1990 (4) TMI 54 - SC - Central Excise

Notification No.25/84 gives concessional excise rates for printing and writing coated paper; 'coated paper' limited to industrial use only

ROHIT PULP AND PAPER MILLS LTD. Versus COLLECTOR OF CENTRAL EXCISE

SC allowed the appeal, set aside the Tribunal's order and held the appellants entitled to concessional excise rates under Notification No.25/84. The Court ... Claim for partial exemption from excise duty in respect of the art paper and chromo paper manufactured - interpretation and the scope of notifications - Application of the principle of 'Noscitur A Sociis' or on the analogy of the 'Ejusdem generis' principle - HELD THAT:- All the three notifications we have extracted draw a distinction between printing and writing paper on the one hand and other types of paper on the other. They also show that the duty on printing and writing paper is generally less than that on the other varieties of paper. Though paper can be classified into various varieties, it does appear that one such classification is between industrial paper and cultural paper. The four out of the five varieties of paper which are denied the benefit of the concession seem to constitute industrial paper. In fact even if, as urged for the Union of India, only three of these items are of the industrial variety while the other two could be either, it will not still be unreasonable (though, may be, a little less plausible) to draw an inference that only industrial paper falling in those two categories are intended to be comprehended in the classification rather than assume, for no detectable reason, that all paper of these two varieties alone are excluded from the concession. We think, therefore, that the appellants are on firm ground in submitting that the expression `coated paper' in the proviso should draw colour from the context in which it is employed and receive an interpretation consistent therewith than its literal one, which in its widest sense, may be comprehensive enough to include all coated paper, industrial or otherwise. The principle of statutory interpretation by which a generic word receives a limited interpretation by reason of its context is well established. In the context with which we are concerned, we can legitimately draw upon the 'noscitur a sociis' principle. This expression simply means that 'the meaning of a word is to be judged by the company it keeps.' In this case, the aim and object of the notification is to grant a concession to small scale factories which manufacture paper with unconventional raw materials. The question naturally arises : Could there have been any particular object intended to be achieved by introducing the exceptions set out in the proviso. Instead of proceeding on the premise that it is not necessary to look for any reason in a taxing statute, it is necessary to have a closer look at the wording of the proviso. If the proviso had referred only to `coated paper', no special object or purpose would have been discernible and perhaps there would have been no justification to look beyond it and enter into a speculation as to why the notification should have thought of exempting only `coated paper' manufactured by these factories from the purview of the exemption. But the notification excepts not one but a group of items. If the items mentioned in the group were totally dissimilar and it were impossible to see any common thread running through them again, it may be permissible to give the exceptions their widest latitude. But when four of them - undoubtedly, at least three of them - can be brought under an intelligible classification and it is also conceivable that the Government might well have thought that these small scale factories should not be eligible for the concession contemplated by the notification where they manufacture paper catering to industrial purposes, there is a purpose in the limitation prescribed and there is no reason why the rationally logical restriction should not be placed on the proviso based on this classification. In our view, the only reasonable way of interpreting the proviso is by understanding the words `coated paper' in a narrower sense consistent with the other expressions used therein. Thus, we accept the appellant's submission that `coated paper' in the second proviso refers only to coated paper used for industrial purposes and not to coated varieties of printing and writing paper. The Tribunal's order is set aside and the appellant held entitled to the concessional rates specified in Notification No. 25/84. Appeal is allowed. Issues Involved:1. Eligibility for partial exemption from excise duty under Notification No. 25/84.2. Interpretation of the term 'coated paper' in the context of the proviso to Notification No. 25/84.3. Application of the 'noscitur a sociis' principle in statutory interpretation.Issue-wise Detailed Analysis:1. Eligibility for partial exemption from excise duty under Notification No. 25/84:The assessee, M/s. Rohit Pulp and Paper Mills Ltd., claimed partial exemption from excise duty for art paper and chromo paper under Notification No. 25/84. The factory used unconventional raw materials, and the pulp contained more than 50% weight of such materials. The Excise Department denied the exemption, arguing that these papers were 'coated paper,' excluded from the notification's benefits. The Central Excise and Gold Control Appellate Tribunal (CEGAT) upheld this denial, leading to the present appeals.2. Interpretation of the term 'coated paper' in the context of the proviso to Notification No. 25/84:The core issue was whether 'coated paper' in the proviso should include all coated papers or only those used for industrial purposes. The assessee argued that 'coated paper' should be interpreted in a restricted manner, excluding printing and writing papers, based on the principle of 'noscitur a sociis.' The Solicitor General contended that the term 'coated paper' should be given its plain and natural meaning, encompassing all coated papers.3. Application of the 'noscitur a sociis' principle in statutory interpretation:The Court applied the 'noscitur a sociis' principle, which means that the meaning of a word is to be judged by the company it keeps. The proviso listed five types of paper excluded from the exemption: cigarette tissue, glassine paper, grease proof paper, coated paper (including waxed paper), and paper of a substance not exceeding 25 grams per square meter. The Court noted that three of these types were indisputably industrial papers, and light paper was generally used for industrial purposes. Thus, it inferred that 'coated paper' should also be interpreted as industrial paper.Detailed Analysis:Eligibility for partial exemption:The assessee initially paid excise duty under Notification No. 24/84 but later sought the concessional rates under Notification No. 25/84 for art paper and chromo paper. The Excise Department refused, stating these were 'coated papers' excluded from the exemption. The Tribunal confirmed this view, leading to the present appeals.Interpretation of 'coated paper':The assessee argued that 'coated paper' should be interpreted narrowly, excluding printing and writing papers, based on the principle of 'noscitur a sociis.' The Solicitor General argued for a broader interpretation, including all coated papers. The Court noted that the notification aimed to grant concessions to small factories using unconventional raw materials and that the exceptions listed in the proviso were primarily industrial papers. Thus, it concluded that 'coated paper' should be interpreted as industrial paper.Application of 'noscitur a sociis':The Court applied the 'noscitur a sociis' principle, noting that the exceptions in the proviso were primarily industrial papers. It found that interpreting 'coated paper' as industrial paper was consistent with the other exceptions and the notification's purpose. The Court cited several precedents supporting this principle, emphasizing that the broader meaning of a word should be limited by its context.Conclusion:The Court concluded that 'coated paper' in the proviso referred only to industrial coated paper, not to coated varieties of printing and writing paper. It set aside the Tribunal's order and held the assessee entitled to the concessional rates specified in Notification No. 25/84. The appeal was allowed without any order as to costs.