S.J. Mukhopadhaya, C.J.@mdashThe appeal has been preferred by the State against the judgment and order passed by the learned Single Judge dated 18-11-2009. By the said order, learned Single Judge allowed the writ petition preferred by the respondent-Company, Vadilal Gases Private Limited (hereinafter referred to as ''the petitioner-Company'') holding that the petitioner-Company being a ''manufacturing unit'' is required to pay only 10% of the duty charges and not 60% as demanded by the appellants and set aside the demand order dated 6-6-2000 issued by the Assessing Officer, Officer of Commissioner of Electricity Duty, Gandhinagar.
2. The writ petition was preferred by the petitioner-Company claiming that its unit is manufacturing various kinds of gas mixtures registered as small scale industry unit is with the Department of Industries. Two electric meters, one for industrial purpose and other for domestic purpose are installed in the unit. It has already been classified under the category of 10% electricity duty ever since 1992.
3. Sometime in the year 1998, the 3rd appellant Assessment Officer visited the said unit, and thereafter, issued notice on 12-11-1998 to show cause as to why 60% of electricity duty be not made applicable to the petitioner-Company. The petitioner-Company by its reply informed that it is a manufacturing industry, therefore, it is liable to pay only 10% electricity duty as per law. On 26-11-1998 the 2nd appellant - Collector of Electricity Duty, Gandhinagar, instructed the Gujarat State Electricity Board to revert to 10% electricity duty. However, on the basis of a subsequent report submitted by the officers from Gujarat Electricity Board, 2nd appellant Collector of Electricity Duty again issued a second show-cause notice to which petitioner-Company replied. It has provided the details of manufacturing of gas made by it.
4. The case of the petitioner-Company was that the 2nd appellant-Collector of Electricity Duty once again visited the respondent-unit and issued a show-cause notice to which petitioner-Company replied. Same question was raised in this notice also. Subsequently, by letter dated 22-7-2000 the 2nd appellant asked for details regarding preparation and process of gas mixtures, which was also replied by respondent on 29-7-2000.
5. Finally, the appellant-authority issued final order on 18-8-2000 and raised the bills towards both the electric meters and the petitioner-Company was directed to pay 60% of the electricity duty.
6. Aforesaid order and bills were challenged before the learned Single Judge. The petitioner-Company contended that they are transporting liquid nitrogen and liquid argon from Reliance Industries Limited, Hazira and G.S.F.C. Baroda in their mobile cryogenic tankers with average temperature of liquids at 196�C. Said tanker is then directly connected to displacement pump, which helps it to pass through the Natural Vaporizer, and ultimately, the end product is procured. It took specific plea before the learned Single Judge that the petitioner-Company is governed by Gas Cylinder Rules, 1981 and fall within the definition of ''manufacture'' as defined thereunder.
7. Learned Single Judge noticed the relevant provisions and held that the petitioner-Company is manufacturing gas mixture, and therefore, is required to pay only 10% duty charges and not 60%. as demanded by the appellant-State. The order dated 7-6-2000 and the bills were set aside.
8. Learned Counsel appearing on behalf of the appellant-State would contend that the petitioner-Company is not manufacturing gas, and therefore, do not come within the definition of ''industrial undertaking'' and it is simply refilling cylinders and no manufacturing process is undertaken by the petitioner-Company.
9. On behalf of the State, learned Counsel for the appellant would contend that ''manufacturing of goods'' would normally include the entire process of manufacture. If it brings out a complete transformation for the whole components so as to produce a commercially different article or a commodity then only it may be called manufacturing process, which the learned Single Judge has failed to notice.
10. He would further contend that the definition ''manufacture'' given in some other enactment cannot be applied while interpreting the expression ''manufacture'' in relation to the provisions of the Bombay Electricity Duty Act, 1958. Learned Single Judge failed to appreciate that under Schedule 1 of Part 2 of the Bombay Electricity Duty Act, 1958, there is a provision of appeal against the order of assessment, and therefore, instead of deciding the case on merit, he ought to have remitted the matter, to the appellate, authority for its decision.
11. According to learned Counsel for the State, the conversion of liquefied gas into a gaseous form as is undertaken by way of modulating the temperature cannot come within the definition of ''manufacturing process''.
12. Learned Counsel for the appellant-State further submitted that when Electricity Duty Inspector visited the premises of the petitioner Company after the show-cause notice, before whom the authorized signatory of the petitioner-Company submitted a letter on 28-12-1998, wherein they have accepted that the process adopted by the petitioner-Company is of refilling the cylinders and no other manufacturing process is undertaken. The conversion of liquefied gas into a gas form is undertaken by way of modulating temperature.
13. We have heard Counsel for the appellant-State and petitioner-Company and perused the record.
14. The petitioner-Company had taken specific plea before the authorities that the liquid organic and nitrogen gases are used as raw materials which are converted into gaseous form and the end products have different quality, different physical properties, different characteristics and different usage because argon and nitrogen in liquid form have no industrial application. The mechanized process by which liquid gases are converted into gaseous form, which includes compression of high pressure, removing impurities during the process and by using vaporizer for removal of moisture. By using heat treatment also the moisture is removed. All such processes show the petitioner-Company is a manufacturing unit.
15. Rates of duty payable by the consumer other than those referred to in Sees. 2(a)(i) and (ii) as per Section 3(1)(a) of the Bombay Electricity Duty Act, 1958 is prescribed under Schedule 1. Under Part 1 of the Schedule at Entry No. 5 prescription for energy consumed by an industrial undertaking has been made, relevant portion of which is quoted hereunder:
(5) For energy consumed by an industrial undertaking, not being an undertaking to which item (2) or (4) applies, other than energy consumed in respect of any of its premises used for residential purposes -
(a) where an industrial undertaking consumes high tension energy - 20 per cent of consumption charges.
(b) where an industrial undertaking consumes exclusively low tension energy - 10 per cent of consumption charges.
16. The petitioner-Company has been provided with low tension energy as per Entry No. 5(b) of Schedule 1. Treating the petitioner-Company as industrial undertaking, the Electricity Board was charging 10% of consumption charge''s. Under Entry No. 7 of Schedule 1 for energy consumed in respect of any premises not falling under any of the Entries Nos. (1) to (6), 60% of consumption charges has been prescribed to be charged. The appellant-State after notice to the respondent-petitioner and on receipt of reply held that the petitioner-Company do not fall under any of the Entries Nos. (1) to (6) of Schedule 1, and as such, the petitioner unit is liable to be charged 60% of the consumption charges.
17. ''Industrial undertaking'' has been defined u/s 2(bb) of the Bombay Electricity Duty Act, 1958, as under :
2(bb) ''Industrial undertaking'' means an undertaking engaged predominantly in -
(i) the manufacture or production of goods, or
(ii) any job work which results in the manufacture or production of goods but does not include -
(A) a service undertaking; and
(B) an undertaking which manufactures or produces any kind of food or drinks or both meant ordinarily for consumption on the premises of the undertaking.
18. According to petitioner-Company it manufactures gas mixtures. Per contra according to appellant-State petitioner-Company is not a manufacturing unit, but refills gas.
19. The expression ''manufacture'' fell for consideration before the Supreme Court in the case of
20. In the case of
21. It is not in dispute that the petitioner-Company is guided by the Gas Cylinders Rules, 2004 as it is dealing with gas cylinders and come within the purview of Explosives Act, 1884. The petitioner has specifically taken a plea that it is preparing gas mixtures of liquid argon and nitrogen gases which are the raw materials. They are converted into gaseous form and the end product has a different qualities, different physical properties, different characteristics and different usage. After mixing it cannot be segregated in two different forms of liquid argon or nitrogen gas.
22. Rule 2(v) of the Gas Cylinders Rules, 2004 defines ''compressed gas'', which reads as follows :
2(v) ''compressed gas'' means any permanent gas, liquefiable gas or gas dissolved in liquid under pressure or gas mixture which in a closed gas cylinder exercises a pressure either exceeding 2.5 Kgf/cm2 abs. (1.5 Kgf/ cm2 guage) at + 15�C or a pressure exceeding 3 Kgf/cm2 abs. (2 Kgf/ cm2 guage) at + 50�C or both.
Explanation:- Hydrogen Fluoride falls within the scope of compressed gas although its vapour pressure at 50�C is 1.7 to 1.8 atmospheric gauge.
Rule. 2(xxxii) defines ''manufacture of gas'' as under :
''manufacture of gas'' means filling of a cylinder with any compressed gas and also includes transfer of compressed gas from one cylinder to any other cylinder.
23. What is the claim petitioner-Company raised or the appellant-State thinks is not the factor. The question is whether petitioner-Company is a manufacturer or not. From the definitions of the Gas Cylinder Rules, 2004, which cover the petitioner-Company, as it is filling up gas from one cylinder to another and the compressed gas means any permanent gas, liquefiable gas or gas dissolved in liquid under pressure or gas mixture which in closed gas cylinders exercises a pressure, as per the rules the petitioner-Company come within the definition of ''manufacturer of gas''. In absence of any definition separately given under the Bombay Electricity Duty Act, 1958, the petitioner-Company, being a manufacturer of gas, we hold that the petitioner-Company is an ''industrial undertaking'' within the meaning of Section 2(bb) of the Bombay Electricity Duty Act, 1958.
24. This apart even as per the decisions of Supreme Court referred to above, on mixture of two gases, as a change takes place and a new and distinct commodity known to the consumer and commercial community comes into existence as a commercial product, we hold that the petitioner-Company is a ''manufacturer'' and fall within the definition of ''industrial undertaking''.
Such finding having been given by the learned Single Judge, we find no case made out to interfere with the judgment passed by the learned Single Judge. In absence of any merit, the Letters Patent Appeal is dismissed, but no costs.
