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1984 (5) TMI 247
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....and the other, having been filed as a revision application to the Central Government, has been transferred to the Tribunal) are directed. 2. The matter was argued before us on behalf of the appellants by Shri S.B. Jijina, Advocate, assisted by Shri D. Krishnamurti and Shri N.C. Sogani, Consultants. 3. Shri Jijina submitted that the question was whether "linters" were "raw cotton" in terms of Item 16 of the Export Tariff Schedule. He pointed .out .that there was no definition of "raw cotton" in the Schedule. Shri Jijina filed a number of extracts from various works of reference, enactments, etc., in support of his contention. These extracts were from Chambers Technical Dictionary, Revised Edition (page 54); "Textile Terms and Definitions", Seventh Edition of the Textile Institute, Manchester (page 115); "Cotton Spinning" (Combined Edition) by William Taggart (page 54); "The Standard Handbook of Textiles" (Eighth Edition) by A. J. Hall (pages 2 to 3); "American Cotton Handbook" by Merrill and others (pages 87 and 151- and 1972 Annual Book of ASTM Standards-Part 25 (page 24). All these authorities were cited in favour of the proposition that linters were different from....
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....raw cotton which were specified in this notification and the effective rate of duty for each of them are given below : 1. Raw cotton of the varieties known as Rs. 550/- per tonne (a) Assam/Comilla Cotton (b) Yellow pickings and Zoda Cotton (that is, cotton of third picking and of unspinable quality). 2. Raw cotton having a staple length of 24.5 millimetres and above Nil 3. All other varieties of raw cotton excepting known as Bengal Deshi. Rs. 1,000/- per tonne. Shri Jijina pointed out that there was no reference in this notification to "linters". According to him, this omission was because Government had come to realise that linters were not "cotton". 6. Shri Jijina went on to refer to the definition of "linter" in the Fairchild Dictionary of Textiles, to which reference was made by the Collector (Appeals) in his order dated 15-3-1983. The definition read as follows : "A name given to short cotton fibres which adhere to the seed after the first ginning process." The Collector (Appeals) had observed that this made it abundantly clear that linters were no....
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....l and authoritative was the basic Indian Trade Classification itself. Subsequently, Shri Sogani produced before us a copy of the Indian Trade Classification - Revision 2. Our comments based on this will be given later). 10. Shri Sogani next drew our attention to a paper with the title "Cotton Linters : Production, Analysis and Grading in India" by V. Sundaram and S.N. Pandey, published under the auspices of the Cotton Technological Research Laboratory, Bombay. (Subsequently, as directed by us, he filed photo copies of the complete paper). Shri Sogani drew our attention to the first paragraph of this paper in which it was stated "It is generally held that the fibre cells which sprout during the first to fifth day after fertilization develop into commercial lint fibres, while those fibre cells which appear later develop into fuzzy fibres or "linters"...... While the cotton fibres form valuable raw material for the textile industry the linters cannot be spun into yarn in view of extremely short length but can be used as a valuable source of cellulose for various purposes". He submitted that this clearly showed that cotton linters were quite different from raw cotton as commerc....
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....at in the Statement for 1980-81, Serial No.68 covered "raw cotton", and various varieties such as Bengal Deshi were specified therein. There was no reference to "cotton linters". However, in the subsequent statement for 1981-82, a fresh item was added as Serial No. 99, covering "cotton linters". Shri Sogani also drew our attention to public notice No. 13 ETC (PN)/81 dated 3-2-1981 of the Chief Controller of Imports and Exprots regarding "Export policy of cotton linters." In this public notice it was stated that it had been decided to allow export of "Cotton Linters" within a limited ceiling on first come, first served basis. It was also directed that in the Policy Statement contained in the Export Policy Book, 1980-81, a new entry No. 99 should be made, with the description "Cotton Linters". It was Shri Sogani's contention that this clearly showed that "cotton linters" were not covered by the other entries relating to "raw cotton" as understood by the Office of the CCI & E. Shri Sogani also placed before us an extract from the ISI Specification for Cotton Linters (IS: 3517-1979), which contained definitions of 'First Cut', 'Second Cut' and 'Mill run' linters. (This extract is not o....
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....uch cotton as could be used for spinning of textiles. He submitted that there was authority of the Supreme Court to the effect that the end-use of an article would not be relevant for its classification if it was not specified in the law. 19. Shri Ohri submitted that over a very long period linters had been treated in India by the Customs Department as raw cotton and this practice had been accepted by the trade. He pointed out that the Import Tariff Schedule as contained in the Indian Tariff Act, 1934 (which was in force until replaced by the Customs Tariff Act, 1975), there was a separate Item No. 46(3) with the description "Cotton, raw". Under a tariff ruling of 1954, reproduced in the Indian Customs Tariff Guide, it was provided that cotton linters were covered by this item. This tariff ruling had not been superseded so long as the Indian Tariff Act was in force. This showed that cotton linters had consistently been classified as raw cotton for the purpose of import, and that this classification had been accepted by the trade. 20. As regards the Export Schedule, Shri Ohri pointed out that Notification No. 184/76 dated 14-10-1976 specifically mentioned linters as ....
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.... drew our attention to a Table at page 96 in which there was reference to different varieties of cotton, such as Comillas, showing the linter content of each. According to him, this showed that linters could also be classified as Comillas, etc., that is, in the same way as raw cotton, and therefore should be considered as raw cotton. He also referred to the Textile Terms and Definitions (Textile Institute, Manchester), which showed that Cotton was the seed hair of a wide variety of plants of the Gossypium family, and the Dictionary of Science and Technology, which stated that "Linters" were "short stiff fibres remaining on cotton seeds after removal of the longer fibres." He submitted that these quotations showed that there was basically no difference between linters and lint (cotton fibres), except that linters were shorter. 25. He thereafter referred to the different varieties of cotton specified in Notification No. 12 dated 9-1-1979 and Shri D. Krishnamurti's argument that linters were not covered by any of that varieties so specified. According to him, if cotton linters were not covered by any category in the notification, they would be subject to the Tariff rate of dut....
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....9, covering "cotton linters", Shri Ohri pointed out that this amendment took effect from 3-2-1981, that is, after the exports covered by the present appeals took place. Further, the amendment was made to enable the implementation of the licensing policy, that is, to permit export of linters up to a ceiling. This was only for convenience and did not mean that linters were a commodity different from raw cotton. 35. Shri Ohri then referred to the Indian Ginning and Pressing Factories Act,1925. In the "Definitions Section"of this Act, it was stated that "cotton" means ginned or unginned cotton, or cotton waste". No distinction was made in regard to linters. 36. Shri Ohri then referred to the clarification given by the Textile Commissioner's Office in their letter dated 1-8-1981, referring to the appellants letter dated 27-7-1981, of which a copy had been filed by the appellants under the direction of the Tribunal. Shri Ohri submitted that it did not clearly specify the point at issue. Accordingly, the reply given by the Textile Commissioner's Office could not be taken as having relevance to the present issue. What was given was an opinion and not in exercise of any stat....
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....2000) covered "Cotton linters". The fact that entry 263.1 referred to "cotton (other than linters)......" tended to show that the term "cotton" normally included linters, but linters had been separated out as a matter of convenience. 42. Thereupon Shri Sogani stated that perhaps the copy of the Indian Trade Classification-Revision 2, which had been shown by him to the Tribunal, was not the latest amended version and the position in such latest version might be different. 43. Shri Sogani again referred to the Export Policy Book, and the fact that in Schedule I thereto, listing "Commodities Subject to Export Control", there was in Part B a separate entry No. 99 for "Cotton Linters", showing that they were different from "raw cotton". Serial No. 68 read "Raw Cotton", and not "raw cotton, other than linters" as it would have done if linters were considered as raw cotton. With reference to this argument the Bench pointed out to Shri Sogani that the entries in the Schedule did not appear to have been drawn up bearing such considerations in mind, but only with a view to the convenience of the licensing authorities. Thus, serial No. 33 referred to "Sugar" and serial No. 33A....
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....erve, however, that this Order was issued under Section 3 of the Essential Commodities Act, 1955. The fourth document sent by Shri Sogani was the "Handbook of Methods of Tests" published by the Cotton Technological Research Laboratory. This was not referred to during the hearing nor did we ask for it to be sent. We are accordingly not taking it into account. 50. We have given our very careful consideration to the arguments advanced before us. Both sides have taken great pains to collect a mass of material which could be of assistance in deciding the issue, and we have studied this material with great care. The arguments advanced on both sides on the question whether cotton linters are "raw cotton" can be arranged under the following heads : (i) Nature of 'linters' and 'lint' (ii) Their uses. (iii) Understanding of trade and official circles, including the Ministry of Finance and Central Board of Excise and Customs. 51. On the first aspect, that is, the nature of linters and lint (the name given to raw cotton obtained by the first ginning process and used for spinning), quotations from a number of reputed authors and institutions have been placed before us. ....
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....eferred to here would equally cover linters, but from the context the appellants seem to be right in urging that it refers only to the lint. 54. It has also been seen that in the paper by Sundaram and Pandey, published by the Cotton Technological Research Laboratory, it has been stated that "while the cotton fibres form valuable raw material for the textile industry, the linters cannot be spun into yarn in view of their extreme short length but can be used as a valuable source of cellulose for various purposes". 55. The above citations would indicate that by "raw cotton" is meant cotton in the form of lint, and not linters. In fact, Shri Sogani did not suggest that linters were not "cotton", nor did he deny that they may literally be considered as "raw". His submission was that the expression "raw cotton" occurring in the Export Tariff Schedule should be taken as a whole and given its normal meaning as understood by the trade, and that linters were not included within this normal meaning. 56. The Indian Trade Classification was also relied upon by the appellants. As mentioned in para 40 above, there is a separate entry in this Classification for "cotton lint....
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....ing that cotton linters were covered by this item, and this ruling continued in force until it became otiose with the replacement of the Indian Tariff Act by the Customs Tariff Act, 1975. Shri Ohri strongly relied on this circumstance as showing that there was a consistent practice, accepted by the trade, to consider cotton linters as "cotton, raw". 60. There is some "substance in Shri Ohri's argument. However it is subject to certain qualifications. One is that the item referred to "cotton, raw" and not "raw cotton". Cotton linters are undoubtedly "cotton", and could reasonably be considered as "raw". Therefore, it would not be doing violence to language to regard them as "cotton, raw". However, as pointed out by Shri Sogani, we are here concerned' with interpreting tie expression "raw cotton" as occurring in Item No. 16 to the Export Tariff Schedule. The tariff ruling, with reference to "cotton, raw", or its acceptance by the trade, may not therefore be conclusive in deciding this question. 61. It has also been pointed out that in Notification No. 184-Customs dated 14-10-1966, issued under Item 3 of the Export Tariff Schedule in the Indian Tariff Act, 1934, coveri....
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....p;The appellants have also relied upon the letter from the Deputy Director in the office of the Textile Commissioner in which it was stated that linters are not cotton or cotton waste and that they do not answer the definition of "cotton" under the Cotton Control Order, 1955. As directed by us, the appellants furnished a copy of the appellants' letter in response to which the above reply was given. We found that the appellants had not been wholly frank in the manner of writing to the Textile Commissioner's office, as they did not indicate the purpose for which they required the clarification, namely, in connection with their current dispute with the Customs authorities. On the other hand, they stated, "we require this information for the purpose of export", implying that it was in connection with export contracts. The reply from the Textile Commissioner's Office also referred to the Cotton Control Order, 1955, which had its own purpose, and did not categorically state that cotton linters were not raw cotton as understood by the trade. Nevertheless, with all these qualifications, the reply from the Textile Commissioner's Office does give the impression that according to them cotton ....