Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Customs vs Edhayam Frozen Foods on 8 July, 2005
Equivalent citations: 2005(190)ELT72(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. In all these appeals of the Revenue, the appellant is aggrieved by orders of the lower appellate authorities setting aside demands of cess under the Agricultural Produce Cess Act, 1940 (APC Act, for short) on prawn/shrimp exported by the respondents. Section 3 of the APC Act provides for levy of cess in the form of Customs duty at the rate of 0.5% ad valorem on all scheduled articles which are produced in, and exported from, India. Fish is specified as Item No. 7 in the schedule to the Act. The question before the lower appellate authorities was whether "fish" included prawn and shrimp. They answered this question in the negative, but without certainty. Accordingly, giving the benefit of doubt to the assessees, the lower appellate authorities dropped the levy under Section 3 of the APC Act in respect of prawn/shrimp.
2. Ld. JDRs, Shri A. Jayachandran and Shri C. Mani reiterated the grounds of the appeals and submitted that the view taken on the above issue in the impugned orders was not correct. The gist of their arguments was that 'fish' was a general and broad term, which covered prawn and shrimp also. It was submitted that, in common parlance, fish included prawn/shrimp as these were seen collectively as seafoods by the common people. In the absence of any definition of the term 'fish' in the APC Act, it should be construed on the basis of how it was known in common parlance. Referring to the reliance placed by the lower appellate authorities on the definitions/descriptions used in the Marine Products Export Development Authority Act, Sales Tax Act, etc., Id. DRs submitted that it was not open to those authorities to borrow anything from other statutes for the purpose of getting at the meaning of any term or expression used in the APC Act. Ld. DRs also referred to the meanings of 'fish' as given in various dictionaries and submitted that the common people used it as a collective term to include all aquatic animals, which were harvested. It was also pointed out that the lower appellate authorities had not categorically held that the term 'fish' did not include prawns/shrimps. They were only giving the benefit of doubt to the assessees.
3. On behalf of the respondents, learned Senior Advocate Shri Joseph Vellapalli led the arguments. Ld. Counsel referred to the provisions of the APC Act and the Marine Products Export Development Authority Act (MPEDA Act, for short). The APC Act was enacted with the object of making better financial provision for the Indian Council Agricultural Research, the MPEDA Act was made to provide for the establishment of an authority for the development of the marine product industry under the control of the Union and for matters connected therewith. 'Marine products' as defined under the MPEDA Act included fish, prawn, shrimp and other fishery products. Ld. Senior Counsel wanted us to note that prawn, shrimp and fish were separately mentioned in the definition of 'marine products". It was pointed out that Section 14 of the said Act provided for levy of cess on all marine products, which were exported. On the other hand, under the APC Act, cess was leviable only on fish and not on any other marine product. In this manner, Id. Senior Counsel endeavoured to show that 'fish' did not include prawn or shrimp. He argued that, for the purpose of levying cess on prawn/shrimp under Section 3 of the APC Act, the burden was on the Revenue to show that prawn and shrimp were the same as fish inasmuch as, among the various marine products, only fish was specified in the schedule to the Act. In this context, reliance was placed on the Supreme Court's judgments in CCE v. Calcutta Steel Industries and Ors. - and Union of India v. Garware Nylons Ltd. - , wherein the burden of proof of taxing authority was examined and it was held that the burden was on that authority to show that the particular goods was taxable. Ld. Senior Counsel also pointed out that fish, prawn and shrimp were biologically different and were known as different items in common parlance. Different statutes also treated them as different commodities. In this connection, reference was made to the MPEDA Act and the Tamil Nadu General Sales Tax Act. Ld. Counsel also referred to certificates issued by (1) Prof. K. Mohan Kumar Nair, M.Sc., (Zoology), M.Sc., (Ind. Fish.), Ph.D. (Aqua Culture) of the College of Fisheries under the Kerala Agricultural University; (2) Dr. R. Santhanam. M.Sc., Ph.D., Dean of Fisheries College and Research Institute under the Tamil Nadu Veterinary & Animal Sciences University, and (3) Joint Director (QC) of the Marine Products Export Development Authority under the Ministry of Commerce and Industry, Govt. of India. All these experts held fish and prawns/shrimps to be different groups of animals. Ld. Senior Advocate, then, cited the following judgments holding prawns to be different from fish :
(i) State of Orissa v. C.I. Foods Ltd. [1982] 50 STC 152 (Orissa).
(ii) C.I. Foods Ltd. v. State of Orissa [1987] 68 STC 284 (Orissa).
(iii) TBR Exports (Madras) v. State of Andhra Pradesh [1999] 116 STC 257 (A.P.) He also referred to Sunbay Food Corporation v. State of Kerala [1986] 63 STC 270 (Kerala), wherein the High Court found that "cuttlefish" - an invertebrate of the phylum, "Mollusca" - was not a kind of fish.
Ld. Counsel also referred to the Supreme Court's judgment in Sterling Foods v. State of Karnataka and Anr. - , wherein the trade parlance test was applied to hold that there was no essential difference between raw shrimps, prawns and lobsters and these items processed/frozen. In his rejoinder, Id. DRs sought to distinguish the first case of CJ. Foods Ltd. (supra) [vide (1982) 50 STC 152] by submitting that, in that case, there was no evidence before the High Court to show that prawn was a class of fish and, in the circumstance, prawn and fish were held to be different items. He claimed that, in the instant case, there was evidence in the form of literature to show that 'fish' included prawns/shrimps also.
4. We have given careful consideration to the submissions. A cess in the form of Customs duty is leviable at the rate of 0.5% ad valorem under Section 3 of the APC Act on all articles included in the schedule to the Act, which are exported from India. 'Fish' is one of the scheduled articles vide Item No. 7 in the schedule to the Act. According to the Revenue, for the purpose of the above levy, 'fish' includes prawn and shrimp also. On the other hand, the assessees argue that prawn and shrimp are entirely different from fish biologically and in common parlance and hence not exigible to levy of cess under the APC Act. 'Fish' has not been defined under the APC Act. Had it been defined under the Act, perhaps, the present dispute would not have arisen. We are called upon to decide as to whether 'fish' specified for the levy of cess under the APC Act includes prawn and shrimp. For this purpose, we have to fish out the legislative intent. Ld. Counsel has urged us to look into the MPEDA Act, 1972 for this purpose. The MPEDA Act, 1972 was enacted for the establishment of an authority for the development of the marine products industry under the control of the Union and for matters connected therewith. Marine Products Export Development Authority was established under this Act. Section 14 of this Act is a taxing provision under which a cess is levied on all "marine products" exported from India. The Act defines "marine products" under Section 3(h) thereof and this definition reads thus :-
"(h) "marine products" includes all varieties of fishery products known commercially as shrimp, prawn, lobster, crab, fish, shell-fish, other aquatic animals or plants or parts thereof and any other products which the Authority may, by notification in the Gazette of India, declare to be marine products for the purposes of this Act;"
The respondents before us are exporters of frozen prawn/shrimp and we are told that they are paying cess on such exports under Section 14 of the MPEDA Act. 'Fish' is also one of the "marine products'" under the MPEDA Act. It is significant to note that shrimp, prawn and fish are treated as different marine products under the Act. The expression "all varieties of fishery products known commercially as shrimp, prawn,...fish..." used in the above definition is noteworthy.
It is clear from this expression that Parliament recognized that shrimp, prawn and fish were known as different items in commercial parlance. Like the MPEDA Act, the APC Act is also a national legislation. The Central legislature provided for levy of a cess on fish under the APC Act without defining 'fish'. It also provided for levy of a cess on "'marine products" under the MPEDA Act and defined the scope of "marine products" for this purpose. The fact that shrimp, prawn and fish were differently known in commercial parlance was acknowledged by the national legislature while defining "marine products" under Section 3 of the MPEDA Act. In our considered view, this aspect is relevant to the present enquiry. Again, we think that one will be justified in looking at the classification of fishery products under the Customs Tariff Act while examining the above question. The relevant provisions of the Customs Act, 1962 and the rules and regulations made thereunder have been made applicable to the levy and collection of cess under Section 3 of the APC Act vide Section 5A of the APC Act. Accordingly, Section 14 of the Customs Act would be applicable to the valuation of goods for levy of cess under the APC Act. But Section 14 of the Customs Act, bears a nexus to the Customs Tariff Act, 1975. Thus Section 5A of the APC Act has set up a bridge to the Customs Tariff Act. If that be so, it may not be inappropriate to take the aid of the Customs Tariff Act for the present purpose. Fishery products have been classified under Chapter 3 of the First Schedule to the Customs Tariff Act. Various types of fish have been classified under Headings 03.01 to 03.05. Shrimp and prawn have been classified under Heading 03.06. This would clearly show that, for the purpose of levy of duty under the Customs Act, shrimp and prawn have been segregated from fish. Now, we will have a closer look at the Schedule to the APC Act. Item No. 19 of this schedule is 'wheat' and Item No. 20 is 'wheat flour'. Wheat flour, though derived from wheat, is treated differently and specified separately for the purpose of levy of cess. According to the Apex Court's ruling in State of Rajasthan v. Rajasthan Agriculture Input Dealers and Ors. v. CCE, (1996) 5 SCC 479, wherein the Apex Court held that the meaning of a particular item in a schedule of taxable items could not ipso facto include all its forms and derivatives and that the interpretation of the specified items should be based on what was explicitly and categorically included therein, "wheat" cannot necessarily include 'wheat flour'. The legislature itself treated them differently and placed them under different entries of the Schedule to the APC Act. Had it been the intent of the legislature to levy cess on shrimp and prawn under the APC Act, these items also would have been specified in the schedule to the Act. Thus it is abundantly clear that it was not the intent of the legislature to levy cess on shrimp and prawn under the APC Act.
5. Ld. DRs have relied on dictionaries etc. to say that "fish" includes a wide range of aquatic animals including crustaceans like shrimps.
Webster's 1913 Dictionary : "A name loosely applied in popular usage to many animals of diverse characteristics, living in the water".
Webster's New World Dictionary (1988) : "Loosely, any animal living in water only, as a dolphin, crab or oyster; often used in combination (shellfish, jellyfish)".
The Oxford English Dictionary (1978) : "In popular language, any animal living exclusively in the water; primarily denoting vertebrate animals provided with fins and destitute of limbs; but extended to include various cetaceans, crustaceans, molluses, etc. In modern scientific language (to which popular usage now tends to approximate) restricted to a class of vertebrate animals provided with gills throughout life and coldblooded". The DRs have harped on the 'loose' meanings of fish given in Webster's dictionaries and on the extended meaning given in the Oxford dictionary. We must discard these, which were not acceptable to the law-makers. What seems to be appealing to us is the meaning of 'fish' in modern scientific language as noted in the Oxford dictionary (vide supra) because modern popular usage tends to approximate to this meaning.
6. The trade parlance distinction between fish and prawn/shrimp, recognized by the legislature, is also supported by scientific data provided by experts. We have before us a detailed account of the biological differences between fish and shrimp in the technical opinion of Prof. Mohan Kumar Nair of College of Fisheries, Kerala Agricultural University. It is said that fish are cold-blooded aquatic vertebrates of the super-class Pisces under the phylum, Chordata, whereas shrimp are aquatic crustaceans i.e. belonging to the large class Crustacea under the phylum, Arthropoda. Shrimps are invertebrates. The body of fish is covered by dermal scales, but that of a shrimp is covered by chitinous exoskeleton. In fish, blood is red-coloured and contains haemoglobin, while in shrimp it is a colourless, thin, watery fluid. The digestive system in fish is coiled and fully developed with different regions like stomach, small intestine, large intestine, etc. and associated glands like liver, pancreas etc. In shrimp, digestive system is straight with just one digestive gland viz. hepatopancrease. In fish, there is a fully developed, closed circulatory system with heart, arteries, veins and capillaries. In shrimp, it is an open system as heart is abbreviated and blood flows through channels. The nervous system in fish consists of brain and spinal cord, which are dorsal in position. In shrimp, nervous system is primitive and the nerve cord is ventral in position. Moulting (casting out of old exoskeleton and formation of new one) is a regular phenomenon in shrimp, whereas it is absent in fish. With regard to shrimps and prawns, Dr. Mohan Kumar Nair says, that, according to recent literature, the name 'prawn' belongs to the fresh water species and the name "shrimp' to the marine species of crustaceans. According to his opinion, fish and shrimp belong to two entirely different categories of aquatic organisms. Dr. R. Santhanam of the Fisheries College and Research Institute, Tamil Nadu Veterinary and Animal Sciences University has also opined that fish and shrimp are entirely different. He has also pointed out that fish invariably live in the surface and middle layers of water column and shrimps are mostly confined to the bottom layer of seawater. The opinion of Dr. Mohan Kumar Nair and Dr. Santhanam, experts from fisheries colleges, cannot be ignored, particularly when the authority of these experts has not been questioned by the Revenue.
7. Ld. Senior Counsel has relied on two judgments of the Orissa High Court and two of the Andhra Pradesh High Court. In all these cases, fish and prawn were held to be different commodities on the basis of commercial parlance. In the case of C.I. Foods Ltd. (supra), fish and prawn were held to be two different commodities for want of evidence to shown that they belonged to the same class. The view taken in C.I. Foods case was followed by the Andhra Pradesh High Court in the case of TBR Exports (supra). In the instant case, the Department has not been able to establish that 'fish' included prawn/shrimp also. Hence the above decisions will have to be followed. The Andhra Pradesh High Court's judgment dated 26-2-99 [1999 (111) E.L.T. 352 (A.P.)] was rendered in a batch of writ petitions filed by M/s. Jaya Satya Marine Exports Pvt. Ltd. In the said case, the High Court held that cess was not leviable on prawns or shrimps under the APC Act, following its earlier decision in TBR Exports case (supra) and the Orissa High Court's decision in C.I. Foods case. Ld. DRs have pointed out that the Andhra Pradesh High Court's judgment dated 26-2-1999 was quashed by the Hon'ble Supreme Court in Commissioner of Customs, Visakhapatnam v. Jaya Satya Marine Exports Pvt. Ltd. - 2001 (131) E.L.T. 3 (S.C.). We find that the Apex Court, while allowing the Civil Appeals filed by the Department against the High Court's judgment, expressed no opinion on the merits of the case. The Court was allowing the Civil Appeals only to enable the assessees [writ petitioners] to take recourse to appellate remedy against the orders passed by the original authorities. In any case, the judgments of the High Courts in the cases of C.I. Foods Ltd. and TBR Exports have attained finality. In all these cases, fish and prawn/shrimp were held to be different commodities.
8. For the reasons stated above, we hold that the exports of shrimp/prawn made by the respondents were not exigible to levy of cess under Section 3 of the Agricultural Produce Cess Act, 1940. The lower appellate authorities were giving the benefit of doubt to the assessees as they could not reach a finding with certainty that prawn/shrimp was different from fish. Beyond doubt, we hold that prawn and shrimp are different from 'fish' for the purpose of the APC Act. And we sustain the impugned orders after removing the 'doubt'.
9. In the result, all the appeals stand dismissed.
(Pronounced in open Court on 8-7-2005).