TMI Blog1989 (9) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary. No doubt this is an inclusive definition. To enlarge its denotation a specific provision to include Ayurvedic preparations containing self-generated alcohol which are not capable of being consumed as ordinary alcoholic beverages was necessary. That having not been done by the Explanation itself, it was not permissible to include it by the Circular. The Explanation I could not have been in conflict with the provisions of the Act and the Circular could not have been in conflict with the Explanation, the Schedule, the Rules and the Act. Appeal allowed. Set aside the judgment and decree of the High Court and restore those of the Civil Judge decreeing the suit. - Civil Appeal No. 1845(N) of 1974 - - - Dated:- 19-9-1989 - G.L. Oza and K.N. Saikia, JJ. REPRESENTED BY : Mr. S.K. Dholakia, for the Appellant. Mr. A.K. Ganguli, for the Respondents. [Judgment per : Saikia, J.]. - This plaintiff s appeal by special leave is from the Appellate Judgment and Decree of the High Court of Judicature at Bombay reversing those of the Trial Court and dismissing plaintiff s special suit. 2. The appellant is a Limited Company registered under the Companies Act having its regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther amended by substitution of an Explanation No. 1 to the Schedule of the Act. By virtue of and under the said Explanation, a patent and proprietary medicine was defined as a medicinal preparation of the description and the type specified in the Explanation. The Explanation which was brought in by the Finance Act was given retrospective effect from April 23, 1962. 6. In purported pursuance of the said Explanation and/or upon the basis thereof, a circular dated May 31, 1962 was issued by the then Director of Prohibition and Central Excise, Government of Maharashtra, Bombay which inter alia, directed that the medicinal preparations containing self-generated alcohol but not capable of being consumed as alcoholic beverage were to be treated as products falling under Item 1 and not Item 3 of the Schedule. Consequent thereupon, the respondents levied and recovered from the appellant diverse sums aggregating to Rs. 2,18,282.16 being the alleged amount of the excise duty payable in respect of the product Ashvagandhaarist . The amounts were paid by the appellant under protest . 7. With a view to enforcing their rights in respect thereof and/or recovering the said amount illegally re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng under Item No. 2(i) of the Schedule, simply by reason of the Explanation which was introduced in the Act by the Finance Act of 1962, as the explanation could never be considered to be or, in any event, in the scheme of the provision of the Act, was not a substantive provision of the Act and the explanation was not intended to and it did not seek to disturb the enumeration of the categories or the respective fields assigned to the various items of the Schedule in existence prior thereto. It is submitted that Item 3 of the amended Schedule was a specific item and enumerated categories of Ayurvedic medicinal preparations covered thereby and that being so, all commodities answering description set out therein fell within the ambit thereof and was excluded from the purview of the other items contained in the said Schedule and that the express language of Item 3(i), namely, of Ayurvedic preparations containing self-generated alcohol which were not capable of being consumed as ordinary alcoholic beverages were exempted and that the appellant s product Ashvagandhaarist was admittedly and obviously an Ayurvedic preparation containing self generated alcohol which was not capable of be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by any one conversant with the said system, and it did not have a brand name in the hands of the appellant and the High Court s interpretation that a mere description is a name is inconsistent with the scheme of the definition of patent and proprietary medicines in the Explanation. This was the reason, it is argued, why Asavas and Aristhas were expressly made non-dutiable after 25-9-1964 by subsequent amendment by the Government. 12. Mr. A.K. Ganguli, learned Counsel appearing for the respondents, demurring, submits that there can be no doubt that Asavas and Aristhas fall under Item 1 of the Schedule to the Act as substituted by Finance Act 2 of 1962 and hence taxable at 10% ad valorem; and those being Ayurvedic preparations are specified preparations and they could never fall under Item 3 or any part thereof which deals with medicinal preparations not otherwise specified containing alcohol. Item 1, Mr. Ganguli submits, specifically describes that medicinal and toilet preparation which has alcoholic contents and which alcohol comes to be present in those medicines by use of one of the two methods described in that item. First of such methods contemplates alcohol contents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intended to implement this provision in the Constitution and proposed uniform rates of excise duty and a uniform procedure for the collection thereof. The Act came in force on 1-4-1957. 14. The Act in Section 2(a) defined alcohol to mean ethyl alcohol of any strength and purity having the chemical composition C2H5OH ; and it defined medicinal preparation in Section 2(g) to include all drugs which are a remedy or prescription prepared for internal or external use of human beings or animals and all substances intended to be used for or in the treatment, mitigation or prevention of disease in human beings or animals. It did not define drug . The Drugs Act, 1940, as it was substituted by the Drugs (Amendment) Act, 1955 (16-4-1955) had defined drug in Section 2(b) to include (i) all medicines for internal or external use of human being or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals other than medicines and substances exclusively used or prepared for use in accordance with the Ayurvedic or Unani systems of medicine; and (ii) such substances (other than food) intended to affe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hers. These three divisions were not drugs as defined in Drugs Act then. The first category of Ayurvedic preparations had not been subjected to duty while the other two categories had been. 16. Admittedly, under the above Schedule the product of the appellant `Ashvagandhaarist was not dutiable which meant that it was included in Item 2(i). It would also be clear that `Ayurvedic preparations containing self-generated alcohol which were capable of being consumed as ordinary alcoholic beverages were dutiable at the rate of Rupees 3 per gallon and the third category of others was also dutiable at the rate of Rupee 5 per gallon on the strength of London proof spirit. Alcohol and self-generated alcohol were treated differently. 17. The Schedule was amended by the Amending Act No. 19 of 1961 and the amended Schedule stood as follows : Item No. Description of dutiable goods Rate of duty 1. Medicinal preparations, being patent or proprietary medicines, containing alcohol and which are not capable of being consumed as ordinary alcoholic beverages. Ten per cent ad valorem . 2. Medicinal preparations, containing alcohol, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.75 per gallon from Rs. 3 per gallon, there was no mention that Item 2(i) of the Schedule, namely, Ayurvedic preparations containing self-generated alcohol which were not capable of being consumed as ordinary alcoholic beverages was subjected to tax. The statement of objects and reasons was silent about Item No. 2(i). 19. In the amended Schedule, we find that Item 1 for the first time mentioned medicinal preparations being patent or proprietary medicines, containing alcohol and which are not capable of being consumed as ordinary alcoholic beverages and the earlier Item No. 1 has been re-numbered as Item No. 2 and the earlier Item No. 2(i), (ii) and (iii) remained as they were as 3(i), 3(ii) and 3(iii). As regards levy of duty Item 2(i) of the old Schedule was kept duty free in Item 3(i) of the Schedule. Thus, there has been no fresh charging of duty on what was 2(i) and is now 3(i) under which category the appellant s product `Ashvagandhaarist was exempted from duty before the amendment of the Schedule. There is, therefore, no doubt that Items 1 2(i) remained mutually exclusive or in other words, they would not be overlapping. Item 1 in the amended Schedule deals with medici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nosis, treatment, mitigation or prevention of disease in human beings and animals, mentioned and process and manufacture exclusively in accordance with the formula prescribed in the authoritative book on Ayurvedic (Siddha) Unani system of medicines specified in the First Schedule . This definition was also inserted by Drugs and Cosmetics (Amendment) Act, 1964 (13 of 1964) Section 2(a)(i) with effect from 15-9-1964. 22. The same exclusion remained in the related Central Acts. For example, the Drugs Control Act, 1950 (Act 26 of 1950) replaced the Drugs Control Ordinance, 1949 (6 of 1949) which was promulgated on 3-10-1949 in order to ensure that certain essential imported drugs and medicines were sold in the reasonable price in the Chief Commissioner s provinces. Similar ordinances were issued by all the provinces. The necessity for continuing price control of these essential drugs continued. That was an Act to provide for the control of sale, supply and distribution of drugs. Drug meant any drug as defined in clause (b) of Section 3 of Drugs Act, 1940, in respect of which a declaration had been made under Section 3 which defined drug. It may be noted that Pharmacopoeias authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r X (other than Section 81), a registered trade mark or a mark used in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right as proprietor to use the mark; and (ii) in relation to the other provisions of this Act, a mark used or proposed to be used in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right, either as proprietor or as registered user, to use the mark whether with or without any indication of the identity of that person, and includes a certification trade mark registered as such under the provisions of Chapter VIII." As defined in Section 2(a), registered proprietor in relation to a trade-mark means a person for a time being entered in the register as proprietor of the trade-mark. A registered trade-mark means a trade-mark which is actually on the register. 25. By Section 18 of the Finance (No. 2) Act, 1962, the Schedule to the Act was further amended substituting the Explanation 1 by the following :- Explanation 1. - Patent or proprietary medicines" means an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the holders of the licences granted under the said Act and the rules thereunder in accordance with the instructions contained in their Circular No. DQ. 64-31/61 dated 22nd July, 1961. A note received from the Government of India, explaining the scope of the new definition of `patent or proprietary medicines was also enclosed along with the circular. 27. It is in evidence in the instant case that two bottles containing Asavas were produced in the Court as Exhibit 42/1 and Exhibit 42/2. Both the bottles contained the same kind of Asavas. The ingredients of the two were the same and the preparation of the two was also the same. When the Asavas were sold during the period beginning from June, 1962 to February, 1964, no excise duty was levied because on the label there was no trade mark of patent and proprietary right printed. If the Asavas were sold in the bottle having a label with no trade mark as at Exhibit 42/1, no duty was recovered from the plaintiff. These Asavas were supplied to Employees State Insurance as per their tender without the trade mark on the label to see that the plaintiff-company were not taxed the excise duty which would have been charged had they put the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule redundant. Was there any change of intention of the Legislature in this regard? 30. A Schedule in an Act of Parliament is a mere question of drafting. It is the legislative intent that is material. An Explanation to the Schedule amounts to an Explanation in the Act itself. As we read in Halsbury s Laws of England, Third Edition, Vol. 36, para 551 : To simplify the presentation of statutes, it is the practice for their subject matter to be divided, where appropriate, between Sections and Schedules, the former setting out matters of principle, and introducing the latter, and the latter containing all matters of detail. This is purely a matter of arrangement, and a Schedule is as much a part of the statute, and as much an enactment, as is the section by which it is introduced". The Schedule may be used in construing provisions in the body of the Act. It is as much an act of Legislature as the Act itself and it must be read together with the Act for all purposes of construction. Expressions in the Schedule cannot control or prevail against the express enactment and in case of any inconsistency between the Schedule and the enactment the enactment is to prevail and if any part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lain the Explanation with the aid of the Article to which it was annexed. We have to remember what was held in Dattatraya Govind Mahajan v. State of Maharashtra, AIR 1977 SC 915 (928) : (1977) 2 SCR 790, that mere description of a certain provision, such as Explanation is not decisive of its true meaning. It is true that the orthodox function of an explanation is to explain the meaning and effect of the main provision to which it is an explanation and to clear up any doubt or ambiguity in it, but ultimately it is the intention of the legislature which is paramount and mere use of a label cannot control or deflect such intention. State of Bombay v. United Motors (supra) laid down that the interpretation must obviously depend upon the words used therein, but this must be borne in mind that when the provision is capable of two interpretations, that should be adopted which fits the description. An explanation is different in nature from a proviso for a proviso excepts, excludes or restricts while an explanation explains or clarifies. Such explanation or clarification may be in respect of matters whose meaning is implicit and not explicit in the main section itself. In Hiralal Ratanla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have not been shown to have been amended, clearly say that where the percentage of proof spirit is in excess of 2%, the preparation would be dutiable under Item 2 which became Item No. 3 in the amended Schedule. This Rule is consistent with the Schedule but is wholly inconsistent with the Director s Circular. 35. Mr. Ganguli relies on (1971) 2 SCR 590 : (1971) 1 SCC 4 Baidyanath Ayurved Bhawan Pvt. Ltd. v. The Excise Commissioner, U.P. The question there was whether medicinal preparation containing tincture, spirit etc. was dutiable. The tincture and spirit in their turn contained alcohol. It was contended that alcohol was not directly added but was component of the tincture or spirit. It was, however conceded that the preparations were medicinal preparations and that tincture was a component of that preparation and alcohol was a component of tincture. Therefore, this Court held that it was difficult to see how it could be urged that the preparation did not contain alcohol. All that the plain language of the provision required was that the preparation should contain alcohol. The question whether Ayurvedic preparation was drug to be included in the definition of medicinal pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. But it has not expressly envisaged in Item 1, patented trade marked Ayurvedic preparations contrary to the classification in the Schedule. Ex praecedentibus et consequentibus optima fit interpretatio. The best interpretation is made from the context. Injustum est nisi tota lege inspecta, de una aliqua ejus particula proposita judicare Vel respondere. It is unjust to decide or respond as to any particular part of a law without examining the whole of the law. Interpretare et concordare leges legibus, est optimus interpretendi modus. To interpret and in such a way as to harmonize laws with laws, is the best mode of interpretation. In the instant case the Director s Circular is not in harmony with Item 3(i) or with the classification of Ayurvedic preparations in separate Item 3. It would not be in conformity with definition of 'medicinal preparation in Section 2(g) of the Act. Jura eodem modo distituentur quo constitutuntur. Laws are abrogated by the same means (authority) by which they are made. The Director s Circular is not shown to have been a piece of delegated legislation. The Explanation on its tenor does not amend the Schedule. No part of a statute is to be taken as superfl ..... 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