Rajasthan High Court - Jaipur
Popular Packings Pvt. Ltd. And Anr. vs Union Of India (Uoi) And Ors. on 8 April, 2004
Equivalent citations: 2004(175)ELT33(RAJ), RLW2004(3)RAJ1894, 2004(3)WLC1
JUDGMENT Anil Dev Singh, C.J.
1. The dispute raised in the aforesaid petitions is with regard to the question whether HDPE/PP tapes are classifiable under heading No. 39.20 or heading No. 39.22 or Heading No. 39.26 of Section VII of the Schedule to the Central Excise Tariff Act, 1985. Since the controversy in all these writ petitions is the same we may notice the facts of D.B. Civil Writ Petition No. 3737 of 1989 with a view to understand the background in which these matters arise.
2. The petitioner in D.B. Civil Writ Petition No. 3737/1989 is M/s Kay Poly Plast Pvt. Ltd. It is engaged in the business of manufacture of High Density Poly Ethylene tapes (for short, 'HDPE tapes') and Poly 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 classification-list effective from 1st March, 1989. Relevant part of the list reads as under:
"1. HDPE/PP Tape of apparents width SECTION XI not exceeding 5 mm produced with or CHAPTER 54 without admixture of LLDPE in small CH. HEADING 5406 portion & used in the weaving of fab- CH. SUB.
ric or manufacture of sacks HEADING 5406.90"
4. Thus it is clear that the petitioner itself classified the product under sub-heading 5406.90. Subsequently, the petitioner filed classification-list effective from 11th August, 1989 classifying the product HDPE/PP for weaving of fabric or manufacturing of sacks under Section VII Chapter 39 Heading 39.26 and sub-heading 3926.90. The petitioner on 11th August, 1989 sent a letter to the Superintendent, Central Excise Range, Udaipur alongwith the revised classification for seeking approval for the change effected in classification list. On 14th August, 1989, the Superintendent, Central Excise Range, Udaipur returned the revised classification list on the ground that the petitioner had not indicated the reason for change in the classification. The Superintendent, Central Excise Range, Udaipur also directed the petitioner to act according to the earlier classification. On receipt of the letter dated 14th August, 1989 the petitioner, vide its letter dated 16th August, 1989, deposited the excise duty according to the earlier classification. According to the petitioner, the letter dated 14.08.1989 of the Superintendent, Central Excise Range, Udaipur returning the revised classification and directing the petitioner company to clear the goods in question under earlier approved classification list amounted to rejection of the revised classification list without specifying any reason or granting any opportunity of personal hearing to it. The petitioner, aggrieved by the letter of the Superintendent, Central Excise Range, Udaipur, dated 14th August, 1989 filed the instant writ petition on 6th October, 1989 claiming the following reliefs:
"i) allow the above writ petition of the petitioners.
ii) Quash impugned order dated 14.8.89 passed by non- petitioner No. 4 as well as instructions issued by the Central Board to all collectorates directing them to classify 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 re-cords 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 atleast @ 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 circumstances of this matter;
viii) Award costs of this writ petition from the non- petitioners."
5. Subsequently, on 26th February, 2001 the petitioner filed an application to amend the writ petition. The permission to amend the petition was allowed on 23.02.2001. In the amended petition, the petitioner sought the following reliefs:
"(I) allow the above writ petition of the petitioners;
(II) quash the impugned order dated 14.08.898 (Annexure No. 4) passed by the non-petitioner No. 4 as well as instructions issued by the Central Board to all Collectorates directing them to classify the HDPE/PP tapes under Chapter 54 of the Schedule to the Tariff Act, 1985 by issuing a writ of certiorari 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 Headings 39.22/39.26 of Chapter 39 of the Schedule to the Tariff Act, 1985; in the alternative hold that HDPE/PP tapes are classifiable under sub-heading 3920.32;
(IV) Prohibit the non-petitioners from levying and recovering the excise duty on HDPE/PP tapes under Chapter 54;
(a) direct the respondents to allow all consequental benefits including MODVAT benefits to the petitioner with restrospective effect;
(b) direct the respondents to allow the petitioner to avail MODVAT credit without complying with the formalities regarding MODVAT benefit for the past period and consequently allow petitioner such credit as regards the duty paid by them on inputs on the basis of audited accounts produced by the petitioners before the jurisdictional authorities.
(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 atleast @ 18% P.A. from the date of payment till its refund by issuing writ of mandamus or any other writ, order or direction;
(VI) Grant an interim relief in terms of reliefs No. (iii) and (iv) mentioned above.
(VII) 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 Packwell 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 Central Excise & Gold Appellate Tribunal (for short CEGAT) in Shellya Industries, Bangalore v. Collector of Central Excise, 1983(14) ELT 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 the material time was as under:
"Articles made of plastics, all sorts, including tubes, rods, sheets, foils, sticks other rectangular or profile shapes, whether laminated or not, and whether rigid or flexible including lay flat tubings and poly-vinyl chloride sheets, not otherwise specified."
7. The Madhya Pradesh High Court also noticed that there were two conditions for a product to be classified under tariff item 15A (2). One was that the article should be made of plastic and the second was that it should not be specified elsewhere in the Central Excise Tariff. It was further noticed by the Court that there was no dispute before the Tribunal that the HDPE woven sacks were entirely made of plastic, therefore, it was held that the HDPE sacks did not fall within the purview of Tariff Item 68 (old) corresponding to new tariff entry 54. The Madhya Pradesh High Court also referred to the decisions of the CEGAT in Shree Radhe Industries v. Collector of Customs & Central Excise, 1983 (12) ELT 379, wherein it was held that since the HDPE tapes are neither man- made filament yarn nor cellulosic spun yarn, they do not fit into any of the categories of Item 18 (old). After a detailed discussion, the Division Bench of the Madhya Pradesh High Court came to the conclusion that the HDPE strips/tapes fall under the Heading No. 39.20, sub-heading No. 3920.32 and not under Heading No. 54.06, sub-heading No. 5406.90. It was also held that HDPE sacks fall under the Heading No. 39.23, sub-heading 3923.90.
8. Subsequently, on 24.09.1992, the Central Board of Excise & Customs issued a circular under Section 37B of the Central Excise Act, 1944 whereby it was ordered that HDPE strips and tapes not exceeding 5 mm were classifiable under Heading No. 39.20. This circular was issued by the Board in consonance with the decision of the Madhya Pradesh High Court to bring about uniformity in the treatment of HDPE strips and tapes by the concerned authorities.
9. Learned counsel for the petitioners submitted that the HDPE/PP tapes fall under Heading No. 39.26, sub-heading No. 3926.90 and are not covered under Heading No. 39.20. According to the petitioners, the HDPE/PP tapes are not strips and, therefore, cannot be covered under heading 39.20 which does not specifically mention the word "tape".
10. In the propositions which have been filed by the petitioners attention has 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 or 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.l Other 30% From 1.3.1987 onwards:
39.26 Other articles of plastics and articles of other materials of heading No. 39.01 to 39.14.
3926.90
-Other 30%
11. 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 attention to heading No. 39.19 which mentions both the words strips and tapes. It was canvassed by the learned counsel for the petitioners that heading No. 39.20 deals with strips of plastics while heading No. 39.19 deals with tapes and strips. As per the learned counsel heading No. 39.20 excludes from its purview tapes since the same are not mentioned therein. It was also argued that plastic tapes fall within the residuary heading No. 39.26 sub-heading No. 3926.90. It was urged by the learned counsel for the petitioners that while construing a taxing statute and determining the liability of a subject to tax regard must be had to strict letter of law and to the language used therein. In other words it was submitted that taxing statute must be construed strictly. It was also submitted that a product is required to be classified in the manner in which the same is known in the trade circles.
12. These propositions are well settled and are unexceptionable. In A.V. Fernandez v. State of Kerala, AIR 1957 S.C. 657, it was held by the Supreme Court that while interpreting the fiscal statute and in computing the liability of a person one must have regard to the actual provision of the Act and strict letter of law. In this regard, the Supreme Court observed as follows:
"It is no doubt true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can come to the conclusion that the appellant was liable to assessment as contended by the Sales Tax Authorities."
13. Again in Hemraj Gordhandas v. H.H. Dave, Assistant Collector of C.E. & Customs, 1978 E.L.t. (J 350), it was held by the Supreme Court that in a taxing statute there is no room for any intendment but regard must be had to 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."
14. Again, in Oswal Agro Mills Ltd. etc. etc. v. Collector of Central Excise and Ors., AIR 1993 S.C. 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 of the principles of interpretation which are merely presumption in cases of ambiguity in the statute. The Court would interpret them as they stand. The object and purpose has to be gathered from such words themselves. Words should not be regarded as being surplus nor be rendered otiose. Strictly speaking there is no place in such cases for interpretation or construction except where the words of statute admit of two meanings. The safer and more correct course to deal with a question of construction of statute is to take the words themselves and arrive, if possible, at their meaning, without, in the first place, reference to cases or theories of construction."
15. In Commissioner of Wealth-tax, Gujrat-III, Ahmedabad v. Ellis Bridge . Gymkhana, Air 1998 S.C. 120, the Supreme Court laid down the following principles:
(1) A fiscal statute must be construed strictly;
(2) The rule of construction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section.
(3) No one can be taxed by implication, and (4) If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all.
16. Similarly, in Bharti Telecom Ltd. v. Commissioner of Customs, AIR 2002 S.C. 74, the Supreme Court held that in a taxing statute there is no room for any intendment and regard must be had to the clear meaning of the words used therein and the matter should be governed only by its language.
17. In Citric India Ltd. v. Union of India, 1996 (66) E.L.T. 566 (Bom.), it was held that it was not permissible to read some additional words in an exemption notification.
18. In Tata Yodogwa Ltd. v. Asstt. Collector of Central Excise, Jamshedpur, 1983 E.L.T. 17 (Pat.), the High Court held that in case the goods are classified under a particular tariff item then, in that event, the ultimate use of the goods cannot be taken note of for the purposes of classification. It was further held that in construing a fiscal statute the language used in the statute cannot be allowed to be strained in order to hold a subject liable to tax.
19. Thus the exigibility of levy depends upon the language of the fiscal statute. Nothing can be added to or substracted 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.
20. 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.
21. In Dunlop India Ltd. v. Union of India and Ors., (1976) 2 SCC 241, the Supreme Court while giving guidance for interpreting the meaning of the words of a taxing statute, held that the acceptance of a particular word in trade and its popular meaning should commend itself to the authority. The Supreme Court while holding so, observed as follows:
"It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular entry."
22. In Union of India and Ors. v. Gujrat Woollen Felt Mills, AIR 1977 SC 1548, the Supreme Court reiterating the aforesaid principle held as follows:
"The well known rule in interpreting items in statutes like the one we are concerned with is that "resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense."
23. Again, in Geep Flashlight Industries Ltd. v. Union of India and Ors., 1985 (22) ELT 3 (SC), the Supreme Court held that an expression used in a taxing statute for describing a commodity must be given the meaning which is generally given to it by a person in the trade or in the market of commodities and should be interpreted in the sense the person conversant with the subject-matter of the statute and dealing with it, will attribute to it.
24. In Atul Glass Industries Ltd. and Ors. v. Collector of Central Excise and Ors., 1986 (25) Elt 473 (SC), the Supreme Court held as follows:
"The test commonly applied to such cases is: How is the product identified by the class or section of people dealing with or using the product? That is a test which is attracted whenever the statute does not contain any definition. Porritts and Spencer (Asia) Ltd. v. State of Haryana (1978) 42 S.T.C. 433 = 1983 E.L.T. 1607 (S.C.). It is generally by its functional character that a product is so identified. In Commissioner of Sales Tax, U.P. v. Macneill & Barry Ltd., Kanpur (1985) 2 SCALE 1093 = 1986 (23) ELT 5 (S.C.), this Court expressed 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 character of the article lies in its being a mirror. It was observed by this Court in Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan and Ors. (1980) 3 SCR 1109 = 1980 ELT 383 (S.C.) which was a case under the Sales Tax law:
"In determining the meaning or connotation of words and expression describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well settled it is that the words or expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. It is they who are concerned with it, and it is the sense in which they understand it that constitutes the definitive index of the legislative intention when the statute was enacted."
25. In yet another case, namely, Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co., AIR 1988 SC 2223, it was held that in order to ascertain the correct meaning of a fiscal entry reference to a dictionary is apt to be a somewhat delusive guide, as it gives all the different shades of meaning. It was also observed that trade meaning which is prevalent in that particular trade should be given. In this regard the Supreme Court held as follows:
"9. It is well settled, as mentioned above, that where no definition is provided in the statute itself, as in this case, for ascertaining the correct meaning of a fiscal entry reference to a dictionary is not always safe. The correct guide, it appears in such a case, is the context and the trade meaning. In this connection reference may be made to the observations of this Court in Commr. Of Sales Tax, U.P. v. S.N. Brothers, Kanpur, AIR 1973 SC 78 at page 80, para 5.
10. The trade meaning is one which is prevalent in that particular trade where that goods is known or traded. If special type of goods is subject matter of a fiscal entry then that entry must be understood in the context of that particular trade, bearing in mind that particular word. Where, however, there is no evidence either way then the definition given and the meaning following from particular statute at particular time would be the decisive test.
11. In the famous Canadian case in King v. Planters Nut and Chocolate Company Limited, 1951 CLR Ex 122, Cameron J. observed that it is not botanist's conception as to what constitutes 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."
26. In Indian Cable Company Ltd., Calcutta v. Collector of Central Excise, Calcutta and Ors., 1994 (74) Elt 22 (SC), the Supreme Court construed the relevant entry in the fiscal statute by holding as follows:
"..........in construing the relevant item or entry, in fiscal statutes, if it is one of every day use, the authority concerned must normally, construe it, as to how it is understood in common parlance or in the commercial world or trade circles. It must be given its popular meaning. The meaning given in the dictionary must not prevail. Nor should the entry be understood in any technical or botanical or scientific sense. In the case of technical words, it may call for a different approach. The approach to be made in such cases has been stated by Lord Esher in Unwin v. Hanson thus:
"If the Act is directed to dealing with matters affecting everybody generally, the words used have the meaning attached to them in the common and ordinary use of language. If the Act is one passed with reference to a particular trade, business, or transaction, and words are used which everybody conversant with that trade, business or transaction known and understands to have a particular meaning in it then the words are to be construed as having that particular meaning, though it may differ from the common or ordinary meaning of the words."
We would only add that there should be material to enter appropriate finding in the case. The material may be either oral or documentary evidence."
27. In Union of India v. Garware Nylons Ltd., 1996 (87) ELT 12 (SC), the Supreme Court noticing the principles which apply while construing the items or entries in the fiscal statute held as follows:
"...........So in construing entries of goods in Excise, Customs of Sales Tax Acts resort should normally be had not to the scientific or technical meaning but to their popular meaning viz. the meaning attached to the expressions by those dealing in them ...............The popular meaning in the context of a Sales Tax Act is that meaning which is popular in commercial circles for the Act essentially, in its working, is concerned with dealers who are commercial men."
XXXXX XXXXXXX XXXXXXXXXX "The justification of the rule that the words are to be understood in 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."
XXXXXXXX XXXXXXXXXX XXXXX "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 more common meaning that the word may have. ..............The Supreme Court "has consistently taken the view that, in determining the meaning or connotation of words and expressions describing an article in a tariff Schedule, one principle which is fairly well settled is that those words and expressions should be construed in the sense in which they are. understood in the trade by the dealer and the consumer. The reason is that it is they who are concerned with it, and, it is the sense in which they understand it which constitutes the definitive index f legislative intention."
28. Therefore, in nut shell the fiscal entry must be interpreted by keeping the following principles in view:
1. A word in the fiscal entry is to be given meaning according to common parlance unless a contrary intention is clearly expressed by the legislature;
2. The expression in the taxing statute is not required to be given a technical meaning;
3. Reference to a dictionary for ascertaining the meaning of a fiscal entry is apt to be a delusive guide;
4. There is no intendment or equity to a fiscal statute; and
5. The courts are to be guided by the words of the taxing statute and their meaning is to be governed by the language used by it.
29. In short, the guiding principle for construing words in the fiscal entry is that the words must be understood in common parlance i.e. in their popular sense as understood by the trade. The learned counsel for the petitioners submitted that in common parlance HTPE/PP tapes on the one hand and strips on the other hand are considered as two different commodities. According to him, in business circle HTPE/PP tapes and strips are separate items. According to the learned counsel for the petitioner heading No. 39.20 does not cover HTPE/PP tapes since it mentions strip in contradistinction to heading No. 39.19 which covers both tapes and strips. The learned counsel contended that the decision of the Madhya Pradesh High Court in Raj Packwell (supra), did not consider this aspect of the matter as the focus in that case was on the question whether HTPE/PP tapes were covered under Chapter 39 or under Chapter 54. It 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.
30. 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 submissions 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.
31. 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, sifted and appreciated. The evidence must be adduced before the authorities charged with the duty to decide disputed questions of fact. In the instant case it is the concerned authority under the Central Excise Act, 1944, who has been entrusted with the statutory duty to decide the question on the basis of the evidence which may be adduced before it. The decision of the authority is appellable. The petitioners in order to short circuit the provisions of the statute have directly filed writ petitions before this Court. It will be hazardous for this Court to ask the parties to lead evidence in the writ petition and to examine the same and decide whether the strips and tapes are the same commodities or separate and distinct ones. That job has been entrusted to the concerned authorities by the statute. It is significant to note that in the first instance the petitioners in the original writ petition sought relief on the ground that the duty was leviable under Chapter 39 and not under Chapter 54. They also sought a declaration to the effect that HTPE/PP tapes are classifiable under heading No. 39.22/39.26 of Chapter 39 of Schedule to the Central Excise Tariff Act, 1985. Besides, they sought quashing of the impugned order dated 14th August, 1989 whereby the respondent No. 4 Superintendent of Central Excise had directed them to classify the HTPE/PP tapes under Chapter 54 of the tariff Act, 1985. Even before the time of filing of the petitions, the decision of the Madhya Pradesh High Court in Raj Packwell (supra), was available but it seems that the petitioners were not aware of the same. Subsequently, in 2001 after several years the petitioners amended the writ petition with a view to seek a relief which goes beyond the relief granted in Raj Packwell (supra). The petitioners have justified filing of the writ petition directly in this Court without resorting to the remedies provided under the Excise law on the ground that pursuant to the decision in Raj Packwell (supra), the Central Board of Excise and Customs by order dated 24th September, 1992, has directed under Section 37B of the Central Excise Act, 1944, that for the purpose of ensuring uniformity in the classification of the HTPE strips and tapes, having a width not exceeding 5mm and sacks made therefrom, shall henceforth be classified under sub-heading 3923.20 of the tariff. It was contended by the learned counsel 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.
32. We have considered the submissions of the learned counsel for the petitioners but we regret our inability to accept the same.
33. 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 assesses, who can question the correctness of the same before a quasi judicial authority.
34. In Rajagopala Naidu v. The State Transport Appellate Tribunal, Madras and Ors., AR 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 to all such orders and directions. The Supreme Court construing the aforesaid provision held that it would be legitimate to assume that the legislature intended to respect the basic and elementary postulate of the rule of law and in exercising their authority and in discharging their quasi- judicial function, the Tribunals constituted under the Act must be left absolutely free to deal with the matters according to their best judgment. The Supreme Court did not agree with the view that the power conferred on the State Government to issue directions could control the quasi-judicial functioning of the Tribunal. In this regard the Supreme Court held as follows:
"It is of the essence of fair and objective administration of law that the decision of the Judge or the Tribunal must be absolutely unfettered by any extraneous guidance by the executive or administrative wing of the State. If the exercise of discretion conferred on a quasi-judicial authority and the presence of such fetters would make the exercise of such authority completely inconsistent with the well-accepted notion of judicial process. It is true that law can regulate the exercise of judicial powers. It may indicate by specific provisions on what matters the tribunals constituted by it should adjudicate. It may by specific provisions lay down the principles which have to be followed by the Tribunals in dealing with the said matters. The scope of the jurisdiction of the Tribunals constituted by statute can well be regulated by the statute and principles for guidance of the said tribunals may also be prescribed subject of course to the inevitable requirement that these provisions do not contravene the fundamental rights guaranteed by the Constitution. But what law and the provisions of law may legitimately do cannot be permitted to be done by administrative or executive orders: This position is so well established that we are reluctant to hold that in enacting Section 43A the Madras Legislature intended to confer power on the State Government to invade the domain of the exercise of judicial power. In fact, such had been the intention of the Madras Legislature and had been the true effect of the provisions of Section 43A. Section 43A itself would amount to an unreasonable contravention of fundamental rights of citizens and may have to be struck down as unconstitutional. That is why the Madras High Court in dealing with the validity of Section 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."
35. In Orient Paper Mills Ltd. v. Union of India, 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 under the Act they must act independently and impartially. They cannot be said to act independently if their judgment is controlled by the directions given by others. Then it's a misnomer to call their orders as their judgments; they would essentially be the judgments of the authority that gave the directions and which authority had given those judgments without hearing the aggrieved party. The only provision under which the Board can issue directions is Rule 233 of the Rules framed under the Act. That rule says that the Board and the Collectors may issue written instructions providing for any supplemental matters arising out of these Rules. Under this rule the only instruction that the Board can issue is that relating to administrative matters; otherwise that rule will have to be considered as ultra vires Section 35 of the Act.
In Mahadayal Premchandra v. Commercial Tax Officer, Calcutta, 1959 SCR 551 = (AIR 1958 SC 667) this Court held that the Commercial Officer while assessing certain transactions should not have solicited instructions from the Assistant Commissioner, nor should he have acted on the basis of those instructions. It was further held that the instructions given by the Assistant Commissioner had vitiated the entire proceedings as "the procedure adopted was, to say the least, unfair and was calculated to undermine the confidence of the public in the impartial and fair administration of the sales tax department."
36. In Genest Engineering Pvt. Limited v. Union of India, 1989 (43) Elt 24 (Guj.), the Gujrat High Court has also taken the view that the instructions issued under Section 37B are not binding on the quasi judicial authorities. In holding so it was observed as follows:
"It is clear from Section 37B that the Administrative orders, instructions and directions have to be observed by the excise authorities who are bound by such orders. Nevertheless, the section has taken particular care to see that the authorities who will be acting as quasi judicial authorities are protected from such type of directions or instructions. That is why the proviso mentioned above clearly makes it that the instructions, orders or directions cannot bind any Central Excise Officer by directing him to make a particular assessment or to dispose of a particular case in a particular manner. Mr. Trivedi, the learned counsel appearing for the petitioners, in order to substantiate his contentions as regards the prayer to declare Section 7B 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 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 controlled by the directions given by others. Then it is a misnomer to call their orders as their judgments; they would essentially be the judgments of the authority that give the directions and which authority had given those judgments without hearing the aggrieved party. The only provision under which the Board can issue directions is Rule 233 of the Rules framed under the Act. That rule says that the Board and the Collector may issue written instructions providing for any supplemental matters arising out of these Rules. Under this rule the only instruction that the Board can issue is that relating to administrative matters; otherwise that rule will have to be considered as ultra vires of Section 35 of the Act."
"It has been made very clear that 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. The judgment further observes that it is true that the assessing authorities as well as the appellate authorities are judges in their own cause; yet whey they are called upon to decide disputes arising out of the Act, they must act independently and impartially. Considering the principle enunciated in this judgment and also Section 37B, which we have extracted above, we are of the definite view that this section does not offend any of the provisions of the Constitution and there is absolutely no direction to any quasi-judicial authority to behave in a particular manner as directed by the Board. The general instructions given by the Board will bind such officers, only when they act in their administrative capacity. We are definite that this Section does not offend any of the provisions of the Constitution and as such it is intra vires the Constitution."
37. In Cether Vessels Ltd. v. Assistant Collector of Central Excise, 1992 (60) ELT 214, the Madras High Court while taking the same view held as follows:
"4.........The scope of Section 37B has, been considered by Kanakaraj, J. in an unreported decision in S.P. No. 74 of 1991 dated 10.4.1991 [since reported in 1992 (57) ELT 211 (Mad.]. The learned Judge after considering the decision of the Supreme Court in Rajagopal Naidu v. The State Transport Appellate Tribunal, Madras and Ors. (AIR 1964 SC 1573), and in Orient Paper Mills Ltd. v. Union of India [AIR 1969 SC 48 = 1978 (2) ELT (J 345) (SC)] and two judgments of the Gujrat High Court in Genest Engineers Pvt. Ltd. v. Union of India [1989 (43) ELT 24 (Guj.) = 1990 (29) ECC 382)] and Air Control and Chemical Engineering Co. Ltd. and Anr. v. Union of India and Ors. [1991 (51) ELT 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."
xxxx xxxxxx xxxxxx xxxxxxx
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 Excise and Salt Act, 1944.
8. Taking the view that Section 37B of the Central Excise and Salt Act, 1944 is valid and need not be struck down as violative of Articles 14 and 19 of the Constitution and that the petitioner can raise all the objections before the authorities including the question of promissory estoppel with regard to the period 14.04.1986 to 25.09.1991, these writ petitions stand dismissed."
38. In Birla Jute and Industries Ltd. v. Assistant Collector of C Ex., 1992 (57) ELT 674;, it was held that departmental circulars issued under Section 37B of Central Excises and Salt Act, 1944 are binding on the departmental officers but the same can not be considered to be binding on the quasi-judicial authorities and the assesses. Taking stock of the several decisions of the Supreme Court and the various courts, the following principles were culled out by the Calcutta High Court:
"(1) there is a distinction between a decision in a particular assessment by a quasi-judicial authority and a decision on principle by the Board. While an instruction issued under Section 37B cannot be binding upon a quasi-judicial authority under the Act, the departmental officers conducting the lis before such quasi-judicial authority cannot take a stand contrary to the directive/instruction issued.
(2) The instructions which may be binding on the Central Excise Officers are not binding on the Assessee who may question the correctness of the same before a quasi-judicial authority and before a Court. Both the quasi-judicial authority and a fortiori, the Court, can question the correctness of the instructions.
An assessee has on the other hand the right to claim and the court may compel compliance with such instructions as are for the benefit of the assessee by the Central Excise Officers."
39. In Bengal Iron Corporation v. Commercial Tax Officer, 1993 (66) ELT 13, the Supreme Court while dealing with the circular of the Andhra Pradesh Government issued under Section 42 of the Andhra Pradesh General Sales-tax Act held that the circular merely represents the understanding of the Government regarding statutory provisions and the same is not binding upon the quasi-judicial functioning of the authorities under Act. In this regard it was observed as follows:
"So far as clarifications/circulars issued by the Central Government and/or State Government are concerned, they represent merely their under-standing of the statutory provisions. They are not binding upon the Courts. It is true that those clarifications and circulars were 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 High 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. Bharat Coking Coal Ltd. and Anr.-AIR 1983 SC 239)."
40. In Sundaram Clayton Ltd. v. Superintendent of C.Ex., Madras, 1994 (70) Elt 190, it was held that trade notices issued by the Excise Department are not binding on the adjudicating authorities. The Madras High Court with reference to trade notices, observed as follows:
"The Trade Notice does not bind the first respondent and hand and foot in the sense that the first respondent has no discretion or power to decide the case on merits. I am therefore, not inclined to entertain these writ petitions at the stage of show cause notice."
41. In Kirloskar Oil Engines Ltd. v. Union of India, 1995 (77) ELT 479, it was recognized by the Supreme Court that the Trade Notices issued under the provisions of the Central Excise and Salt Act, were not binding on the Collector. In this regard it was observed as follows:-
"It is true, as held by the High Court and by the authorities that a trade notice is not binding, but what the High Court omitted to consider was that there was no other material with the Department on which it could assume that the washers and the bushes manufactured by the appellant were 'thin walled bearings'. The basis for initiation of proceedings being Indian Standard Booklet published by the Indian Standard Institute, it was not proper either for the High Court or for the assessing authorities to ignore it and levy the duty treating these goods to be 'thin walled bearings', on assumptions without any material. The observation in the judgment of the High Court that it was undisputed that thrust washers and wrapped bushes were in accordance with specification under IS : 4774-1968 is factually incorrect. The written note of the appellant given before the assessing authority has been extracted. It is obvious that the order was made under misapprehension."
42. In Collector of Central Excise, Patna v. Usha Martin Industries, (1997) 7 SCC 47, the Supreme Court with reference to the instructions issued under Section 37B of the Act was of the view that while revenue cannot be permitted to take a stand contrary to the instructions issued by the Board, the assessee was free to contest the validity or legality of the departmental instructions. The Supreme Court was also of the view that the appellate authority was not bound by the interpretation given by the Board but the assessing officer cannot take a view contrary to the Board's interpretation. The observations of the Supreme Court in this regard are as follows:
"20. Section 37B of the Act 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 Dalai (P) Ltd., (1996) 88 ELT 638, Ranadey Micronutrients v. CCE, (1996) 87 ELT 19, Poulose and Mathen v. CCE, (1997) 90 ELT 264, British Machinery Supplies Co. v. Union of India, (1996) 86 ELT 449. Of course the appellate authority is also not bound by the interpretation given by the Board but the assessing officer cannot take a view contrary to the Board's interpretation."
43. Having regard to the aforesaid discussion, we are of the view that the petitioners ought to have approached the appropriate authorities constituted under the Central Excise Act, 1944 for relief as the basic question raised before us is a disputed question of fact and the evidence needs to be led for its determination. It is the departmental authorities which have been empowered to determine any issue arising between the parties under the Central Excise Act, 1944 and the Central Excise Tariff Act, 1985, on the basis of evidence adduced by them. According to the thrust of the judicial dicta, notwithstanding few discordant notes here and there, the quasi judicial authorities, especially the appellate authority is not bound by the Board's directions issued under Section 37B. In the circumstances, we decline to exercise writ jurisdiction under Article 226 of the Constitution of India. The petitioners, however, would be free to seek their remedy as per the Central Excise Act, 1944, if so advised and if permissible in law.
44. Accordingly, the writ petitions fail and are hereby dismissed.