Holding

Properzi Rods are a species of aluminium wire rods and therefore are covered by Entry 27(a)(ii) of the First Schedule of the Central Excise and Salt Act, 1944.

Summary

Indian Aluminium Cables Ltd. manufactured aluminium rods by the Properzi process and argued that these "Properzi Rods" were not "wire rods" and therefore should be taxed under the residuary Entry 68 of the Central Excise and Salt Act, 1944. The Central Excise authorities classified them under Entry 27(a)(ii) as "wire bars, wire rods and castings, not otherwise specified" and demanded duty. The company appealed, contending that commercial usage, the distinct manufacturing process, and the end‑use for cable conductors set Properzi Rods apart from ordinary wire rods. The Supreme Court examined the meaning of "wire rods" in the tariff, emphasizing that classification must follow the description understood in trade and that the "not otherwise specified" clause applies to wire rods as well. Relying on expert affidavits, the licence to manufacture "aluminium wire rods", and the definition of wire rods in the Customs Tariff Guide, the Court held that Properzi Rods are a species of aluminium wire rods and thus fall within Entry 27(a)(ii). Consequently, the appeals were dismissed.

Issues considered

Whether Properzi Rods fall within Entry No. 27(a)(ii) of the First Schedule of the Central Excise and Salt Act, 1944.
Whether the classification of a product under the excise tariff should be based on commercial parlance, manufacturing process, or end‑use.
Interpretation of the phrase "not otherwise specified" in relation to wire rods.
Whether Properzi Rods qualify as "goods" within the meaning of the Central Excise Act.

Legislation cited

Central Excise and Salt Act, 1944s. 35, s. 36

Subjects

classificationtariffcentral exciseProperzi Rodwire rodstatutory interpretationcommercial parlancenot otherwise specifiedproduct definitionmanufacturing process

Judgment

731

INDIAN ALUMINIUM CABLES LTD.
A
v.

UNION OF INDIA & ORS.

May 27, 1985 B
[Y.V. CHANDRACHUD, CJ., SABYASACHl MUKHARJI AND
R.S. PATHAK, JJ.]

Central Excise and Saft Act. 1944 : c
First Schedule Entry 27 (a) (ii) and E,ztry No. 68. 'Proprrzi Rods' -
Classification of-Explained.

Interpretation of Statutes;
D
Central Excise Tariff-Fiscal Schedule-Classification of product-Process
of rr:anufactw e and end use of product-Not necessarily determinative of
classijiration.

Words & Phrases :
E

'Pr.Jperzl R.)Js'-,\.feanin<s of-Central Excise & 8alt Act 1944, First
Schedule Entry 27 (a) (ii).

The appellant-Company carries on the business of manufacture and sale F
of aluminium conductors used for the purpose of transmission of high voltage
electric current. There were three different manufacturing techniques by which
rods were obtained : by extrusion, by conveational rolling and by the Properzi
method. The rods prepared by the last m~thod was known as Properzi
Rod.
G
The Superintendent of Central Excise called upon the appellant-Company
to clear the Properzi Rods manufactured by it after payment of duty under
Entry No. 27 (a) (ii) of the Central Excise Tariff on the basis that Prnperzi
Rods were aluminium wire rods. Aggrieved by that order, the appellant filed
an appeal under s. 35 of the Central Excise and Salt Act, !944 which was
dismissed by the Deputy Collector. The appellant thereafter filed a revision H
against that order under s. 36 to the Central Government, and the order of the
Deputy Collector was set aside, and the matter was remanded to the Appellate
Authority for deciding the appeal afresh. In view of the order of remand the
732 SUPREME COURT REPORTS (1985) SUPPL. S.C.R,

appellant withdrew the writ petition which it had simultaneously filed, challeng·
A ing the order of the Deputy Collector. After th~ remand the appeal was heard
by the Appellate Collector, and the appellant relied on the affidavits and
opinions of experts in support of its case that Properzi Rods fall under the
residuary entry and not under Entry No. 27 (a) (ii). The Appellate Collector
however dismissed the appeal. The revision application and the writ petition
to the High Court against the aforesaid order were also dismissed.

B
In the appeal to this Court it was contended on behalf of the appellant,
that Properzi Rods are not wire within the meaning of Entry No. 27 (a) (ii) of
the First Schedule to the Act for tho following reasons : (I) Commercially,
Properzi Rods are not known as wire rods in the trade A person wanting to
purchase Properzi Rods asks specifically for Properzi Rods and not for wire
rods. (2J Properzi Rods are mainly used for the manufacture of aluminium
c conductors and cables, while wire rods are used mainly for making nuts, bolts
and rivettes. (3) A wire rod is limited by its length, while Properzi Rods ar1
only available in coils. (4) Aluminium wire rods are available not in
continuous length but only in short length. (5) Aluminium wire rods are neither
accepted nor commercially required for the purpose of manufacturing
aluminium conductors and cables. (6) The manufacturers of aluminium wire
D rods do not have the capacity to manufacture Properzi Rods. (7) The Indian
Standards Institution which prescribes specifications for various commercial
commodites has prescribed separate specifications for Properzi Rods and
aluminium wire rods (8) In the Cost Accounting Record (Aluminium) Rules
1972, Properzi Rods are shown separately from aluminium wire rods the latter
being shown under the description •other rolled products'. (9) The Properzi
process is as pecialised process evolved only in the field of aluminium for the
E manufacture of aluminium rods which are suitable for being used as aluminium
cables and conductors. The Properzi proce11s is wholly unknown in the field of
manufacture of iron and steel rods.

Dismissing the Appeal,

F HELD : 1. From the description of 'Properzi Rod' as contained in the
various affidavits filed on behalf of the appellant itself, it is clear that Properzi
Rod is a wire rod. Entry No 27 (a) (ii) comprehends "wire bars, wire rods and
castings, not otherwise specified", The last clause of this entry, "not otherwise
specified" must govern not only the expression 'castings' but the expressions
'wire bars' and 'wire rods' also. Since Properzi Rods, which are a species of
wire rods, are not otherwise specified, they would fall under Entry No. 27(a)
G (ii). [738F-GJ

2. In determining the meaning or connotation of words and expressions
describing an article in a tariff schedule, one principle which is fairly wcll-
setted is that those words and expressions should be construed in the sense in
H which they are understood in the trade, by the dealer and the consumer. The
reason is that it is that who are concerned with it and, it is the sense in which
they understood it which constitutes the definitive index of the Ieaislati'c
intention. [739 A-BJ
INDIAN ALUMINIUM CABLES V. UNION 733

Commissioner of Salt Tax, Madhya Pradesh v. Jaswant Singh Charan
Singh; [1967 2 SCR 720. 723 Minerals & Metals Trading Corporation of A
India Ltd. v. Union of India; (1973] I SCR 997, 1002, Dunlop India Lid. v.
Union of lndin; (1976] 2 SCR 98, 113., State of U.P. "M/S. Kores (India) Ltd.;
(1977] 1 SCR 837, 839., Delhi Cloth and General Mills Co. Lid. v. State of
Rajasthan, (1980] 3 SCR 1119, 1115, referred to.

In the instant case, however the contention of the appellant itself in the B
earlier revision application which was filed by it before the Government of
India, was that Properzi Rods had no commercial market. as such. That is
clear from the Remand Order. After the remand, the appellant contended
once again before the Appellate Collector of Central Excise and Customs,
New Delhi, that Properzi Rods are not ''goods" within the n1eaning of the
Central Excise Act since they arc neither marketed as such nor are market·
able. Commercial parlance assume~ importance when goods are marketable. C
It is therefore not possible to hold that the goods io que;tion are not wire
rods. There is preponderating evidence on record to show that they are
nothing but a species of wire rods despite the special method of their manu-
facture and the use to which they are put. [739 C-F]

3. The genus is 'aluminium wire rods' while the Properzi Rod is a D
species belonging to that genus. Though the Central Excise Tariff does not
give the definition of wire rods, the expression 'wire rod' has been defined in
the Indian Customs Tariff Guide, Wire Rods are synonymous with wire
bars. [737 E; 738 EJ

4. The process of manufacture of a product and the end use to which
it is put, cannot necessarily be determinative of the classification ofthat
E
product under a fiscal schedule like the Central Excise Tariff. What is more
important is whether the broad description of the article fits in with the
expression used in the tariff. The aluminium wire rods, \\'·hether obtained by
the extrusion process, the conventional process or by Properzi process, are
still aluminium wire rods. The procrss of manufacture ia bound to undergo
transformation with the advancement in science and technology. The name or F
the end-product may, by reason of new technological processes, change but,
the basic nature and quality of the article may still answer the same descrip·
tion. [740 A-CJ

CIVIL APPELLATE JURISDICTION; Civil Appeal Nos. 2729 and
2730 of 1982. G
From the Judgment and order dated 7.5.1982 of the Delhi
High Court in Civil Writ No. 934 of 1972 & Order No. 162/82
passed by Sh. D.N. Mehta, Addi. Secretary to the Govt. of India.
H
K.K. Venugopa/, Krishna Kumar, Ms. Bina Gupta, and Ms.
LaxmiVenugopa/ for the Appellant.
734 SUPREME COURT REPORTS [1985] SUPPL. S.C.R.

M.M. Abdual Khader, N.C. Ta/ukdar, Girish Chandra, C.V.
A Subba Rao and Ms. A. Subhashini for the Respondents.

The Judgment of the Court was delivered by

CHANDRACHUD, CJ : These two appeals involve the question
B as to whether 'Properzi Rods' manufactured and cleared by the
appellant, the Indian Aluminium Cables Ltd., fall within Entry No.
27 (a) (ii) of the First Schedule to the Central Excises and Salt Act,
1 of 1944 and, if so, under which category of the articles mentioned
therein. The Government of India contends for the application of
that Entry while, according to the appellant, 'Properzi Rods' fall
c under the residuary Entry 68. Civil Appeal No. 2729 of 1982 arises
out of a judgment dated May 7, 1982 of the High Court of Delhi in
Civil Writ Petition No. 934of1972. Civil Appeal No. 2730 of 1982
is directed against Order No. 162 of I 982 passed by the Government
of India in a revision application against the order dated September
7, 1982 passed by the Appellate Collector of Central Excise, New
D
Delhi. Order No. 162 of 1982 of the Government of India was
passed by the Additional Secretary and the Joint Secretary, Govern-
ment of India, in its Ministry of Finance, Department of Revenue.

The appellant Company carries on the business of manufacture
E and sale of aluminium conductors used for the purpose of trans-
mi'5ion of high voltage electric current. One of its factories is
situated at Faridabad, in the State of Haryana. The affidavits filed
by the appellant show that there are three different manufacturing
techniques by which rods are obtained : by extrusion, by conven-
tional rolling and by the Properzi method. In the extrusion process,
F rods are manufactured by forcing the metal through a sized die. In
the conventional rolling process, billets of definite weight are first
cast. Thereafter, they are pre-heated well above the recrystallization
temperature in a loop mill, wl1ere the rods are coiled in· between two
passes to compensate exothermic heat produced by rolling. In the
G Properzi method. aluminium ingots are charged in melting furnace,
each charge consisting of 2500 pounds which takes about 30 minutes
for melting. After the ingots are subjected to the melting process,
the aluminium is transferred to the holding furnaces, from where it
is taken to the holding pot. The metal which is poured is cooled
H by water sprays, as a result of which it is solidified and emerges in
the form of a continuous bar. The bar is rolled and comes out in
the form of a hot rolled rod of 9.5 mm. diameter in continuous
length. This rod is known as Properzi Rod.
INDIAN ALUMINIUM CABLES v. UNION (Chandrachud, C.J.) 735

The First Schedule to the Act of 1944 contains 68 entries, the
A
last of which, Entry No. 68 is, broadly, in the nature of a residuary
entry. It will be necessary to go to that entry only if the Properzi
Rods with which we are concerned in these appeals, do not fall under
Enter No. 27 (a) (ii), as is contended on behalf of the Government.
That entry reads as follows :
B
"Aluminium-

(a) (ii) wire bars, wire rods and castings, not other-
wise specified."
c
By an order dated September 1, 1970, the Superintend~nt of
Central Excise, Faridabad, called upon the appellant to clear the
Properzi Rods manufactured by it, after payment of duty under
Entry No. 27 (a) (ii) of the Central Excise Tariff on the basis that
Properzi Rods are aluminium wire rods. Aggrieved by that order,
the appellant filed an appeal under section 35 of the Act, which was
D
dismissed by the Deputy Collector of Central Excise, Chandigarh,
on February 7, 1972. The appellant filed a revision against that
order under section 36 of the Act to the Central Government.

- Simultaneously, the appellant also filed Civil Writ No. 310 of 1972
in the High Court of Delhi, challenging the order of the Deputy
Collector. The High Court directed the Government to dispose of
the revision application within one month and kept the writ petition
E

- pending for admission. The order of the Deputy Collector was set
aside by the Government in revision and tbe matter was remanded
to the Appell tie Authority for deciding the appeal afresh. In view
of the order of remand, the appellant withdrew the writ petition on
May 18, 1972. After the remand, the appeal was heard by the
Appellate Collector on July 22, 1972. The appellant relied on the
F

affidavits and opinions of experts in support of its case that Properzi
Rods fall under the residuary entry and not under Entry No. 27(a)
(ii). However, the Appellate Collector dismissed the appeal on G
September 7. 1972. The appellant filed a revision application against
the appellate order and it also filed a writ petition in the High Court
of Delhi, being Civil Writ Petition No. 934 of 1972. Having failed
in the revision application as also in the writ petition, the appellant
has filed these two appeals. H
Shri Venugopal, who appears on behalf of the appellant,
contends th11t Properzi Rods are not wire rods within the meaning of
736 SUPREME COURT REPORTS (1985) SUPPL. s.c.R.

Entry No. 27 (a) (ii) of the First Schedule to the Act, for the follow-
A ing reasons: (I) Commercially, Properzi Rods are not known as
wire rods in the trade. A person wanting to purchase Properzi Rods
asks specifically for Properzi Rods and not for wire rods. (2)
Properzi Rods are mainly used for the manufacture of aluminium
conductors and cables, while wire rods are used mainly for making
B nuts, bolts and rivettes. (3) A wire rod is limited by its length,
while Properzi Rods are only available in coils weighing 500 to 2000
kg. of continuous length ranging from 2625 meters to 10500 meters,
with a uniform standard thickness of 9.50 mm. diameter. (4)
Aluminium wire rods are available not in continuous length but only
in short length ranging from 150 meters to 400 meters. (5) Alu-
c minium wire rods are neither accepted nor commercially required for
the purpose of manufacturing aluminium conductors and cables. (6)
The manufacturers of aluminium wire rods do not have the capacity
to manufacture Properzi Rods. (7) The Indian Standards Institution
which prescribes specifications for various commercial commodities,
D has prescribed separate specifications for Properzi Rods and alu-
minium wire rods. (8) In the Cost Accounting Record (Aluminium)
Rules, 1972 prescribed by the Government of India, Department of
Company Affairs, Properzi Rods are shown separately from alu-
minium wire rods, the latter being shown under the description 'other
rolled products'. (9) The Properzi process is a specialised process
E evolved only in the field of aluminium for the manufacture of
aluminium rods which are suitable for being used as aluminium
cables and conductors. The Properzi process is wholly unknown in
the field of manufacture of iron and steel rods.
'
F In support of these points, reliance is placed by the appellant
upon the expert opinions of Shri V.A. Gadgil, Associate Professor
of Metallurgy, College of Engineering, Poona, Dr. K.R. Satya-
narayan, Professor and Head of the Department of Metaliurgy,
College of Engineering, Poona, Dr. R.D. Chaudhari, Professor of
Metallurgy, College of Engineering, Poona and Dr P.R. Khangaon-
G kar, Senior Professor and Head of the Department of Metallurgy,
Regional College of Engineering, Nagpur. Reliance is also placed
by the appellant on the separate specifications made by the Indian
Standards Institution for Aluminium Properzi Rods on the one band
and wire rods on the other. Finally, the appellant draws sustenance
H
to its case from the affidavits filed by Jashwantrai Gangadas Mehta
and Sbamseer Singh Parmar, the former being a partner in a concern
dealing with the sale and distribution of nonferrous metals and
INDIAN ALUMINIUM CABLF.S v. UNION (Chandrachud, C.J.) 737
•
aluminium products and the latter being a managing partner of a A
concern which deals with the sale and manufacture of aluminium
products. In their affidavits, they have described the qualitative
difierence between Properzi Rods and wir~ rods and have stated that,
in commercial parlance, the two are considered as distinct items.

B
Turning first to the affidavits of the academics, they lay accent
on the basic difference between the process of manufacturing Pro-
perzi Rods and the wire rods. That is demonstrated in the affidavits
of Shri V.A. Gadgil, Dr. K.R. Satyanarayan and Dr. R.D.
Chaudhari. Dr. P.R. Khangaonkar has described with particularity
• the Properzi process which is adopted by the appellant's plant at
Faridabad for manufacturing Properzi Rods. Contrasting the Pro-
c
perzi Process with the extrusion process, Dr. Khangaonkar states in
his affidavit that the raw material used in the Properzi process is
aluminium ingots whereas it is aluminium billets in the other
processes. He concludes that, from an expert's point of view, the
Properzi Rods cannot be put in the same category as conventionally D
rolled aluminium rods. Though we have no doubt that the data
contained in these affidavits is based on true facts, we find it difficult
to accept that Properzi Rods cannot be described as wire rods merely
because the process of manufacturing the two articles is different. It
is significant that the appellant itself obtained a licence in L-4 form E
to manufacture "aluminium wire rods". It is only because of the
particular process to which the wire rods are subjected, namely, the
process, that the end product is called Properzi Rods. In other
words, the genus is 'aluminium wire rods' while the Properzi Rod is
a species belonging to that genus. Not only did the appellant obtain
a licence to manufacture 'aluminium wire rods' on the strength of F
which it manufactures Properzi Rods, but the classification list in
From No. I submitted by it on October 10, 1969 also declared that
the goods manufactured by it were to be warehoused as "aluminium
wire rods 3/8". It is somewhat interesting that though the contention
of the appellant was that Properzi Rods fall under residuary Item
G
No. 68, the appellant expressed its willingness before us to accept
the view of the Additional Secretary in revision that Properzi Rods
can fall under the description "castings not otherwise specified" in
Entry No. 27(a) (ii) of the First Schedule to the Act. The reason
why the appellant has come to the Court appears to be that previous- H
ly, it was enjoying an exemption from payment of excise duty by
virtue of Notification No. 46/70 dated March 1, 1970, whichJ;.was
rescinded by Notification No, 74/70 dated March 26, 1970,
738 SUPll.EME COURT REPOllTI (1985) SUPPL. s.c.11..

It may be mentioned that in the Aluminium Control Order·
A. issued by Government of India, Ministry of Steel and Mines, Pro-
perzi Rods are mentioned as "Wire Rods". In the Circulars issued .
by Cable and Conductors Manufacturers Association of India also,
such rods are described as "Wire Rods". Undoubtedly, · these
considerations are not conclusive but, it cannot be denied that they
B are relevant. They show that Properzi Rods are but a species of
wire rods.

The specifications issued by the Indian Standards Instituation
are for ensuring quality control and have nothing to do with the
c class to which the goods belong in a tariff schedule. Considering the
use to which the Properzi Rods are put, they may have to meet a
different and higher quality control than the ordinary wire rods. But,
that does not mean that Proparzi Rods are not comprehended within
the expression 'wire rods'.
D
The very affidavits on which the appellant relies show that
Properzi Rods are obtained, in the first place, by a process of casting
as cast bars, which ultimately come out in the form of rods having
a 9.5 mm diameter. Though the Central Excise Tariff does not give
the definition of wire bars or wire rods, the expression 'wire rod' has
E been defined in the Indian Customs Tariff Guide thus : "Wire rod is
of any shape generally round and between 5 mm and 14 mm
diameter and is intended for conversion into wire". Wire rods are
synonymous with wire bars.

F From the description of 'Properzi Rod' as contained in the
various affidavits filed on behalf of the appellant itself, it is clear
that Properzi Rod is wire rod. Entry No. 27 (a) (ii) comprehends-j
"wire bars, wire rods and castings, not otherwise specified". The
last clause of this entry, "not otherwise specified" must govern not
only the expression 'castings' but the expressions 'wire ·bars' and
G 'wire rods' also. Since Properzi Rods, which are a species of rods,
are not otherwise specfiied, they would fall nuder Entry No.
27 (a) (ii)•.

H . The affidavits to which we have referred assert, particularly
those of the two dealers, that in commercial parlance Propcrzi Rods
are not called wire rods and the two are' treated as distinct species
of goods, ~hri Venu(:opal plac~s stronll reJian~ \lpon these afii·
. JNDIAN ALUMINIUM CABLES '· UNION (Chandrachud, C.J.) 739

davits and argues that whether a particular item falls under a parti·
· cular entry must be determined with reference to its description in A
commercial parlance. This Court has con•istently taken the view that,
in determining the meaning or connotation of words and expressions
describing an article In a tariff schedule, one principle which
is fairly well-settled is that those words and expressions should
be construed in the sense in which they are understood in .the B
. trade, by the dealer and the consumer. The reason is that it Is they
who are concerned with it and,_it is the sense In which they under-
stand it which constitutes the definitive index of the legislative
intention. (See Commissioner of Sales Tax, Madhya Pradesh v.
Jaswant Singh Charan Singh;(') Minerals & Metals Trading Corpora-
tion of India Ltd. v. Union of India;(') Dunlop India Ltd. v. Union of C
India;(•) State of U.P. v. M/s. Kores (India) Ltd.;(') and, Delhi Cloth
and General Mills Co. Ltd. v. State of RajaJthan('). The difficulty in
applying the principle of these decisions to the instant case is that
the contention of the app~llant itself in the earlier revision applica•
tion which was filed by it before the Government of India, was that D
Properzi 1Rods bad no commercial market_ as such. That is clear
from the Remand Order No. 764 of 1972 dated May 16, 1972 paseed
by the Joint Secretary to the Government of India. After the
remand, the appellant contended once again before the Appellate
Collector of Central Excise and Customs, New Delhi, that Properzi
Rods are not "goods" within the meaning of the Central Excise Act E
since they are neither marketed as such nor marketable. Commer•
cial parlance assumes importance when goods are marketable. It is
therefore not possible to bold that the goods in question are not wire
rods. There is preponderating evidence on records to show that they
are nothing but a speoies of wire rods despite the special method of F
their manufacture and the use to which they are put. We may also
· · , add that the statements contained in the affidavits of Jashwantrao
Gangadas Mehta and Shamseer Singh Parmar cannot be accepted
at their face value. Both of them appear to be dealers in sales and
distribution of wire rods. Their affidavits do not show any fami-
liarity with dealings in Properzi Rods. The knowledge claimed by G
them does not stem from their personal experience but is in the
nature of hearsay.

(!) [1967] 2 S.C.R. 720, 723.
(2) [1973) I S.C.R. 997, 1002 •. 0
(l) (1976] 2 S.C.R. 98. 113.
(4) (1977] I S.C.R. 837, 839. •
(5) [1980J 3 S,C.R, 1109, 1115,
740 SUPREME COURT REPORTS (198S] SUPPL. S.C.B..

To sum up the true position, the process of manufacture of a
A product and the use to which it is put, cannot necessarily be deter·
minative of the classification of that product under a fiscal schedule
like the Central Excise Tariff. What is more important is whether
the broad description of the article fits in with the expression used
in the Tariff. The aluminium wire rods, whether obtained by the
B extrusion process, the conventional process or by Properzi process,
are still aluminium wire rods. The process of manufacture is bound
to undergo transformation with the advancement in science and
technology. The name of the end-product may, by reason of new
technological processes, change but, the basic nature and quality of
the article may still answer the same description. On the basis of
c the material before us, it is not possible to record a positive finding
that Properzi rods are treated as distinct items in commercial
parlance. Properzi Rod is a wire rod subject to the properzy process
and is used for transmission of high voltage electric current.

D For these reasons, we confirm the judgment of the High Court
and the order passed by the Government of India in its Finance
Department dated March 15, 1982 and dismiss these appeals with
costs.

N.V.K. Appea18 dismtsaed.