Holding

Rapid‑hardening white cement is classifiable under Entry 23(i) of the Central Excises & Salt Act and Sub‑heading 2502.20 of the Excise Tariff, not under the residual entries, and the classification before 28‑Feb‑1986 is under 23(i) and thereafter up to 1‑Mar‑1992 under 2502.20.

Summary

The appellants, manufacturers of rapid‑hardening white cement, challenged the classification of their product under the Central Excise Tariff. They argued that the cement should be placed in Entry 23(i) of the Central Excises & Salt Act (and later Sub‑heading 2502.20) as rapid‑hardening cement, rather than in the residual entries 23(ii) or 2502.90. The Tribunal had held otherwise, treating the colour of the cement as determinative. The Supreme Court examined the tariff language, noting that entries other than the first item are defined by property, not colour, and accepted technical evidence that rapid‑hardening can be a property of white cement. It held that the rapid‑hardening property, not colour, governs classification, and upheld the appellants' contention for the relevant periods. Consequently, the appeal was allowed and the Tribunal’s order set aside.

Issues considered

The correct classification of rapid‑hardening white cement under Entry 23(i) versus Entry 23(ii) of the Central Excises & Salt Act, 1944.
The appropriate classification under Sub‑heading 2502.20 versus 2502.90 of the Central Excise Tariff, 1985 for the period 28‑Feb‑1986 to 1‑Mar‑1992.
Whether colour of cement is a relevant factor for tariff classification when the property of rapid‑hardening is present.
The effect of IS specifications 8041:1978 (rapid‑hardening cement) and 8042:1978 (white cement) on the classification.

Legislation cited

Central Excise Tariff Act, 1985

Subjects

central excisetariff classificationrapid‑hardening cementwhite cementcolour vs propertyIS specificationsEntry 23(i)Sub‑heading 2502.20appellate tribunal

Judgment

\
-,..,.

INDIAN RA YON INDUSTRIES ETC. A
v.
COLLECTOR OF CENTRAL EXCISE, JAIPUR

MAY 12, 1998

[SUJATA V. MANOHAR AND D.P. WADHWA, JJ.] B

Central Excises & Salt Act, 1944-Entry 23(i) or 23(ii)-Rapid-
hardening white cement-Assessment of-Prior to 28-2-1986-Held,
classifiable under the head "rapid-hardening cement" in Entry 23(i) and not C
under Entry 23 (ii)-More so when the product was licensed under both the
IS! specifications 8041: 1978 and 8042: 1978 for rapid-hardening cement and
white cement respectively.

Words and Phrases-"Rapid-hardening cement"-Meaning of-In the
context of Entry 23(i) of the Central Excises & Salt Act, 1944. D
Excise Tariff Act, 1985 :
•
Sub-heading 2502.20 or 2502.90-Assessment period subsequent to
28-2-1986 but prior to 1-3-1992-Rapid-hardening white cement-Held,
classifiable under the head "rapid-hardening cement" under Sub-heading E
2502.20 and not under Sub-heading 2502.90-Excise.

Item 2502.21 (as in force with effect from 1-3-1992)--Scope of-Held,
Rapid-hardening white cement covered.

The appellants were manufacturers of rapid-hardening white cement. F
For the period prior to 28-2-1986, the relevant tariff entry for cement was
Tariff Entry 23. After coming into force (If the new Excise Tariff from 28-
2-1986, the relevant entry is 2502. There was a change in entry 2502, w.e.f.
1-3-1992. The disputes relate to the classification of white cement produced
by the appellants under the Central Excise Tariff in force at the relevant G
time. According to the appellant, the correct classification would be Entry
2502.20. These entries were similar to old entries 23(i) and 23(ii). From 1-
3-1992, Entry 2502.20 covered the case because it expressly dealt with white
cement whether or not with rapid-hardening quality. The cement produced
by the appellants conformed to the ISi specifications for rapid-hardening
port land cement, i.e. 18:8041:1978. The adjudicating officer held that the H
333
334 SUPREME COURT REPORTS [1998] 3 S.C.R.

A white cement manufactured by the appellants conformed to the properties
of rapid-hardening cement, and that it fell under Tariff Entry 23(i) or 2502.20.
The Tribunal, however held that white cement would not fall under Entry
23(i) or 2502.20. Hence this appeal.

Allowing the appeal, this Court
B
HELD : In Item 23(i) of the Central Excises & Salt Act and Sub-
heading 2502.20 of the Central Excise Tariff Act, apart from grey portland
cement, there are other kinds of cement which are mentioned without any
reference to their colour but with reference to their properties. Thus, the
entry includes rapid-hardening cement, low-heat cement and waterproof
C hydrophobic cement. The appellants have produced enough technical material
to show that rapid-hardening cement can be grey portland or white. Since
these items in Entry 23(i) and Sub-heading 2502.20, have no nexus with the
colour of the cement, unlike the first item which is expressly grey portland
cement, there is no reason why the other kinds of cement referred to in the
D .entry should be confined only to cement of grey colour. The rapid-hardening
property has no correlation with the colour of the cement. Hence, the Appellate
Tribunal was not right in excluding rapid-hardening cement having white
colour from classification under the head "rapid-hardening cement" in Entry
23 (i) or 2502.20. Moreover, ISi specification also has two different
specifications, 8041:1978 for rapid-hardening cement and 8042:1978 for
E white cement. The product of the appellants is licensed under both these
specifications. Therefore, the appellants' contention that prior to 28-2-1986
the item manufactured by them was classifiable under Tariff Item 23(i) while
after this date and up to 1-3-1992, it was classifiable under Sub-heading
2502.20 is upheld. [338-D-H; 339-A-B]
F Kajaria Export Ltd. v. Union of India, (1995] Supp. 3 SCC 61,
distinguished.

Aalborg Portland, Denmark: "The Technology of White Concrete",
referred to.

G CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5819 of 1994
Etc.

From the Judgment and Order dated 23.8.94 of the Central Excise & Gold
(Control) Appellate Tribunal, Delhi in A. No. E./3060/92-C.

H P.S. Jha for the Appellants in C.A. No. 5819/94.
I
..

INDIAN RA YON AND INDUSTRIES LTD. v. C.C.E. [SUJATA V. MANOHAR, J.] 335
Sanjeev Sen, (Ms. Monica Singal) for Mis. JBD & Co., for the Appellant A
.~ in C.A. No. 6030/94.

R. Mohan (G. Prakash) and V.K. Verma for the Respondent.

The Judgment of the Court was delivered by
B
MRS. SUJATA V. MANOHAR, J. Mis. J.K. White Cement Works and
Mis. Indian Rayon and Industries Ltd., the two appellants herein, are engaged
in the manufacture of rapid hardening white cement. The dispute relates to
the classification of white cement produced by these appellants under the
Central Excise Tariff in force at the relevant time. In the case of J.K. White C
Cement Works, the period of disputed classification is 16.2.1985 to 28.2.1986
and 1.3.1986 to 28.2.1992. ln the case oflndian Rayon and Industries Ltd. the
relevant period is 26.4.1991to28.2.1992.

For the period prior to 28.2.1986, the relevant Tariff Entry for cement was
Tariff Entry 23. After coming into force of the new Excise Tariff from 28.2.1986, D
the relevant Entry is 2502. There was a change in the Entry 2502 with which
we are concerned, w.e.f. 1.3.1992. The amended Tariff Entry 2502.21 thereafter
covered rapid hardening white cement. The relevant Entries for the three
periods are as follows :
(a) Prior to 28-2-1986 E

23. CEMENT ALL VARlETIES Rs.250 10% of the
(i) Grey Portland Cement (including Per MT basic duty
Ordinary Portland Cement, Portland- chargeable
Pozzolana Cement and Portland slag
F
cement), masonry cement, rapid hard-
ening cement, low heat cement and
water proof (hydrophobic) cement.
(ii) All Others 40%ad -do-
valorem
G
(b) From 28-2-1986

Heading Sub- Description of goods Rate of Duty
Heading
H
,·~
336 SUPREME COURT REPORTS (1998] 3 S.C.R.

A 25.02 Cement Clinkers; Cement, all
sorts ~~
2502.10 Cement Clinkers 12%

250220 Grey Portland Cement (including
B ordinary portland cement, port- Rs. 225
land pozzolana cement and port Per Tonne
land slag cement), masonry
cement, rapid hardening cement,
low-heat cement and water-proof
c hydrophobic cement.
····················
....................
2502.90 Other 40"/o

(c) From 1-3-1992
D
Heading Sub- Description of goods Rate of
Heading Duty

25.02 Cement clinkers, cement, all sorts
E 2502.10 Cement clinkers Portland Cement 10%

250221 White Cement, whether or not 40% +
artificially coloured and whether Rs. 250per
or not with rapid hardening tonne
properties.
F
250229 Other 40%+
Rs. 250 per
tonne

G Jn respect of the period prior to 28.2.1986, the Tribunal has held that
Entry 23(i) is applicable only to grey portland cement. "Rapid hardening
cement" in Entry 23(i) refers, according to the Tribunal, only to grey portland
cement which has a rapid hardening quality. Since the Item manufactured by
the appellants is white cement and not grey cement with rapid hardening
H quality, it falls under the Residuary Entry 23(ii). According to the assessees,
r
INDIA!\ RA YON AND INDUSTRIES LTD. v. C.C.E. [SUJATA V. MANOHAR, J.] 337
each item in Tariff Entry 23(i) has to be read separately. Rapid hardening A
cement whether it is grey or white will be covered by Entry 23(i). Hence it will
not fall under Entry 23(ii). In the same manner from 28.2.1986 to 1.3.1992, the
Tribunal has held that the correct classification of the Item produced by the
appellants is under 2502.90 which is the Residuary Entry. While according to
the appellants, the correct classification would be under Entry 2502.20. These B
Entries are similar to old Entries 23(i) and 23(ii). From 1.3.1992, Entry 2502.21
covers the case because it expressly deals with white cement whether or not
with rapid hardening qua! ity.

The Tribunal has held that white cement will not fall under Entry 23(i)
of 2502.20. The appellants had produced considerable literature before the C
Tribunal in order to show that the cement produced by them has rapid
hardening quality. In this connection, the appellants relied on the publicity
catalog:ie of white cement called 'The Technology of White Concrete'
published by Aalborg Portland, Denmark. The catalogue mentions, "Danish
white cement is produced in special plants which are completely separated
from the production of grey cement and Danish White Cement fulfils the D
requirements of most countries to rapid-hardening cement, thus for instance,
the British standard 12:1958. The most essential differences from ordinary
rapid-hardening cement are whiteness and a particularly low alkali-content."
The appellants also relied upon a test certificate from Shriram Institute for
Industrial Research which tested a sample of rapid hardening J.K. White E
Cement. The test results are set out in the test certificate and the Institute
has certified that the sample conformed to IS: 8041. 78 rapid hardening portland
cement. The reference to IS:804 l. 78 is to the Indian standard specification for
rapid hardening cement. The appellants possess a licence for the manufacture
of IS:804 I .78 rapid hardening cement. The Appellants have also relied upon
the test report of the Department of Civil Engineering, Uiliversity of Roorkee F
which states that J.K. White Cement has also got rapid hardening property
as it has satisfied the requirements ofIS:804 I.I 978. It is also mentioned there
that J.K. White Portland Cement can be used as rapid hardening portland
cement since it has got all the properties of rapid hardening cement. In
general, white cement can be ordinary or of rapid hardening nature like grey
rapid hardening and grey ordinary cement because the rapid hardening property G
of white or grey cement is due to its physical and chemical properties
irrespective of colour. The colour of the cement is not the criterion for
achieving rapid hardening property. Rapid hardening white cement can be
used in the preparation of masonry structural finishes.

Another report was also obtained by the Department from the National H
338 SUPREME COURT REPORTS (1998] 3 S.C.R.

A Counci~ for Cement and Building Material, Ballabhgarh testing the physical
properties of the white cement manufactured by the appellants. The test
report has stated that the compressive stress of cement on one day was 230
kg./CM2 as against "not less than 160 kg/CM2 per rapid hardening cement".
These test results also confirm that the cement produced by the appellants
B conforms to the ISi specifications for rapid hardening portland cement
IS:804I:1978. In fact, the adjudicating officer has held that the white cement
manufactured by the appellant thus conforms to the properties of rapid
hardening cement. However, because it is white in colour, the Department has
held that it will fall under Tariff Entry 23(i) or 2502.20.

C Learned counsel for the respondent has drawn our attention to a decision
of this Court (to which one of us was a party in the case of Kajaria Exports
Ltd. & Ors. v. Union of India & Ors., [1995] Supp. 3 SCC 61, where this Court
held that white cement and ordinary grey portland cement are two different
commercial commodities both in commercial parlance and in technical
composition. In the present case, however, the appellants do not seek to
D include ordinary white cement without rapid hardening properties in Tariff
Item 23(i) or 2502.20. In these two Tariff Entries, apart from grey portland
cement, there are other kinds of cement which are mentioned without any
reference to their colour but with reference to their properties. Thus, the Entry
includes rapid hardening cement, low heat cement and water proof hydrophobic
E cement. The appellants have produced enough technical material to show that
rapid hardening cement can be grey portland or white. Since these Items in
the Tariff Entry 23(i) and 2502.20, have no nexus with the colour of the cement,
unlike the first Item which is expressly grey portland cement, we do not see
why the other kinds of cement referred to in the Entry should be confined
only to cement of grey colour. The rapid hardening property has no correlation
F with the colour of the cement. Hence, in our view, the Tribunal was not right
in excluding rapid hardening cement having white colour from classification
under the Head "Rapid Hardening Cement" in Entry 23. I or 2502.20. It is also
necessary to note, in this connection, that !SI specification also has two
different specifications, 8041: I 978 for rapid hardening cement and 8042: 1978
for white cement. The product of the appellants is licensed under both these
G specifications. The Tribunal has placed emphasis on the cement manufactured
by the appellants being sold as white cement. This emphasis does not appear
justified. All white cements do not possess rapid hardening properties. The
cement manufactured by the appellants is a special kind of white cement
having rapid hardening properties. It is used for giving a finish to structures
H and for other decorative purposes. Since it possesses rapid hardening qualities
INDIAN RA YON AND INDUSTRIES LTD. v. C.C.E. [SUJATA V. MANOHAR, J.] 339
and is cement, it must be classified as rapid hardening cement. It cannot, A
therefore, fall under the Residuary Item 23(ii) or 2502.90.

In the premises, the appeals are allowed, the impugned judgment and
order of the Tribunal is set aside and the appellants' contention that prior to
28.2.1986 the Item manufactured by them was classifiable under Tariff Item
23(i) while after 28.2.1986 and upto 1.3.1992, it was classifiable under Tariff B
Item 2502.20 is upheld. The appellants will be entitled to all consequential
reliefs in accordance with law. There will, however, be no order as to costs.

R.K.S. Appeals allowed.

c

,. .