COMMISSIONER OF INCOME TAX HARYANA ADDITIONAL COMMISSIONER OF INCOME TAX MADRAS COMMISSIONER OF INCOME TAX TAMIL NADU III MADRAS Vs. KRISHNA COPPER STEEL ROLLING MILLS JAGADHRI: TRICHY STEEL ROLLING MILLS LTD

JUDGEMENT

(1.) THE Judgment of the court was delivered by

(2.) THESE appeals involve a common question and hence can be disposed of by a common order. The respondent assessees are steel rolling mills engaged in the manufacture of M.S. (mild steel) rods, bars or rounds. The question for consideration is whether they are entitled to a higher rate of development rebate specified in Section 33(l)(b)(B)(i)(a) and to relief under S. 80-I (as it stood at the relevant time) of the Income Tax Act, 1961. The answer to this question entirely turns on whether the assessees are engaged in the manufacture or production of any one of more of the articles or things specified in the relevant Schedule to the Act. They claim that the articles manufactured by them fall under Item 1 of the list of articles and things set out in the relevant Schedule which reads: <PG>736</PG>

(3.) THE above decisions were rendered in the context of the Sales Tax Acts and notifications thereunder. THEy, however, bring out two points. First, they make it clear that there is a real and clear dichotomy <PG>739</PG> 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 2 in the list is: "Aluminium, copper, lead and zinc (metal)". While ingots and sheets manufactured from scrap have been held to fall under Item 2, finished commercial products like aluminium pigments, aluminium arti- cles and aluminium caps have been held to fall outside it. See COMMISSIONER OF INCOME TAX v. Rashtriya Metal Industries Ltd. 3, a case under the Companies' (Profits) Surtax Act, 1964, Indian Aluminium Co. Ltd. v. COMMISSIONER OF INCOME TAX 4 and Indian Aluminium Co. Ltd. v. COMMISSIONER OF INCOME TAX 5, Jeewanlal 1929 Ltd. v. COMMISSIONER OF INCOME TAX 6 and COMMISSIONER OF INCOME TAX v. Fitwell Caps P. Ltd. 7 So also, Item 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 wires will not fall under Item 7 as they are not used for the above pur- pose 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. v. COMMISSIONER OF INCOME TAX 8. 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 2 of the Schedule which covers "aluminium, copper, lead and zinc (metals)". Item 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. Item 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 Schedule as "iron and steel (metal)" and articles or things manufactured from "iron and steel". Secondly, the decision in State of M.B. v. Hiralal shows that even the expression "iron and steel" - which is wider than the expression we are concerned with as it is not further qualified by the word "metal" - was held to mean iron and steel used as raw material for the manufacture of other goods. THE court held that bars, flats and plates only represented such raw material in attractive and acceptable forms. Sri Gauri Shankar, for the Revenue, contended that <PG>740</PG> the use of the appellation "metal" in the entry we- are concerned with further restricts the nature of the qualifying industry but we are not inclined to agree. Obviously it is not used to denote the metal in its a pristine form as an ore or as an extraction from the ore. In the context of a manufacturing industry it is used, we think, for emphasising the distinc- tion between the metal used as a raw material in the manufacture of various articles and the commercial articles made therefrom. We would, therefore, attach the same meaning to the expression as Hiralal . In that case, the court held that the bars, flats and pieces turned out by the assessee from the scrap metal were not products manufactured from the raw material but only represented the raw material rolled out in attractive and acceptable forms. Per contra, in Devi Dass Gopal Krishnan rolled steel S. were held to be products manufactured from steel scrap and ingots. But that will not be conclusive here because the relevant provision here contemplates something manufactured out of iron ore or iron scrap. THE question really therefore is: having regard to the nature of the iron and steel industry and its processes, do M.S. bars, rods and rounds represent the raw material for the manufacture of articles of iron and steel or are they themselves articles made of iron and steel?