TMI Blog1996 (2) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... Oil (BP) on the ground that the conversion of Castor Oil (Commercial) into Castor Oil (BP) was a manufacturing process and, therefore, the petitioners were not entitled to refund of the octroi duty under the Bombay Municipal Corporation's Refund of Octroi Rules, 1965. On that basis, the Corporation also refused to extend or grant R-Form facilities to the petitioners as provided under Rules VII and VIII of Part II of the Bombay Municipal Corporation Exemption from octroi (Free Gift etc.) Rules, 1966. It is not necessary in the present case to highlight the correspondence because the main point which arises for consideration in the present case is whether the Castor Oil undergoes any change in its characteristics, condition or state because of superior filtration so as to amount to a manufacturing process, particularly when the Castor Oil (Commercial) gets converted into Castor Oil (BP). At this stage it may be mentioned that Castor Oil (Commercial) can be used for Industrial purpose like manufacture of soaps whereas Castor Oil (BP) could be used for any purpose including medicinal preparations or even in Pharmaceutical products being manufactured. 4.Mr. Bharucha, learned Counsel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viz. filtration through a filter press followed by centrifuging treatment with acid/alkali bleaching and deodorization. Mr. Bharucha contends that these are the various stages of the filtration process which does not amount to manufacture. Mr. Bharucha stated that even if Castor Oil (Commercial) is kept in the open and if it is allowed to be stored in the open, the dirt will settle down and the impurities can be removed by the filtration process which does not amount to manufacturing process. Mr. Bharucha further contends that ultimately Castor Oil medicinal (BP) is nothing, but a transparent Castor Oil and neither the nature nor the condition of the initial product viz. Castor Oil (Commercial) undergoes any change by any process which could be termed as a manufacturing process. Mr. Bharucha contends that octroi duty is levied under Section 192 of the B.M.C. Act on importation of a product into the City limits. Mr. Bharucha contends that Section 192 gets attracted only if there is use, consumption or sale within the city limits. In the present case it is not in dispute that Castor Oil (Commercial) was imported into Bombay from time to time and Castor Oil medicinal (BP) has been ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e various tests laid down by the Apex Court for determination of the question, as to what amounts to a manufacturing process. Dr. Chandrachud contended that in the present case, although the nature and the extent of processing may vary from one case to another, yet it is only when the change or a series of changes takes the commodity to the point where commercially it is recognised as a new and distinct article, then manufacturing can be said to have taken place. Dr. Chandrachud contended that in the present case what is imported is Castor Oil (Commercial) and what is exported is Castor Oil (BP). Dr. Chandrachud stated that in the present case, it is not in dispute that what was imported was quite different from what was exported. Dr. Chandrachud contended that in the present case, since Castor Oil (Commercial) was imported, it was something like Castor Oil in a crude form and what was imported was Castor Oil in a refined form, after the above process was carried out and, therefore, there was commercially a new and distinct article which came into existence in the form of Castor Oil (BP). Dr. Chandrachud further contended that in the present case, there was a material difference in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 and not on the basis of Rules of Exemption to which R-Form facility applies and so also the case of the petitioners is not based on the E.P. Rules because after 1991, the Corporation has extended the benefit of E.P. Rules, 1991 to the petitioners. Dr. Chandrachud further contends that in the present case, the petitioners have made a claim for refund of octroi, right from 1983 whereas the Petition has been filed as stated herein above, only on 12th May, 1988. Dr. Chandrachud, therefore, contends that the claim of the petitioners is clearly barred by limitation and also on the ground of laches and delays. Dr. Chandrachud contends that the particulars of the claim indicates that the petitioners seek refund for the period of more than three years because they claim refund from August 30, 1983 by Claim No. 15519. 6.In the present case, I find considerable merit in the contentions advanced on behalf of the petitioners. Under Section 192 of the Bombay Municipal Corporation Act, the Corporation is entitled to levy and charge octroi duty in respect of goods imported into City limits. Under Section 192 of the B.M.C. Act, the goods are exigible to payment of octroi duty only if they are u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of days in the sun would lead to the dirt setting down and if after the dirt has settled down, the upper portion is removed, it would be a Castor Oil of a superior grade which is Castor Oil (BP) but that Castor Oil, in its identity and form, remains the same and in the circumstances, the process of filtration which includes bleaching, centrifuging or deodorization cannot, by any stretch of imagination, be termed as a manufacturing activity. For example, centrifuging permits the dirt to settle down. Bleaching is a part of the process. For example, if well-water is bleached, it becomes good for drinking, but that does not involve manufacturing activity. Similarly, deodorization removes the smell. These are only various stages of filtration. After the process of filtration, there is transparency and deodorization. In other words, the quality of the Castor Oil improves. The grade improves and it is for this reason that it is indicated in the British Pharmacopia as Castor Oil (BP). At this stage it may also be mentioned that Castor Oil (Commercial) can be used for industrial purpose whereas Castor Oil (BP) can be used not only for industrial purpose, but can also be used for medicinal p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was that when pineapple is canned, it undergoes a change which amounts to manufacturing process because it is dipped in the sugar syrup and thereafter it is tinned which results in a distinct new article. This contention is rejected by the Supreme Court on the ground that there is no manufacturing activity involved even in the case of a canned pineapple because the basic substance remains the same and merely because the fruit is canned, it cannot be said that it has undergone a change so as to bring into existence a new and distinct commodity/article. Similarly, in the case of Garware Nylons v. Union of India Ors. [reported in 1980 (6) E.L.T. 249 (Bombay)], the Division Bench was concerned with the question as to whether a yarn, when twisted which becomes a twine, amounts to a manufacturing process. The contention of the Department was that twisting of the yarn is a manufacturing process because the resultant twine is a new product which, in the market, is commercially known as a separate distinct and new product which has a distinct marketability. This argument was rejected by the Division Bench of this Court vide Para 11 of the said judgment on the ground that the essence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required only to examine the various stages of the filtration process. Dr. Chandrachud further contended that if as a result of the above process, a new commercial product comes into existence then the test of manufacture is satisfied. Dr. Chandrachud further contended that in a matter of this type, the end user plays a very important role. Dr. Chandrachud contended that in the present case, we are concerned with interpretation of Schedule H to the B.M.C. Act which indicates various Headings and which clearly shows that end use of a product is very important in the matter of interpretation of the entries falling in Schedule H to the B.M.C. Act. Dr. Chandrachud further contends that there is no merit in the contention of the petitioners that end use is relevant only in Customs and Excise matters and it is not relevant in matters pertaining to octroi. At this stage, I wish to clarify that in a matter of this type, there cannot be any one single conclusive test. Ultimately, it will depend on facts of each case. In the present case, it is not possible to lay down that only end use should be the test or other tests regarding a new commodity coming into existence should not be looked at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r quality. In the present case, therefore, even applying the test of end user since there is no specified end user coming into existence, there is no merit in the contention advanced on behalf of the Corporation that after the filtration process, Castor Oil (BP) is the resultant of a manufacturing process. It is not the case of the Corporation that Castor Oil (BP) can only be used for medicinal preparation. On the contrary, the Corporation concedes that it can be used for a variety of purposes. One more aspect may also be reiterated. In the case of Garware Nylons (supra), the Division Bench of this Court has categorically held that when a yarn is twisted, there is no manufacturing process involved although the output is known as twine in the Commercial market and although in the trading, twine is known as a separate commodity commercially, still it retains the characteristics of a yarn and those characteristics are not obliterated by virtue of twisting of the yarn into twine. Similarly, in the present case, after the filtration process also the basic characteristics of Castor Oil remain the same and in the above circumstances, the judgment of the Division Bench of this Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners is time-barred. The petitioners have come well in time. The petitioners, as a diligent assessee, have invoked the Refund of Octroi Rules from time to time and the petitioners have repeatedly represented to the Corporation to grant them refund. Ultimately, the above Writ Petition came to be filed on 12th May [1988] which is well within the period of three years from the date of the rejection of their claim on August 30, 1985 read with the letter dated 3rd December 1986. 10.Before concluding, I wish to clarify that in matters of this type, the Corporation is required to render proper assistance on the technical data to the Court. Merely on the ground of Affidavits filed by their officers, it is not possible in the present case to decide the controversy to the fullest extent. In the present case, the Corporation has [not] relied upon any Affidavit of a person belonging to the market, dealing in Castor Oil. No expert evidence, in the form of an Affidavit, is also annexed to the Petition. No technical data is supplied. No literature also has been supplied. In the above circumstances, it is very difficult in certain cases of this type, to decide the matters, particularly wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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