TaxTMI 
TaxTMI 
2004 (4) TMI 434
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.... 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 filed a classific....
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....assify the HDPE/PP tapes under Chapter 54 of the Schedule to the Tariff 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 circ....
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....p; Grant any other appropriate relief/reliefs which may do complete justice to the petitioners in the facts and circumstances of this matter; and (VIII) Award costs of this writ petition from the non petitioners." 6. Before we proceed to determine the questions argued before us it needs to be noticed that the Madhya Pradesh High Court in Raj Pack Well Ltd. v. Union of India, 1990 (50) E.L.T. 201 held that HDPE strips and tapes fall under Section VII Heading No. 39.20 sub-heading No. 3920.32 and not under Section XI Chapter 54 Heading No. 54.06, sub-heading No. 5406.90 of the Schedule to the Central Excise Tariff 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....
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....s been drawn to the following entries : Heading No. Sub Heading No. Description of goods Rate of duty 39.20 Other plates, sheets, film, foil and strip of plastics, non-cellular, whether lacquered or metallised or laminated, supported or similarly combined with other materials or not. - Of other plastics 3920.32 - Flexible plates, sheets, film, foil and strip. 60% From 28-2-1986 to 28-2-1987 39.22 3922.90 Other articles of plastics and articles of materials of heading Nos. 39.01 to 39.1 - Other 30% From 1-3-1987 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 atten....
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.... the clear meaning of the words. It was further observed as follows : "The entire matter is governed wholly by the language of the notification. If the tax-payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the construction of the words of the notification or by necessary implication therefrom, the matter is different but that is not the case here." 11. Again, in M/s. Oswal Agro Mills Ltd. etc. etc. v. Collector of Central Excise & Others, 1993 (66) E.L.T. 37 (SC) = AIR 1993 SC 2288, 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....
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....iable to tax. 16. Thus the exigibility of levy depends upon the language of the fiscal statute. Nothing can be added to or subtracted from the words of the taxing statute. Nothing can be implied in the taxing statute. It is the express words of the taxing statute which determine the field of its operation. There is neither intendment nor equity in a taxing statute. 17. Having noticed the aforesaid principles, the question still remains as to what is the meaning of the word "strip" used in heading No. 39.20. Whether the word "strip" means a tape as well and whether the word "tape" used in Entry 39.19 signifies that tape is synonymous with the word "strip". The meaning of the words "strip" and "tape" is not to be gathered from scientific and technical point of view, but the same can be construed 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 statut....
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....xpressed the view that ammonia paper and ferro paper, used for obtaining prints and sketches of site plans could not be described as paper as that word was used in common parlance. On the same basis the Orissa High Court held in State of Orissa v. Gestetner Duplicators (P) Ltd. (1974) 33 S.T.C. 333 that stencil paper could not be classified as paper for the purposes of the Orissa Sales Tax Act. It is a matter of common experience that the identity of an article is associated with its primary function. It is only logical that it should be so. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identifies it in his mind. In the case 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 ....
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....s a fruit or vegetable......but rather what would ordinarily in matters of commerce in Canada be included there should be the guide. Similarly, this Court has held in Union of India v. Delhi Cloth and General Mills Co. Ltd., AIR 1963 SC 791 at p. 794 para 12 that the view of the Indian Standard Institute as regards what is refined oil as known to the market in India must be preferred in the absence of any other reliable evidence. It must be emphasized in view of the arguments advanced in this case that the meaning should be as understood in the particular trade. In this case, we are construing not paper as such but a particular brand of paper with a meaning attributed to it. Sub-item (2) of item 17 as was the position in 1976 paper referred to all kinds of paper including paper or paper boards which have been subjected to various treatments such as 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 Oth....
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....their natural, ordinary or popular sense is well expressed by JUSTICE FRANKFURTER : "After all legislation when not expressed in technical terms is addressed to common run of men and is therefore to be understood according to sense of the thing, as the ordinary man has a right to rely on ordinary words addressed." In determining, therefore, whether a particular import is included within the ordinary meaning of a given word, one may have regard to the answer which everyone conversant with the word and the subject-matter of statute and to whom the legislation is addressed, will give if the problem were put to him.'     x         x      x           x "As a necessary consequence of the principle that words are understood in their ordinary or natural meaning in relation to the subject-matter, in legislation relating to a particular trade, business, profession, art or science, words having a special meaning in that context are understood in that sense. Such a special meaning is called the technical meaning to distinguish it from the m....
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.... was also submitted that it was the case of the assessee before the Madhya Pradesh High Court, that HTPE/PP tapes were covered under heading No. 39 and on that basis it was held that HTPE tapes were not covered by Chapter 54 but were covered by heading No. 39.20 sub-heading No. 3920.32. The learned Counsel for the petitioners have produced certain letters of various traders to show that HTPE/PP tapes and strips are different commodities and are understood in commercial parlance as separate items. 26. In fact, the learned Counsel for the petitioners are asking us to hold that the strips and tapes are different items as understood by the traders. The submission raised by the learned Counsel for the petitioners is based on disputed questions of fact as the learned Counsel for the respondents has submitted that strips and tapes are not different articles and in commercial world they are considered to be the same. The pleadings also show that the plea of the petitioners is based on disputed questions of facts. 27. This Court sitting in writ jurisdiction is loath to decide disputed questions of facts since for determination of such questions evidence needs to be led, sift....
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....el for the petitioners that the Central Board of Excise having taken that view, it will be a mere formality to approach the concerned authorities for relief. 28. We have considered the submissions of the learned Counsel for the petitioners but we regret our inability to accept the same. 29. It seems to us that instructions and directions issued under Section 37B of the Central Excise, 1944 are not binding on quasi judicial authorities, especially the appellate authority and assessees, who can question the correctness of the same before a quasi judicial authority. 30. In Rajagopala Naidu v. The State Transport Appellate Tribunal, Madras and Others, AIR 1964 SC 1573, the Supreme Court noticed that the Motor Vehicles Act, 1939, as amended by the Madras Amending Act 20 of 1948, conferred judicial powers on State Transport Authority. Section 43A of the Madras Amendment Act empowered the State Government to issue orders and directions of general character as may be considered necessary in respect of any matter relating to road transport and the State Transport Authority, the Regional Transport Authority and such Transport Authorities were required to give effect t....
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....ith the validity of S. 43A purported to do was to clothe the Government with authority to issue directions of an administrative character and nothing more. It is somewhat unfortunate that though judicial decisions have always emphasised this aspect of the matter, occasion did not arise so long to consider the validity of the Government order which on the construction suggested by the Respondent would clearly invade the domain of quasi judicial administration." (emphasis supplied) 31. In Orient Paper Mills Ltd. v. Union of India, 1978 (2) E.L.T. (J 345) (S.C.) = AIR 1969 SC 48, the Supreme Court while dealing with the directions issued by the Central Board of Revenue held that the Collector while hearing the appeals exercises quasi-judicial power and the directions issued are not binding on him for the purpose of deciding the appeals. The Supreme Court keeping in view the principle that the decision of quasi-judicial authority cannot be controlled by directions of a superior authority held as follows :- "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 und....
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...., in order to substantiate his contentions as regards the prayer to declare Section 37B as ultra vires the Constitution, brought to our notice the judgment in the case of Orient Paper Mills Ltd. v. Union of India reported in 1978 (2) E.L.T. (J 345). In that judgment, paragraph 8 reads as follows : '8. If the power exercised by the Collector was a quasi-judicial power as we hold it to be, that power cannot be controlled by the directions issued by the Board. No authority however high placed can control the decision of a judicial or a quasi-judicial authority. That is the essence of our judicial system. 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. 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 under the Act they must act independently and impartially. They cannot be said to act independently if their judgment is control....
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....td. v. Union of India [AIR 1969 SC 48 = 1978 (2) E.L.T. (J 345) (S.C.)] and two judgments of the Gujarat High Court in Genest Engineers Pvt. Ltd. v. Union of India [1989 (43) E.L.T. 24 (Guj.) = 1990 (29) ECC 382)] and Air Control and Chemical Engineering Co. Ltd. and Another v. Union of India and others [1991 (51) E.L.T. 265 (Guj.) = 1990 (26) ECC 324] has held that the circular under Section 37B cannot go beyond the limited scope of Section 37B and it shall not bind the quasi-judicial authorities."     x         x      x           x 7. With regard to the circular dated 8-6-1990, I have already held that Section 37B has to be read down and in that view of the matter, the circular dated 8-6-1990 also cannot bind the authorities exercising quasi-judicial functions especially the Revisional or Appellate Authority under the Central Excises and Salt Act, 1944. 8. Taking the view that Section 37B of the Central Excises and Salt Act, 1944 is valid and need not be struck down as violative of Articles 14 and 19 of the Consti....
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.... communicated to the concerned dealers but even so nothing prevents the State from recovering the tax, if in truth such tax was leviable according to law. There can be no estoppel against the statute. The understanding of the Government, whether in favour or against the assessee, is nothing more than its understanding and opinion. It is doubtful whether such clarifications and the circulars bind the quasi-judicial functioning of the authorities under the Act. While acting in quasi judicial capacity, they are bound by law and not by any administrative, instructions, opinions, clarifications or circulars. Law is what is declared by this Court and the Hjgh Court - to wit, it is for this Court and the High Court to declare what does a particular provision of statute say, and not for the executive. Of course, the Parliament/Legislature never speaks or explains what does a provision enacted by it mean. (See Sanjeev Coke Manufacturing Company v. M/s. Bharat Coking Coal Ltd. and Another - AIR 1983 SC 239)." (underlining is ours) 36. In Sundaram Clayton Ltd. v. Superintendent of C. Ex., Madras, 1994 (70) E.L.T. 190, it was held that trade notices issued by the Excise Department are ....
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....enjoins on the Board a duty to issue such instructions and directions to the excise officers as the Board considers necessary or expedient "for the purpose of uniformity in the classification of excisable goods or with respect to levy of duty excised on such goods". It is true that Section 37B was inserted in the Act only in December, 1985 but that fact cannot whittle down the binding effect of the circulars or instructions issued by the Board earlier. Such instructions were not issued earlier for fancy or as rituals. Even the pre-amendment circulars were issued for the same purpose of achieving uniformity in imposing excise duty on excisable goods. So the circular, whether issued before December, 1985 or thereafter should have the same binding effect on the Department. 21. Through a catena of decisions this Court has pronounced that the Revenue cannot be permitted to take a stand contrary to the instructions issued by the Board. It is a different matter that an assessee can contest the validity or legality of a departmental instruction. But that right cannot be conceded to the Department, more so when others have acted according to such instructions, [vide CCE v. Jayant Da....