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TMI Blog2014 (10) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-10 assessed the sale turnover of Gambier as an classified item and accordingly levied tax @ 12.5% for the period 1.4.2009 to 31.5.2009 and @ 13.5% for the period from 1.6.2009 to 31.3.2010. She submits that Gambier is KATTHA. She submits that KATTHA is specified in Entry-68 of Part-A of Schedule-II to the U.P. Value Added Tax Act, 2008 (hereinafter referred to as the 'Act') liable to tax @ 4% and, therefore, sale turnover of Gambier is also liable to tax @ 4%. 3- In support of her submission she relied upon some literature of a book namely, "Indian Forester" wherein it is mentioned that Catechu may be prepared from Gambier. She also relied upon a book of Chemistry and Technology in which it is mentioned that Gambier is obtained from leaves and twigs of uncaria plant. It is used in dyeing compound shed, for preservation of fishing nets and for tanning purposes. It may be used as an alternative raw-material to meet the demand for Catechu. On the basis of these materials, she submits that Catechu and Gambier both are one and the same commodity and, therefore, the Tribunal has committed as manifest error of fact to hold that the Gambier is not KATTHA and, therefore, is li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above noted facts have not been disputed by the applicant, as is evident from the pleadings in the revision. 11- In para-19 of the revision, the applicant has stated that 'Catechu' and 'Gambier' both are different articles but are used for the same purpose. In pragrph-22 of the revision, the applicant has stated that Catechu and Gambier are different but the ingredients and purpose are same except the percentage/quantity of ingredients. Thus, according to own case of the applicant Gambier and Catechu both are different commodities. The case of the applicant is that both are used for the same purpose and, therefore, the Gambier should also be taxed at the rate specified for Catechu. Thus, once it is found that Gambier and Catechu are two different commodities, the rate of tax as specified for Catechu cannot be applied on the sale turnover of Gambier. 12- It is well settled that in interpreting items in Taxation Statute like the Value Added Tax Act, Sales Tax Act or Excise Act, primary object of which is to raise revenue and for which purpose diverse products, articles and substances are classified, resort should be had not to the scientific or technical meanings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in such circumstances. However, this rule shall not be applicable when the legislature has expressed a contrary intention, such as by providing a statutory definition of the particular entry, word or item in specific, scientific or technical terms, then interpretation ought to be in accordance with scientific and technical meaning and not according to common parlance understanding. 15- In the case of Mamta Surgical Cotton Industries Rajasthan Versus Assistant Commissioner (Anti Evasion), Bhilwara, Rajasthan, 2014 (4) SCC 87 ( paragraph Nos. 32 to 34 ), Hon'ble Supreme Court held as under :- "32.The aforesaid view is further fortified by the common parlance test. It can be said that when a consumer requires surgical cotton, he would not be satisfied with cotton being provided to him and the same principle would reversibly apply that a customer of cotton would not use surgical cotton as a substitute. Further the purpose for which cotton and surgical cotton are used are diametrically opposite. While surgical cotton finds utility primarily for medical purposes in households, dispensaries, hospitals, etc. raw cotton being, inter alia, non-sterilised and riddled with organic impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the common parlance test is an extension of the general principle of interpretation of statutes for deciphering the mind of the law maker; "[i] it is an attempt to discover the intention of the legislature from the language used by it, keeping always in mind, that the language is at best an imperfect instrument for the expression of actual human thoughts." [(See :Oswal Agro Mills Ltd. v. CCE, 1993 Supp(3) SCC 16." 21. A classic example on the concept of common parlance is the decision of the Exchequer Court of Canada in R. v. Planter Nut and Chocolate Co. Ltd. The question involved in the said decision was whether salted peanuts and cashew nuts could be considered to be "fruit" or "vegetable" within the meaning of the Excise Tax Act. Cameron J., delivering the judgment, posed the question as follows: "...would a householder when asked to bring home fruit or vegetables for the evening meal bring home salted peanuts, cashew or nuts of any sort The answer is obviously `no'." Applying the test, the Court held that the words "fruit" and "vegetable"are not defined in the Act or any of the Acts in pari materia. They are ordinary words in every-day use and are therefore, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riety of coal would arise that a distinction would be made between coal and charcoal; otherwise, both of them would in ordinary parlance as also in their commercial sense be spoken as coal. 24."In Dunlop India Ltd. v. Union of India, at p. 251, while holding that VP Latex was to be classified as "raw rubber" under Item 39 of the Indian Tariff Act, 1934, this Court observed:(SCC pp.252-54, paras 29 & 34) "29. It is well established that in interpreting the meaning of words in a taxing statute, the acceptation of a particular word by the trade and its popular meaning should commend itself to the authority. "34. We are, however, unable to accept the submission. 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Cellulose Products Ltd. v. CCE, it was observed : "20. In other words, if the word used in a fiscal statute is understood in common parlance or in the commercial world in a particular sense, it must be taken that the Excise Act has used that word in the commonly understood sense. That sense cannot be taken away by attributing a technical meaning to the word. But if the legislature itself has adopted a technical term, then that technical term has to be understood in the technical sense. In other words, if in the fiscal statute, the article in question falls within the ambit of a technical term used under a particular entry, then that article cannot be taken away from that entry and placed under the residuary entry on the pretext that the article, even though it comes within the ambit of the technical term used in a particular entry, has acquired some other meaning in market parlance. For example, if a type of explosive (RDX) is known in the market as Kala Sabun by a section of the people who uses these explosives, the manufacturer or importer of these explosives cannot claim that the explosives must be classified as soap and not as explosive." 29. "There is a catena of decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preparation, label, literature, character, common and commercial parlance, the product was liable to be classified as a medicament. It was not an ordinary shampoo which could be of common use by common people. The shampoo was meant to cure a particular disease of hair and after the cure it was not meant to be used in the ordinary course. 33. Therefore, what flows from a reading of the afore-mentioned decisions is that in the absence of a statutory definition in precise terms; words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding, or according to their popular meaning. In other words they have to be constructed in the sense that the people conversant with the subject-matter of the statute, would attribute to it. Resort to rigid interpretation in terms of scientific and technical meanings should be avoided in such circumstances. This, however, is by no means an absolute rule. When the legislature has expressed a contrary intention, such as by providing a statutory definition of the particular entry, word or item in specific, scientific or technical terms, then, interpretation ought to be in accordance with the scientific an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tariff..." 36. Moreover, the functional utility and predominant or primary usage of the commodity which is being classified must be taken into account, apart from the understanding in common parlance [see O.K. Play (India) Ltd. v. CCE, (2005) 2 SCC 460; Alpine Industries v. CEE, New Delhi (1995) Supp. (3) SCC 1; Sujanil Chemo Industries v. CEE & Customs (2005) 4 SCC 189; ICPA Health Products (P) Ltd (supra) v. CEE (2004) 4 SCC 481; Puma Ayurvedic Herbal (Supra); Ishaan Research Lab (P) Ltd.(Supra) ; CCE v. Uni Products India Ltd., (2009) 9 SCC 295]. 37. A commodity cannot be classified in a residuary entry, in the presence of a specific entry, even if such specific entry requires the product to be understood in the technical sense [see Akbar Badrudin v. Collector of Customs, (1990) 2 SCC 203; Commissioner of Customs v. G.C. Jain, (2011) 12 SCC 713]. A residuary entry can be taken refuge of only in the absence of a specific entry; that is to say, the latter will always prevail over the former [see CCE v. Jayant Oil Mills, (1989) 3 SCC 343; HPL Chemicals v. CCE, (2006) 5 SCC 208; Western India Plywoods v. Collector of Customs, (2005) 12 SCC 731; CCE v. Carrier Aircon, (2006) 5 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trutuf Safety Coal Industries CST 2007 (8) SCC 242 (paragraph 13), Craft Interiors (P) Ltd. v. CCE 2006(12) SCC 250 (paragraph 18 and 20 ), Parley Biscuits Pvt. Ltd. v. State of Bihar, 2005 (9) SCC 669, Associated Cement Company Ltd. v. State of M.P. 2004 (9) SCC 72, Alpine Industries v. CCE 2003(3) SCC 111, S. Samuel MD, Harrisons Malyalam v. Union of India 2004(1) 256 (Paragraph 13), Union Of India v. Harjeet Singh Sandhu 2001(5) SCC 593, Collector of Custom and Central Excise v. Surendra Cotton Oil Mill Company 2001(1) SCC 578, Pappu Sweets and Biscuits V. Commissioner of Trade Tax, U.P., 1998 (7) SCC 228, Metagraphs (P) Ltd. v.CCE 1997(1) SCC 262, Purewal Associate Ltd. v. CCE, 1996(10) SCC 752, Indian Cable Co. Ltd. v. CCE, 1994(6) SCC 610, Novapan India Ltd. v. CCE 1994 (Suppl.)(3) SCC 606, CCE v. Ballarpur Industries Ltd. , 1989 (4) SCC 566, CCE Vs. Krishna Carbon Paper Company, 1989 (1) SCC 150, Filterco v. CST, 1986(2) SCC 103, Chiranjeet Lal Upendra v. State of Assam, 1985(Suppl.) SCC 392, Indo International Industries v. CST, 1981 (2) SCC 528 (Paragraphs 4 and 5 ), Union of India v. Gujrat Woolen Felt Mills, 1977 (2) SCC 870, State of U.P. v. Indian Hume Pipe Co. Ltd., 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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