STATE OF ANDHRA PRADESH Vs. INDIAN DETONATORS LTD

JUDGEMENT

(1.) This Tax Revision case raises a short point as to whether "Electric Detonators" manufactured by the Assessee, the Indian Detonators Ltd., are "electrical goods" falling within Entry 47 of Schedule I to the Andhra Pradesh General Sales Tax Act, 1957, so that they may be subjected to sales tax at the rate of 7 per cent. A "detonator" is an explosive accessory for initiating high explosives. It is used for blasting purposes and is issued only against special licence to be obtained by persons concerned with blasting or mining operations. It contains chemical composition inside a metallic tube, whether aluminium or copper, which is closed at one end. In this tube are compressed two charges of initiating explosives successively. One is base charge and the other is priming charge. The chemical mixture in each of them is somewhat different from the other. The tube with explosive thus compressed thereinto forms a "detonator." In order that this detonator may function, it is necessary that the explosive chemicals therein should be ignited. This ignition is effected in more than one way. One of the methods of igniting it is to provide a train of black powder called "safety fuse" which would carry a flame from a point sufficiently away from the explosives to the initiating explosives. This method, under certain circumstances, especially in an atmosphere of explosive mixture of gases, proves hazardous. The detonators which are to be used under such conditions are provided with facilities to ignite them by passing electric current and they are on that basis called "electric detonators," the first of the kind being ordinary detonators. The assessee company manufactures both the types of detonators but sets a very high value 7 to 8 times more than ordinary detonators on electric detonators probably due to a sort of monopoly in some measure that it enjoys. The electric detonators are provided with two metal strips which are held together and separated from each other by means of insulating material. To one pair of ends of these strips are soldered leading wires. The other pair of ends are joined together by means of a high resistance nichrome wire. This wire is called "bridge wire." The bridge wire is surrounded by a mixture of charcoal and other ingredients. On passing the electric current through the leading wire and the bridge wire, the bridge wire glows and ignites the mixture of chemicals giving a hot flash on ignition. This hot flash is conveyed to the priming charge the ignition of which in turn, explodes the base charge. The shock energy available in the detonation of these two charges is conveyed to the explosive cartridge within which is buried the detonator. This causes the explosion that is utilised in commercial blasting practices. That is how the nature and the kind of detonator manufactured by the assessee has been described by Sri V. Y. Tambe, an expert whose opinion forms part of the record of this case. Practically there is no difference between an ordinary and electric detonator so far as detonator or explosive portion is concerned. The combination of chemicals compressed in the metallic casting in both the kinds of detonators is essentially the same. If at all there is any difference between the two kinds of detonators it is in the method of setting off the detonators. While for ignition of the priming charge flame is carried through the safety fuse in the ordinary detonator, in the case of electric detonator the flame is produced from passing electric current through its fuse end. The difference in the mode of ignition in the two types of the detonators in no way affects the explosive potency of the chemicals therein. In other words, the efficiency of the detonator is unaffected and would be the same, whether it is ignited by electric current or ordinary flame because the explosion is caused by the chemicals whether the fuse is ignited by means of mechanical device or electricity.

(2.) In this state of facts, the question is whether electric detonators come within the meaning of 'electric goods' in Entry 37 of Schedule I to the Andhra Pradesh General Sales Tax Act. The said entry reads thus: "37. All electrical goods, instruments, apparatus and appliances including fans and lighting bulbs, electrical earthenware and porcelain and all other accessories." The expression "electrical goods" has not been defined in the Act. Neither the Act nor the Rules thereunder have laid down any test to be satisfied before any given article is brought within the scope of Entry 37. The Appellate Authority, therefore, relying on the test laid down in William Jacks & Co. v. The State of Madras, held that electric detonators are electrical goods inasmuch as they cannot be operated by any means other than electric energy to ignite the fuse. The Appellate Tribunal did not agree with this view for in bringing any goods under the classification of electrical goods, the goods are to be taken as a whole. For this purpose their component parts cannot be taken separately. To put it differently the article sold is to be taken as a unit and cannot be split up and considered. On this basis which has also been clearly stated in the case relied on, the Tribunal seems to have held that inasmuch as the electric energy is used only for the limited purpose of ignition, the detonator which is primarily and essentially an explosive accessory depending for its potency and power on the chemical combination, cannot be classified as electrical goods or appliances. In our judgment, the approach of the Tribunal to the problem is correct. The Appellate Authority was no doubt impressed greatly by the fact that the electrical detonator cannot be used without electrical energy. But before that test is applied, it is essential that the goods must be capable of being classified as electrical goods. It may be that certain goods cannot be used without electrical energy; yet they need not necessarily be electrical goods. Take the case of a motor car. Its use certainly depends on the functioning of the electric equipment as well. In fact without electrical energy it may not be possible to start or make it run. But on that account the motor car does not become electrical goods. There can be innumerable instances of this kind. The nature of the goods therefore has to be determined taking the goods as a whole and not by any of its single factor.

(3.) In William Jacks & Co., Ltd. v. State of Madras, the Madras High Court referring to its earlier decision in William Jacks & Co., Ltd. v. State of Madras clarified this position. The question for consideration was whether lathe can be classified as electrical goods. It was observed thus:- "A lathe, by itself, even though driven by electrical energy will not come within the scope of the expression 'electrical goods' in section 3 (2) (viii) of the Madras General Sales Tax Act, 1939." It is unnecessary to refer to the line of reasoning in that case more elaborately for the position has been made further clear in a later decision of the Madras High Court in Deputy Commissioner of Commercial Taxes, Madurai Division, Madurai v. Ravi Auto Stores, it was laid down therein as follows:- " Intrinsically, the goods in question must be electrical goods and secondly their use cannot be had without electrical energy. Merely because an article cannot be used without electricity, it may not be decisive. It is necessary that, apart from that fact, the article, by its every nature, answers the description of 'electrical goods'." We find ourselves in respectful agreement with this proposition.