1983 (3) TMI 51 - HC - Central Excise

Court quashes government orders on candy classification, emphasizes local trade standards over foreign interpretations.

The appeal was allowed, and a Writ of Certiorari was issued to quash the orders of the Central Government and the lower authorities. The court held that ... Lozenges and Candy - Distinction between - Writ jurisdiction Issues Involved:1. Classification of 'lozenges' under the Central Excises and Salt Act, 1944.2. Interpretation of the term 'candy' in the Indian context.3. Admissibility of American usage in Indian excise law.4. Evidentiary requirements in tax classification disputes.5. Scope of judicial review under Article 226 of the Constitution of India.Detailed Analysis:1. Classification of 'lozenges' under the Central Excises and Salt Act, 1944The primary issue in the appeal was whether 'lozenges' fall under Item I-A(1) of the First Schedule to the Central Excises and Salt Act, 1944, thereby attracting the levy of excise duty. The appellant argued that 'lozenges' should not be classified under 'candy' for excise purposes. The Assistant Collector, Appellate Collector, and the Central Government had rejected this contention, leading to the appeal.2. Interpretation of the term 'candy' in the Indian contextThe court examined whether the term 'candy' in the tariff item is wide enough to include 'lozenges'. The appellant contended that 'candy' and 'lozenges' are distinct categories in Indian trade and should be understood as such. The ISI publications and various technical bodies, including the Central Food Technological Research Institute and the Defence Food Research Laboratory, supported this distinction. The court noted that 'lozenges' are made from pulverized sugar with binding materials and flavors, while 'candy' involves a boiling process and includes other ingredients.3. Admissibility of American usage in Indian excise lawThe respondents argued that the American understanding of 'candy', which includes 'lozenges', should be applied. The court rejected this argument, citing precedents where foreign interpretations were not accepted in Indian law. The court emphasized that the words used in a tax law should be construed in the way they are understood in the local context, as per the Supreme Court in Annapurna Biscuit Manufacturing Company v. S.T. Commissioner, U.P. and the Court of Appeal in Hardwicke Game Farm v. Suffolk etc. Association Limited.4. Evidentiary requirements in tax classification disputesThe court addressed the criticism that the appellant failed to provide sufficient evidence. It was noted that the appellant had indeed presented ISI booklets and other relevant materials, which were ignored by the authorities. The court found that the authorities had erred by relying on American definitions and disregarding the Indian context and standards.5. Scope of judicial review under Article 226 of the Constitution of IndiaThe respondents contended that judicial interference under Article 226 is unwarranted unless the authorities' views are perverse or unreasonable. The court disagreed, stating that the authorities had ignored relevant considerations and applied irrelevant ones, constituting a clear error of law. The court referenced Union of India v. Tarachand Gupta and Brothers to support its decision to issue a Writ of Certiorari.ConclusionThe appeal was allowed, and a Writ of Certiorari was issued to quash the orders of the Central Government and the lower authorities. The court held that 'lozenges' should not be classified under 'candy' for excise purposes, emphasizing the importance of local trade understanding and standards over foreign interpretations. There was no order as to costs.