TMI Blog2004 (4) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... PE tapes ) and Poly Propylene tapes (for short, PP tapes ). It appears that the petitioner purchases HDPE/PP granules. In order to convert the HDPE/PP granules into HDPE/PP tapes, the granules are poured into a machine called Extruder. In the extruder these granules are melted by heating. Due to heat the granules polymerize into a molten mass. Simultaneously with heating, mechanical pressure is applied by rotation of screw. By application of appropriate pressure a film or strip of desired gauge is obtained. This film or strip thus obtained is in a semi-finished condition. The film or strip is cooled with the help of air in the open and is slit into tapes with the help of blades fixed in a machine called Godet machine. After silting, the tapes are stretched with the help of heat generated by heaters and by mechanical force. This not only imparts strength to the tapes but it also results in reducing the width of the tape. By this process the desired width of the tapes can be obtained. In the instant matter, we are concerned with width of the tapes not exceeding 5 mm. These HDPE and PP tapes are manufactured from raw materials composed exclusively of plastic. 3. The petitioner file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1985 by issuing a writ of certiorary or any other writ, order or direction after summoning relevant records from the non-petitioners; (iii) Hold and declare that HDPE/PP tapes; are classifiable under Heading 39.22/39.26 of Chapter 39 of the Schedule to the Tariff Act, 1985; (iv) Prohibit the non-petitioners from levying and recovering the excise duty on HDPE/PP tapes under Chapter 54; (v) Direct the non-petitioners to refund the excise duty recovered from the petitioner company on HDPE/PP tapes under Heading No. 54.06 with interest at least @ 18% from the date of payment till its refund by issuing a writ of mandamus or any other writ, order or direction; (vi) An ad interim relief in terms of relief (iv) mentioned above be also granted (vii) Grant any other relief/reliefs which may do complete justice to the petitioners in the facts and circumstances of this matter; (viii) Award costs of this writ petition from the non-petitioners. 5. Subsequently, on 26th February, 2001 the petitioner filed an application to amend the writ petition. The permission to amend the petition was allowed on 23-2-2001. In the amended pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff Act, 1985. It was also held that HDPE sacks are classifiable under the Heading No. 39.23, sub-heading No. 3923.90. While coming to the aforesaid conclusion the Madhya Pradesh High Court referred to the decision of the Customs, Excise and Gold (Control) Appellate Tribunal (for short CEGAT) in Shellya Industries, Bangalore v. Collector of Central Excise, 1983 (14) E.L.T. 1827 wherein it was held that HDPE woven sacks were articles made of plastic and were classifiable under old Schedule Item No. 15A(2) of the Central Excise Tariff. Tariff Item 15A(2) at the material time was as under : Articles made of plastics, all sorts, including tubes, rods, sheets, foils, sticks other rectangular or profile shapes, whether laminated or not, and whether rigid or flexible including lay flat tubings and polyvinyl chloride sheets, not otherwise specified. The Madhya Pradesh High Court also noticed that there were two conditions for a product to be classified under Tariff item 15A(2). One was that the article should be made of plastic and the second was that it should not be specified elsewhere in the Central Excise Tariff. It was further noticed by the Court that there was no dispute before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onwards : 39.26 Other articles of plastics and articles of other materials of heading Nos. 39.01 to 39.14 3926.90 - Other 30% According to the aforesaid written propositions and the oral submissions of the learned Counsel for the petitioners HDPE/PP tapes are not covered under heading No. 39.20 since the said entry inter alia relates to the strips of plastics and not to plastic tapes. The learned Counsel for the petitioners contended that there was a distinction between the words tapes and strips . They drew our attention to heading No. 39.19 which mentions both the words strips and tapes. It was canvassed by the learned Counsel for the petitioners that heading No. 39.20 deals with strips of plastics while heading No. 39.19 deals with tapes and strips. As per the learned Counsel heading No. 39.20 excludes from its purview tapes since the same are not mentioned therein. It was also argued that plastic tapes fall within the residuary heading No. 39.26 sub-heading No. 3926.90. It was urged by the learned Counsel for the petitioners that while construing a taxing statute and determining the liability of a subject to tax regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that there is neither scope for any intendment nor equity in a taxing statute, that in a fiscal statute neither anything can be inserted nor anything can be deleted, while construing the same, that the taxing statute should be interpreted and construed as per the words which the legislature has chosen to employ in the Act and that in a taxing statute there is no room for assumption or presumption. In this regard the Supreme Court also observed as follows : Where the words of the statute are plain and clear, there is no room for applying any of the principles of interpretation which are merely presumption in cases of ambiguity in the statute. The Court would interpret them as they stand. The object and purpose has to be gathered from such words themselves. Words should not be regarded as being surplus nor be rendered otiose. Strictly, speaking there is no place in such cases for interpretation or construction except where the words of statute admit of two meanings. The safer and more correct course to deal with a question of construction of statute is to take the words themselves and arrive, if possible, at their meaning, without, in the first place, reference to case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the basis of the meaning ascribed by the commercial world. In other words, meaning must be given to the words according to the understanding of the people in trade. 18 In Dunlop India Ltd. v. Union of India Others, 1983 (13) E.L.T. 1566 (S.C.) = (1976) 2 SCC 241, the Supreme Court while giving guidance for interpret- ing the meaning of the words of a taxing statute, held that the acceptance of a particular word in trade and its popular meaning should commend itself to the authority. The Supreme Court while holding so, observed as follows : It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular entry. 19. In Union of India Ors. v. Gujarat Woollen Felt Mills, 1977 (1) E.L.T. (J 24) (S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of a glass mirror, the consumer recalls primarily the reflective function of the article more than anything else. It is a mirror, an article which reflects images. It is referred to as a glass mirror only because the word glass is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The basic or fundamental character of the article lies in its being a mirror. It was observed by this Court in Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan Ors. 1980 (6) E.L.T. 383 (S.C.) = (1980) 3 SCR 1109 which was a case under the Sales/Tax law : In determining the meaning or connotation of words and expression describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well settled it is that the words or expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. It is they who are concerned with it, and it is the sense in which they understand it that constitutes the definitive index of the legislative intention when the statute was enacted. 22. In yet another case, namely, Collector of Central Excise, Kanp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coating, impregnating. So, therefore, if all kinds of paper including coated paper is the goods, we have to find out the meaning attributed to those goods in the trade of those kinds of paper, where transactions of those goods take place. 23. In Indian Cable Company Ltd., Calcutta v. Collector of Central Excise, Calcutta and Others, 1994 (74) E.L.T. 22 (S.C.), the Supreme Court construed the relevant entry in the fiscal statute by holding as follows : ...............in construing the relevant item or entry, in fiscal statutes, if it is one of every day use, the authority concerned must normally, construe it, as to how it is understood in common parlance or in the commercial world or trade circles. It must be given its popular meaning. The meaning given in the dictionary must not prevail. Nor should the entry be understood in any technical or botanical or scientific sense. In the case of technical words, it may call for a different approach. The approach to be made in such cases has been stated by Lord Esher in Unwin v. Hanson thus : If the Act is directed to dealing with matters affecting everybody generally, the words used have the meaning attached to them in the commo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the more common meaning that the word may have .The Supreme Court has consistently 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 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 understand it which constitutes the definitive index of legislative intention. 25. Therefore, in nut shell the fiscal entry must be interpreted by keeping the following principles in view : 1. A word in the fiscal entry is to be given meaning according to common parlance unless a contrary intention is clearly expressed by the legislature; 2. The expression in the taxing statute is not required to be given a technical meaning; 3. Reference to a dictionary for ascertaining the meaning of a fiscal entry is apt to be a delusive guide; 4. There is no intendment or equity to a fiscal statute; and 5. The courts are to be guided by the words of the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who has been entrusted with the statutory duty to decide the question on the basis of the evidence which may be adduced before it. The decision of the authority is appellable. The petitioners in order to short circuit the provisions of the statute have directly filed writ petitions before this Court. It will be hazardous for this Court to ask the parties to lead evidence in the writ petition and to examine the same and decide whether the strips and tapes are the same commodities or separate and distinct ones. That job has been entrusted to the concerned authorities by the statute. It is significant to note that in the first instance the petitioners in the original writ petition sought relief on the ground that the duty was leviable under Chapter 39 and not under Chapter 54. They also sought a declaration to the effect that HTPE/PP tapes are classifiable under heading No. 39.22/39.26 of Chapter 39 of Schedule to the Central Excise Tariff Act, 1985. Besides, they sought quashing of the impugned order dated 14th August, 1989 whereby the respondent No. 4 Superintendent of Central Excise had directed them to classify the HTPE/PP tapes under Chapter 54 of the Tariff Act, 1975. Even befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cising their authority and in discharging their quasi-judicial function, the Tribunals constituted under the Act must be left absolutely free to deal with the matters according to their best judgment. The Supreme Court did not agree with the view that the power conferred on the State Government to issue directions could control the quasi-judicial functioning of the Tribunal, In this regard the Supreme Court held as follows : It is of the essence of fair and objective administration of law that the decision of the Judge or the Tribunal must be absolutely unfettered by any extraneous guidance by the executive or administrative wing of the State. If the exercise of discretion conferred on a quasi-judicial authority arid the presence of such fetters would make the exercise of such authority completely inconsistent with the well-accepted notion of judicial process. It is true that law can regulate the exercise of judicial powers. It may indicate by specific provisions on what matters the tribunals constituted by it should adjudicate. It may by specific provisions lay down the principles which have to be followed by the Tribunals in dealing with the said matters. The scope of the juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ially be the judgments of the authority that gave the directions and which authority had given those judgments without hearing the aggrieved party. The only provision under which the Board can issue directions is Rule 233 of the Rules framed under the Act. That rule says that the Board and the Collectors may issue written instructions providing for any supplemental matters arising out of these Rules. Under this rule the only instruction that the Board can issue is that relating to administrative matters; otherwise that rule will have to be considered as ultra vires Section 35 of the Act. In Mahadayal Premchandra v. Commercial Tax Officer, Calcutta, 1959 SCR 551 = (AIR 1958 SC 667) this Court held that the Commercial Officer while assessing certain transactions should not have solicited instructions from the Assistant Commissioner, nor should he have acted on the basis of those instructions. It was further held that the instructions given by the Assistant Commissioner had vitiated the entire proceedings as the procedure adopted was, to say the least, unfair and was calculated to undermine the confidence of the public in the impartial and fair administration of the sales tax depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue directions is Rule 233 of the Rules framed under the Act. That rule says that the Board and the Collectors may issue written instructions providing for any supplemental matters arising out of these Rules. Under this rule the only instruction that the Board can issue is that relating to administrative matters; otherwise that rule will have to be considered as ultra vires of Section 35 of the Act. It has been made very clear that there is no provision in the Act empowering the Board to issue directions to the assessing authorities or the appellate authorities in the matter of deciding disputes between the persons who are called upon to pay duty. The judgment further observes that it is true that the assessing authorities as well as the appellate authorities are judges in their own cause; yet when they are called upon to decide disputes arising out of the Act, they must act independently and impartially. Considering the principle enunciated in this judgment and also Section 37B, which we have extracted above, we are of the definite view that this section does not offend any of the provisions of the Constitution and there is absolutely no direction to any quasi-judicial authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered to be binding on the quasi-judicial authorities and the assessees. Taking stock of the several decisions of the Supreme Court and the various Courts, the following principles were culled out by the Calcutta High Court : (1) there is a distinction between a decision in a particular assessment by a quasi-judicial authority and a decision on principle by the Board. While an instruction issued under Section 37B cannot be binding upon a quasi-judicial authority under the Act, the departmental officers conducting the lis before such quasi-judicial authority cannot take a stand contrary to the directive/instruction issued. (2) The instructions which may be binding on the Central Excise Officers are not binding on the Assessee who may question the correctness of the same before a quasi-judicial authority and before a Court. Both the quasi-judicial authority and a fortiori, the Court, can question the correctness of the instructions. An assessee has on the other hand the right to claim and the court may compel compliance with such instructions as are for the benefit of the assessee by the Central Excise Officers. 35. In Bengal Iron Corporation v. Commercial Tax Officer, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade Notices issued under the provisions of the Central Excises and Salt Act, were not binding on the Collector. In this regard it was observed as follows :- It is true, as held by the High Court and by the authorities that a trade notice is not binding, but what the High Court omitted to consider was that there was no other material with the Department on which it could assume that the washers and the bushes manufactured by the appellant were thin walled bearings . The basis for initiation of proceedings being Indian Standard Booklet published by the Indian Standard Institute, it was not proper either for the High Court or for the assessing authorities to ignore it and levy the duty treating these goods to be thin walled bearings , on assumptions without any material. The observation in the judgment of the High Court that it was undisputed that thrust washers and wrapped bushes were in accordance with specification under IS : 4774-1968 is factually incorrect. The written note of the appellant given before the assessing authority has been extracted. It is obvious that the order was made under misapprehension. 38. In Collector of Central Excise, Patna v. Usha Martin Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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