Bombay High Court
Haldyn Glass Works Pvt. Ltd. vs M.L. Badhwar on 1 January, 1800
Equivalent citations: 1980(6)ELT291(BOM)
ORDER
1. By this petition filled under Article 226 of the Constitution of India, the petitioner are challenging the legality and validity of an undated order passed by the Appellate Collector, Central Excise, Bombay, confirming the order dated September 19, 1973 passed by the Assistant Collector, Central Excise, Bombay.
2. The short point which falls for determination in this petition is whether the product manufactured by the petitioner is entitled to claim exemption Notification No. 50/61, dated March 1, 1961 issued by the Central Government. The petitioner manufacture glass-ware including the glass bead, glass beads are solid glass beads spherical or almost spherical in shape in diameter anything from 0.11mm. to 1.5 mm. these beads are called Ballotini after its Italian inventor or glass beads all over the country and overseas. The Tariff Item in respect of glass and glass-ware is 23A in the Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the "Act") and reads as follows:-
"23A. GLASS AND GLASSWARE-
(1) * * * * (2) * * * * (3) * * * * (4) Other glassware including tableware."
The glass beads admittedly fall within Tariff Item No. 23A (4) and the excise duty is 30% ad valorem the Government of India published Notification No. 50/61 on March 1, 1961 and exempted glass bangles and glass beads from the whole of the excise duty leviable thereon.
3. The Superintendent of Central Excise visited the petitioners' factory on April 14, 1970 after the petitioners submitted the classification list of the excisable goods. The Superintendent, Central Excise, by an other dated April 21, 1970 held that the product `Ballotini' beads is the other glassware and assessable under Tariff Item No. 23A(4). The petitioners carried an appeal against this order before the Appellate Collector of Central Excise claiming that the decision of the Superintendent was erroneous as the petitioners were entitled to claim advantage of the exemption Notification. The appellate authority by an order dated March 16, 1971 accepted the claim of the petitioners holding that the produce "Ballotini" beads are eligible for the exemption from Central Excise duty as per the exemption Notification. In pursuance of this order, the petitioners sought refund on March 29, 1971 and the refund cheque was handed over on July 15, 1971.
4. Thereafter a fresh show cause notice was served upon the petitioners on Demand 23, 1972. By this show cause notice, the petitioners were required to show cause as to why the classification and rates of duties approved by the jurisdictional Superintendent should not be revoked and as to why the glass beads should not be classified as chargeable under Tariff Item No. 23A(4). The annexure to the show cause notice sets out that the glass beads were examined by the Assistant Collector on December 13, 1972 and it was found that the glass beads are round spherical glass granules not having any hole or perforation through them. It was further stated that the end use of the glass beads was as rebectors, blast cleaning medium, grinding and dispersing medium and Collant for transformer oil and similar other industrial uses. It was further stated that the glass beads are not entitled to exemption as the conventional meaning of the terms has to be adopted and only glass beads which are pierced for threading and which are used for the ornamental purpose are entitled to exemption. The petitioner gave a detailed reply to the show cause notice pointing out that the exemption Notification does not refer to the glass beads with holds for stringing Notification must be construed liberally. The petitioners also pointed out that all over the world the product manufactured by the petitioners is recognised as glass beads and in support of the submission, various authoritative books including the dictionaries were cited.
5. The Assistant Collector, by his order dated September 19, 1973 rejected the claim made by the petitioners holding that the petitioners are not entitled to claim exemptions and are liable to pay duty. The Assistant Collector did hold that the contention of the assessee that the term "beads" is also used for describing small spherical objects not having any holes or perforations is correct but turned down the claim of the petitioners on the ground that the expression "glass beads" in the Notification must be read in connection with the expression "glass bangles". The petitioners carried on appeal but that was dismissed by the Appellate Collector holding that the Brussels Nomenclature which was adopted by the Government of India in the year 1975 describes "glass beads" as white or coloured small pierced balls more or less round in shape and used for necklace, roseries, imitation flowers etc. as well as for decorating textile articles and bags or for use as electrical insulators. Placing strong reliance upon this description, the Appellate Collector dismissed the appeal. The orders passed by the Excise Authorities are under challenge in this petition.
6. Mr. Dalal, the learned counsel appearing in support of the petition, submitted that the plain reading of the exemption Notification leaves no manner of doubt that the glass beads manufactured by the petitioners are entitled to exemption from payment of excise duty. Mr. Dalal submits that the petitioners have produced ample material before the Assistant Collector to establish that the glass beads manufactured by the petitioners are recognised world over as beads. Mr. Dalal submits that not only various books and dictionaries produced before the Assistant Collector support his claim but the two authorities below have also accepted that the expression "glass beads" covers the product manufactured by the petitioners. The submission of the learned counsel is sound and requires to be upheld. It is undoubtedly true that the Assistant Collector has not refuted the claim of the petitioners that the term "glass beads" is used for describing small spherical objects not having any holds or perforations all over the world and amongst the traders dealing with the object.
7. Mr. Manjrekar, the learned counsel appearing on behalf of the respondents, realising this position submitted that even assuming the product manufactured by the petitioners is the glass beads, still it is not entitled to claim exemption. Mr. Manjrekar submits that the glass beads are entitled to exemption provided they are used for ornamental purposes. The learned counsel submits that the expression "glass beads" must be read in conjunction with the expression "glass bangles" appearing in the exemption Notification and it must be held that the exemption was meant only for such products as are generally correct. The exemption Notification, nowhere, restricts the exemption to glass beads used for ornamental or personal ware. It is not proper to read the exemption Notification in a limited sense and deprive the petitioners of the advantage of the same.
8. Mr. Manjrekar relied on the decision of the Supreme Court in the case of Dr. Devendra M. Surti vs. The State of Gujarat where the Supreme Court was considering the question whether the expression "Commercial Establishment" appearing in Section 2(4) of the Bombay Shops and Establishments Act would cover private dispensary of a medical practitioners. The Supreme Court in paragraph 6 of the judgment observed as follows :-
`But, in our opinion, in the matter of constructing the language of Section 2(4) of the Act we must adopt the principle of noscitur a sociis. This rule means that, when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. The words take as it were their colour from each other that is, the more general is restricted to a sense analogous to a less general. "Associated words take their meaning from one another under the doctorine of noscitur a sociis the philosophy of which is that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it; such doctrine is broader than the maxim Ejusdem Generis" (Words and Phrases, Vol. XIV, p.207)'.
Relying upon this observation, Mr. Manjrekar submits that the words "glass beads" are general and they should be restricted to a sense in such cases to the expression "glass bangles". The submission has no merit because the Supreme Court has observed that the doctrine of noscitur a sociis can be attracted when the meaning of doubtful word is required to be ascertained. In the present case, the expression "glass beads" is very clear and the doctrine pointed out by the Supreme Court is wholly inapplicable. In my judgment, the exercise of the Excise Authorities to limit the expression "glass beads" to only those beads which are manufactured for personal or ornamental ware is entirely incorrect.
9. Mr. Dalal also submitted that while considering the exemption Notification it is necessary for the Court to adopt the liberal construction and in support of this submission, the learned counsel relied upon the decision of this Court in the case of Commissioner of Income-tax, Bombay City 1 vs. Chugandas & Co. (Securities) reported in 38, Income Tax Reports, 241. The question which came for consideration before the Court was whether the exemption from payment of income-tax was available in respect of income from securities. The matter was referred to a third Judge on a difference of opinion between the two learned Judges, but all the three Judges have held that while interpreting the exemption clause, the exemption should be liberally construed provided no violence is done to the language employed in the section. This decision of the Bombay High Court was confirmed by the Supreme Court in the case of The Commissioner of Income-tax, Bombay City 1 Bombay v. M/s Chugandas & Co., Bombay . It is clear from these two decisions that the expression in the exemption Notification must be liberally construed.
10. Mr. Manjrekar, on the other hand, submitted that there are two decisions of the Supreme Court where contrary observations are made and relied upon the decisions of the Supreme Court (The Union of India vs. Commercial Tax Officer, West Bengal and other and Municipal committee, Akot vs. Manilal Manekji Pvt. Ltd. and another. It is really not necessary to go into the question in detail because even on a strict construction I have no hesitation in holding that the petitioners' product is entitled to claim exemption under the Notification.
11. Mr. Manjrekar then submitted the appellate authority has relied upon the description "glass beads" in Brussels Nomenclature which was adapted by the Government of India in 1975 and as the expression described therein support the claim of the department. I would not disturb the orders of the authorities below. The submission is misconceived. In the first instance, Brussels Nomenclature was nor available to the department on the date when the show cause notice was large material in the shape of recognised books and dictionary to indicate the true ambit and scope of the expression "glass beads" and that undoubtedly support the petitioners. Apart from it when the expression in the Notification is very clear and is not restricted or limited to manufacture of glass beads for ornamental or personal use in my judgment it is not really necessary to fall back upon the Brussels Nomenclature to determine the true scope of the Notification.
12. Mr. Manjrekar finally submitted that the view taken by the authorities below was a possible view and therefore. I should not disturb is in these writ proceedings. Mr. Dalal rightly submit that on a previous occasion the department has taken a contrary view and when there is a doubt in the mind of the department itself, it is futile to submit that this Court should not exercise the jurisdiction under Article 226 of the Constitution of India. In my judgment, the orders passed by the authorities below are clearly erroneous and are based on misconception of true scope of exemption Notification and are therefore to be quashed.
13. Accordingly, the petition succeed and the rule is made absolute is terms of prayer (a) of paragraph 18 of the petition. The petitioners have furnished Bank guarantee as per the interim order passed by the Court on September 4, 1975. The Bank guarantee to stand discharged after a period of six weeks from to day. The petitioners have paid the duty subsequent to the period October 1,1973 under protest and in view of this decision the department is bound to refund the same. In the circumstances of the case there will be no order as to costs.