for our purpose is as follows :

Definition of steel.

2.1 For the purpose of classification, steel is an iron base alloy generally suitable for working to the required shape in the solid state having a

carbon content generally less than 1.5 per cent and containing varying amounts of other elements. A limited number of high alloyed steels may have

more than 2 per cent carbon but 2 per cent is the usual dividing line between steel and cast iron.

Classification on the basis of chemical composition.

3.1 Steel shall be classified as follows :

(a) Unalloyed steels, and

(b) Alloy steels.

3.3 Alloy steels

Alloy steels are those steels Where specified content of any element is equal to or greater than that indicated in 3.1.

Depending on the alloy content (exclusive of S, P, C and N), alloy steels shall be subdivided as follows :

Subdivision Total alloying elements

per cent

Low alloy steels Up to and including 5

Medium alloy steels More than 5 but up to and including 10

High alloy steels More than 10 ..................

Now we will refer to Harmonized Commodity - Description and Coding System (Volume 3, 1986). The relevant portions for our purpose are as

follows :

(e) Stainless steel

Alloy steels containing, by weight, 1.2 per cent or less of carbon and 10.5 per cent or more of chromium, with or without other elements.

(o) Wire

Cold-formed products in coils, of any uniform solid cross-section along their whole length, which do not conform to the definition of flat-rolled

products.

(d) High speed steel

Alloy steels containing, with or without other elements, at least two of the three elements molybdenum, tungsten and vanadium with a combined

content by weight of 7 per cent or more of carbon and 3 to 6 per cent of chromium.

Liquid steel obtained by the abovementioned processes, with or without further refining, is generally run into a receiving ladle. At this stage alloying

elements or de-oxidising agents, in solid or liquid form, may be added. This may be done in a vacuum to ensure freedom from gaseous impurities.

Steels obtained by all these processes are divided, according to their content of alloying elements, into ''non-alloy steels'' and ''alloy steels''

(stainless or other). They are further divided in accordance with their special properties into free-cutting steel, silicon-electrical steel, high speed

steel or silico-manganese steel, for example. Alloy steel. All steels contain carbon and small amounts of silicon, sulphur, manganese and

phosphorous. Steels which contain intentional additions of elements other than those or in which silicon and manganese are present in large

amounts are termed alloy steels. The alloying elements are deliberately added to produce certain properties in the product. In Government

statistics, alloy steel figures relate to steel, other than high speed steel, containing any of the elements named below and in the quantities indicated :

Chromium or nickel 0.4 per cent or more, Mo, W or V.C. 1 per cent or more, Mn 10 per cent or more.

Stainless steel. A corrosion-resistant type of alloy steel which contains a minimum of 12 per cent chromium. The latter is the element which confers

upon the steel its property of resisting attack by the atmosphere or by a number of chemical reagents. The effect is attributed to the ability of

chromium to form a thin, but very tenacious, film of oxide at the surface of the alloy which resists attack by most oxidising agents. The resistance to

corrosive attack is enhanced if nickel be added, and is further improved by small additions of molybdenum and copper. There are three main

classes of stainless steels.

Wire. A term somewhat difficult to define precisely. It refers to slender rod-like products. The crossion of a wire is usually circular but not

exclusively so. The method of manufacture is to draw wire bars or rods through successively smaller dies. The finer wires are reeled and the

heavier wire is generally supplied in coils. The diameter of a wire may be quoted as a fraction of an inch in mm. or may be designated by a gauge

number (see also wire gauge). The lowest gauge in any of the various systems refers to wire approximately 15 mm. in diameter, and this may be

taken as indicating roughly the upper limit of dimension for wire.

The relevant portion from Central Excise Tariff of India 1991-92 reads as follows :

(e) Stainless steel :

Alloy steels containing by weight 1.2 per cent or less of carbon and 10.5 per cent or more of chromium, with or without other elements.

------------------------------------------------------------------------

Heading No. Sub-heading Description of goods Rate of duty

------------------------------------------------------------------------

(1) (2) (3) (4)

------------------------------------------------------------------------

72.23 7223.00 Wire of stainless steel Rs. 2,500 per tonne

------------------------------------------------------------------------

The Supreme Court, while considering section 14(iv) of the Central Sales Tax Act, before amendment, dealing with iron and steel, in State of

Tamil Nadu v. Pyare Lal Malhotra reported in [1976] 37 STC 319, observed as follows :

What we have inferred above also appears to us to be the significance and effect of the use of words ''that is to say'' in accordance with their

normal connotation and effect. Thus, in Stroud''s Judicial Dictionary, 4th Edn., Vol. 5, at page 2753, we find : ""That is to say. - (1) ''That is to say''

is the commencement of an ancillary clause which explains the meaning of the principal clause. It has the following properties : (1) it must not be

contrary to the principal clause; (2) it must neither increase nor diminish it; (3) but where the principal clause is general in terms it may restrict it.

See this explained with many examples, Stukeley v. Butler Hob. 171.

From the various extracts taken from several books, there cannot be any doubt that the expression, ""iron and steel"" will cover ""alloy steel"" as

well as ""stainless steel"" apart from non-alloy steel. If that be so, applying the meaning given to the words ""that is to say"" in Stroud''s Judicial

Dictionary, the position will be like this. Whatever meaning given to the main item must be given to all sub-items. It cannot be increased or

diminished. If we accept the contention of the learned Government Advocate that alloy steel or special steel will apply only to sub-items (i) to (viii),

that will have the effect of diminishing the meaning of ""steel"" occurring in the main item, when applied to items (x) to (xvi). Therefore, on a plain

construction of ""iron and steel"" mentioned in the main item, we are inclined to hold that it includes all kinds of steel like non-alloy steel and alloy

steel, including stainless steel. If the ""iron and steet"" occurring in the main item includes non-alloy steel and alloy steel including stainless steel, the

same benefit must be given to sub-items (xi) and (xv) also.

The other contention that in view of sub-item (ix), the alloy and special steel will apply only to sub-items (i) to (viii) is not correct as that will

diminish the meaning given to the main item. Even otherwise, sub-item (ix) can be explained by saying that it was included by way of abundant

caution or sub-items (i) to (viii) are in the nature of raw materials or primary steel and items (x) to (xvi) are derivatives from primary materials

mentioned in sub-items (i) to (viii). In this connection, the judgment of the Supreme Court reported in [1976] 37 STC 319 (State of Tamil Nadu v.

Pyare Lal Malhotra) can again be referred to. Though that judgment dealt with section 14 of the Central Sales Tax Act as it stood before

amendment, it has discussed the scope of that section after amendment, which has been reproduced as item 4 of the Second Schedule to the Act.

The observation of the Supreme Court in the said judgment, which supports the stand taken by the learned counsel for the assessees, reads as

follows :

It will be seen that ''Iron and steel'' is now divided into 16 categories which clearly embrace widely different commercial commodities, from mere

scrap iron and leftovers of processes of manufacturing to ''wires'' and ''wheels, tyres, axles and wheel sets''. Some of the enumerated items like

melting scrap ''or'' tool alloys'' ''and special steels'' could serve as raw material out of which other goods are made and others are definitely

varieties of manufactured goods.

We find force in the argument of the learned counsel for the assessees that a sub-item cannot be construed with the aid of another sub-item, to

restrict the scope of one sub-item. In other words, the learned Government Advocate, by referring to sub-item (ix), wants to restrict the scope of

sub-items (xi) and (xv). That may not be a proper way of understanding the sub-items, as rightly contended by the learned counsel for the

assessees, Mr. C. Natarajan. For understanding the sub-items, we must look into the main item, and if so done, there is no difficulty in holding that

stainless steel tube and stainless steel wires are declared goods.

The learned Government Advocate placed reliance on the decisions in Agral Metal Perforators v. Commissioner, Sales Tax reported in [1981]

48 STC 378, Apollo Tubes Limited v. State of Kerala reported in [1986] 61 STC 275, T.I. and M. Sales Limited v. State of Tamil Nadu

reported in (1983) 52 STC 99 (Mad.) [App.] and Rajasthan Iron and Steel Merchants Association (Pvt.) Ltd. Vs. Commercial Taxes Officer, to

contend that a strict construction must be given in understanding the sub-items.

Mr. C. Natarajan, learned counsel appearing for the assessees, brought to our notice that the Supreme Court in Gujarat Steel Tubes Ltd v.

State of Kerala reported in [1989] 74 STC 176 overruled the decisions in [1986] 61 STC 275 (Apollo Tubes Limited v. State of Kerala) and

Rajasthan Iron and Steel Merchants Association (Pvt.) Ltd. Vs. Commercial Taxes Officer, . According to the learned counsel, in view of the

judgment of the Supreme Court, the other two decisions relied on by the Revenue must be deemed to be not good law.

Mr. C. Natarajan, learned counsel appearing for the assessees, further submitted that the words and phrases defined by the Indian Standard

Glossary can be relied upon, in view of the judgment of the Supreme Court in Collector of Central Excise v. Krishna Carbon Paper Co. reported

in : 1988(37)ELT480(SC) . The Supreme Court in that case observed as follows :

In the famous Canadian case in King v. Planters Nut and Chocolate Company Limited 1951 CLR (Ex) 122, Cameron, J., observed that it is not

botanist''s conception as to what constitutes a fruit or vegetable ...... but rather what would ordinarily in matters of commerce in Canada be

included there should be the guide. Similarly, this Court has held in Union of India (UOI) Vs. Delhi Cloth and General Mills, that the view of the

Indian Standards Institute, as regards what is refined oil as known to the market in India must be preferred in the absence of any other reliable

evidence.

If there is a market meaning or trade meaning of that kind of a paper that should be adhered to. In this case, there is no direct evidence how these

peculiar goods are dealt with in the particular market dealing with those goods. But there is evidence how these are to be understood in the light of

the specifications of the Indian Standards Institute which we have mentioned before.

* * *

In the aforesaid view of the matter, we are of the opinion that as at the relevant time the definition of ''paper'' being paper board and all kinds of

paper (including paper or paper boards which have been subjected to various treatments such as coating and impregnating) and in the light of the

I.S. specifications as noted hereinbefore and there being no other reliable evidence as to how coated paper is understood in the market, except the

opinion of the Indian Standards Institute in its specifications, in our opinion, the Tribunal was not right in the view it took.

* * *

There was authority of the Indian Standards Institute''s publication ''Glossary of Terms used in Paper Trade and Industry-IS : 4661. In view of the

facts as appeared in paragraph 14 of the Tribunal''s judgment in 1987 (29) ELT 627 where the basis of the classifications of ISI in its specifications

is explained, we are of the opinion that the carbon paper fell under item 17(2) as it stood at the relevant period germane for this appeal, before

1982, and not in residuary item No. 68 of the Central Excise Tariff.

It is also submitted that wires and tubes are marketed in lengths and, therefore, they cannot be treated as articles of stainless steel. In support

of that, Mr. C. Natarajan placed reliance on the judgment in Commissioner of Income Tax, Haryana Vs. M/s. Krishna Copper Steel Rolling Mills,

Jagadhri etc. etc., . The question that was considered in that case was, whether MS Rods, bars and rounds would fall under item 1 of the Schedule

to the Income Tax Act, 1961, to earn extra development rebate.

Item 1 of the Schedule reads as under :

Iron and steel (metal), ferro alloys and special steels.

The Supreme Court, after referring to the decision in The State of Madhya Bharat (Now The State of Madhya Pradesh) and Others Vs. Hiralal Ji,

, observed as follows :

The above decisions were rendered in the context of the Sales Tax Act and notifications thereunder. They, however, bring out two points. First,

they make it clear that there is a real and clear dichotomy between ''iron and steel ''and'' products or goods made of iron and steel ''and, indeed,

between any metal as such and the products or goods fabricated therefrom. This is also clear from the various entries in the relevant Schedules

under the Income Tax Act itself. For instance, item No. 2 in the list is : ''aluminium, copper, lead and zinc (metal)'', white ingots and sheets

manufactured from scrap have been held to fall under item No. 2; finished commercial products like aluminium pigments, aluminium articles and

aluminium caps have been held to fall outside it. See Commissioner of Income Tax, Bombay City-IV Vs. Rashtriya Metal Industries Ltd., , a case

under the Companies (Profits) Surtax Act, 1964; INDIAN ALUMINIUM CO. LTD. Vs. COMMISSIONER OF Income Tax, WEST

BENGAL-II., Indian Aluminium Co. Ltd. Vs. Commissioner of Income Tax, , Jeewanlal (1929) Ltd. Vs. Commissioner of Income Tax, and

Commissioner of Income Tax, Karnataka-I, Bangalore Vs. Fitwell Caps Private Limited, . So also, item No. 7 refers, inter alia, to ''cables'' which

is only a type of thick copper wire used for the transmission of electricity. It has been held that insulated copper wires of a type known as winding

wire will not fall under item No. 7 as they are not used for the above purpose and that an industry engaged in its manufacture is not an industry

eligible for the reliefs of the kind presently under consideration : See Hindustan Wire Products Ltd. Vs. Commissioner of Income Tax, Patiala, .

This decision is of no direct relevance here except to point out that no attempt was made in the case to contend that they will fall under item No. 2

of the Schedule which covers ''aluminium, copper, lead and zinc (metals)''. Item No. 11 in the Schedule refers to ''steel castings and forgings and

malleable iron and steel castings''. The expressions ''casting'' and ''forging'' refer to processes used in the manufacture or production of articles of

iron and steel and also mean, particularly when used in the plural, the articles produced by the process (vide : Glossary of terms published by the

Bureau of Indian Standards and relating to Iron and Steel : Part VI ''forging). Item No. 21 which refers to ''seamless tubes'' also furnishes a similar

indication. There is, therefore, a distinction between the article or thing referred to in the Schedules as ''iron and steel (metal)'' and articles or things

manufactured from ''iron and steel''.

* * *

(iii) the production from blooms, billets and slabs - again by processes of hot-rolling, cold-rolling, forging, extruding, drawing, etc. - of finished

steel products, bars, plates, structural shapes, rails, wire, tubular products, coated and uncoated sheet steel, etc., all in the many forms required by

users of steel.

* * *

We would like to emphasise, at the cost of repetition, that what we should examine is not the nature of the mill which yields the article but the

nature of the article or thing that is manufactured and ask ourselves the question whether such article or thing can he considered as raw material for

manufacture of other articles made of the metal or is it itself an article made of the metal. On this issue, our view is, as we have already stated, that

the goods in the present case fall in the former category. We think that Sri Ramachandran is right in pointing out that the mild steel rods, bars or

rounds which are manufactured by the assessees here are only finished forms of the metal and not articles made of iron and steel. They only

constitute raw material for putting up articles of iron and steel such as grills or windows by applying to them processes such as cutting or turning.

The rod or the wire rods (with which some of the decisions were concerned) are likewise not products of iron and steel but only certain finished or

refined forms of the metal itself.

It is not in dispute that in the case on hand, the stainless steel wires and tubes are sold in lengths, and those wires and tubes are used for

manufacturing other stainless steel articles.

The contention of Mr. C. Natarajan is that if two views are possible, a construction that favours the subject ought to be accepted. As we have

held that the main item will include alloy as well as non-alloy steel, we do not think that we should go into this question.

The question that remains to be answered is, whether the judgment in R.K. Manufacturers Vs. The Board of Revenue, Commercial Taxes,

Madras, has any binding effect. The question that arose for consideration in that case was, whether the stainless steel wires sold by the appellant

therein would come under item 109 of the First Schedule to the Tamil Nadu General Sales Tax Act or under entry 4(xv) of the Second Schedule.

In answering that question, the learned Judges held that stainless steel wire is certainly an article made of stainless steel. This view taken by the

Division Bench is no longer good law in the light of the view expressed by the Supreme Court in the decision mentioned above. Further, we have

extracted the full judgment of the Division Bench in [1983] 54 STC 88 (R. K. Manufacturers v. Board of Revenue). It will be seen that no detailed

arguments were made, no materials that were placed before the authorities below were placed before the Division Bench.

In B. Shama Rao v. Union Territory of Pondicherry reported in [1967] 20 STC 215, the Supreme Court has observed as follows :

In view of the intense divergence of opinion except for their conclusion partially to uphold the validity of the said laws it is difficult to deduce any

general principle which on the principle of stare decisis can be taken as binding for future cases. It is trite to say that a decision is binding not

because of its conclusion but in regard to its ratio and the principle laid down therein.

In Nathmal Manghilal and Company v. State of Andhra Pradesh reported in [1983] 54 STC 91, a Division Bench of the Andhra Pradesh High

Court, on an identical question, namely, the binding nature of a decision rendered at the admission stage, held as follows :

This order was made at the stage of admission. Since this order affirms the approach of the Tribunal, we have sent for the relevant record and

have perused the Tribunal''s order. Unfortunately, the definition of ''cotton fabrics'', as set out in item 19 of the First Schedule to the Central

Excises and Salt Act, 1944, which has to be imported into the Andhra Pradesh General Sales Tax Act, by virtue of the explanation to the Fourth

Schedule to the A.P. General Sales Tax Act, was not brought to the notice of the learned Judge. In view of the fact that entry 19 of the First

Schedule to the Central Excises and Salt Act specifically includes ''cotton fabrics'' coated with cellulose derivatives or other artificial plastic

materials, within the meaning of the expression ''cotton fabrics'', and because this important aspect was not noticed by this Court while dismissing

the said T.R.C. at the admission stage, we are of the opinion that the said order cannot be treated as a binding decision.

It is also not in dispute that there is no res judicata in tax matters - vide the decision in The Amalgamated Coalfields Ltd. and Another Vs. The

Janapada Sabha, Chhindwara, .

Another judgment of this Court was brought to our notice. It is State of Tamil Nadu v. National Co-operative Sugar Mills Ltd. reported in

[1992] 86 STC 22 infra; (1992) 1 MTCR 136, wherein, a Division Bench of this Court, has observed as follows :

Mr. Inbarajan, learned counsel for the respondents, has brought to our notice the order of a Division Bench of this Court dismissing the Tax Case

No. 1285 of 1990 filed by the Revenue on January 3, 1991 at the stage of admission. Apart from the fact that the said judgment was rendered at

the stage of admission confirming the view of the Tribunal, we are unable to deduce any ratio from the judgment because the facts of the case had

not been elaborately set out in the order. Further, that also relates to the payment of transport charges by the assessee which the Tribunal found

was relatable to the sugarcane purchase price. We do not think that the said order made at the time of admission upsets well considered judgments

in Kallakurichi Co-Operative Sugar Mills Limited and Another Vs. The State of Tamil Nadu, and in Perambalur Sugar Mills Ltd. v. State of Tamil

Nadu [1992] 86 STC 17.

In the light of the above decisions, we feel that there is no need to refer the matter to a Full Bench as that decision in [1983] 64 STC 88

(Mad.) (R. K. Manufacturers v. Board of Revenue) is not a binding authority.

For the foregoing reasons, we hold that the stainless steel wires and stainless steel tube, manufactured by the assessees in these cases are

declared goods exigible to tax as such. The contrary view taken by the Tribunal in the appeals against which Tax Case Nos. 630 to 632 of 1985,

96 to 98 of 1986 and 57 of 1991 have been preferred, is not correct and, therefore, these tax cases, namely, T.C. Nos. 630 to 632 of 1985, 96

to 98 of 1986 and 57 of 1991 are allowed. Consequently, T.C. Nos. 218 and 631 to 633 of 1989 wherein the Tribunal has taken the view which

in accordance with the view taken by us, are dismissed. No costs.