Bombay High Court
Union Of India (Uoi) And Ors. vs Raman Kantilal Bhandari on 26 July, 1990
Equivalent citations: 1990(29)ECC152
Author: S.P. Bharucha
Bench: S.P. Bharucha
JUDGMENT C. Mookerjee, C.J.
1. This appeal is filed by the Union of India and two others and is directed against the judgment and order of the learned Single Judge making the Rule obtained by the Respondent Raman Kantilal Bhandari absolute and directing the present Appellants who were Respondents in the Writ Petition to refund an amount of Rs. 15,688.94 p. paid by the petitioner as additional duty on the import of a consignment of Pentaerythritol made in August 1984. In deciding in favour of the Writ Petitioner, the learned Single Judge has held that the said imported goods were a sort of alcohol within the meaning of Entry 68 Schedule, I of the Central Excise and Salt Act and, therefore, exempt from payment of the additional duty by the Petitioner., The, learned Single Judge in this connection had, inter alia, relied upon the Circular Letter No. 4/84 dated 1st October, 1984 issued by the Central Board of Excise and Customs, New Delhi, on the scope of the term; "alcohol of all sorts" appearing in Tariff Item 68. In their said Circular dated 1st October, 1984 the Board had, inter alia, stated:
The matter has been further examined in Board's office. According to the Budget summary leading to the insertion of T.I. 68 in 1975, though Central Government is not competent to levy duties only on alcoholic liquor for common consumption it was decided that since the imposition of such levy even though nominal, will have the effect of taking away the savings provision under Article 277 of the Constitution, rendering all levies illegal on such alcohols, that may be now in force under various State Government enactments duty may not be levied on the alcohol other than for human consumption also. In other words, there was no legislative intention and it was a conscious decision that in addition to alcohol for human consumption, other sorts of alcohols would also not be accessible under T.I.68. The Chief Chemist who was consulted in this regard suggested that in view of the possible interpretation on both sides amendment to the Tariff Item to define alcohol for exclusion purposes under T.I.68 be attempted as provided under T.I.14-E, The said Circular Letter also refers to the opinion of the Law Ministry which had been consulted by the Board. The view of the Law Ministry was that alcohol in any form was excluded from Tariff Item 68. In the penultimate paragraph of the Circular Letter the Board had also referred to the decision of the Special Bench of the Customs, Excise and Gold (Control) Appellate Tribunal dated 19th April, 1983 which had also taken the same view that the term "alcohol" in Tariff Item 68 was not confined only to ethly alcohol but referred to alcohol of all sorts including iso amyl alcohol.
2. By an amendment which came into force with effect from 27th December, 1985, Section 151A was inserted in the Customs Act, 1962. The said provision empowered the Board, if it considered it necessary or expedient so to do for the purpose of bringing uniformity in the classification of goods or with regard to the levy of duty thereon, to issue orders, instructions and directions to officers of customs as it might deem fit and such officers of customs and all other persons employed in the execution of the Customs Act were obliged to observe and follow such orders, instructions and directions of the Board. The Board Circular referred to above was issued prior to insertion of Section 151A in the Statute Book. For deciding this Appeal, it is not necessary for us to consider whether or not the said provision gives binding effect to even orders, instructions and directions of the Board issued prior to the change in law. For the reasons presently indicated, the view taken by the learned Single Judge about the meaning of the expression "alcohol of all sorts" appearing in Tariff Item 68 is correct and, therefore, the learned Single Judge has rightly granted refund of the additional duty paid on the consignment in question.
3. At this stage, we may indicate that the Assistant Collector of Customs had thrown out the Writ Petitioner's application for refund in limine on the ground of limitation. The learned Single Judge was plainly right in holding that in case the recovery of the additional duty was without the authority of law, no question of limitation could be pleaded to deprive the Petitioner of his right to obtain refund of the additional duty recovered without this authority. Before the learned Single Judge, the department itself did not pray for a remand and had preferred to contend that on merits the Writ Petitioner was not entitled to refund, inasmuch as the commodity imported by him was not alcohol of any sort. Mr. Bhabha, the learned Counsel for the Appellants, has submitted that the consignment of Pentaerythritol was not alcohol of any sort. The Board's Circular Letter dated 1st October, 1984 had no statutory force. The interpretation put by the Board upon Tariff Item 68 was not binding upon the Appellants. According to Mr. Bhabha, the decision of the Customs, Excise and Gold (Control) Appellate Tribunal dated 19th April, 1983 was also erroneous. Mr. Bhabha further submitted the according to trade or common parlance the article imported by the Writ Petitioner was not alcohol and the expression "alcohol" as given in Tariff Item 68 meant only Ethly Alcohol and not any other sort of alcohol. In this connection the learned Counsel for the Appellants placed reliance upon opinions and other materials produced on behalf of the Appellants before the learned Single Judge. According to the learned Counsel for the Appellants, no contrary evidence was adduced by the Petitioner who had relied solely upon the Board's Circular Letter dated 1st October, 1984 and the order of the Tribunal mentioned above. Therefore, the submission is that evidence given about the popular meaning of the expression "alcohol" in Tariff Item 68 ought to be accepted. According to Mr. Bhabha, neither the Board nor the Tribunal in expressing opinions about the scope of Tariff Item 68 had taken any notice of the trade or common parlance. In order to establish the meaning of the expression "alcohol" according to the common parlance, on behalf of the Appellants, strong reliance was placed on the affidavit of M.K. Ranganathan, Deputy Chief Chemist, Customs, Bombay, dated 16th December, 1986. The said deponent opined that the goods in question, viz. Pentaerythritol and other similar goods such as propylene glycol, trimethelen propyn, octanol, butanol, etc. fall within a common technical category, viz., chemical products. Further, ethly alcohol commonly referred to as alcohol and its products are materially different from such chemical products. According to the deponent Ranganathan, the term "alcohol" derived from "al" and "khol", the two Arabic words, when unqualified, has become specific for ethly alcohol spirits of wine rectified to the highest degree. Ethyl alcohol is well known as a constituent of alcoholic beverages. Reference has been made to Encyclopedia, Chemical Technology by Kirk Othmer, 3rd Edition. In paragraph 8 of his affidavit, Ranganathan, in support of the view that in the trade parlance "alcohol" is accepted to refer to ethyl alcohol, has relied upon certain authorities, viz. (1) Chemical Synonyms and Trade Names by William Gardener, (2) Merck Index, (3) Van Nastrend's Scientific Encyclopedia, 5th Edition (4) Condensed Chemical Dictionary, 10th Edition, (5) Chemical Trade Names and Commercial Synonyms by William Haynes, etc. The deponent proceeds to say that the said term "alcohol" unqualified and in singular refers to ethanol or ethyl alcohol. The qualification "all sorts" had to cover ammoniated spirit, rectified spirit, denatured spirit, absolute alcohol and alcohol of various dilutions and preparations. Before the learned Single Judge the present Appellants had produced price list effective from 1st March, 1986 of S.H. Kelkar & Co. Ltd., Lal Bahadur Shastri Marg, Bombay-400 080. In the said price list some of the items were described thus: "Benzyl Alcohol Extra"."Phenyl Athyl Alcohol Pure", "Phenyl Athyl Alcohol Extra". etc. But according to the terms and conditions of the said price list, "all the products mentioned in the list are free from alcohol". Mr. Bhabha tried to submit that the same indicated that mere use of the words "alcohol pure" or "alcohol extra" did not denote that/the particular article was an alcohol of a sort and that according to trade or common parlance, these goods were not termed as alcohol. On behalf of the Appellants, reliance was also placed upon two identical certificates granted by Dr. Gopal Kumar G. Nair who described himself as the Chairman of the Bulk Drug Committee of the Indian Drugs Manufactures' Association and also as the Director of the Bombay Drug House Pvt. Ltd. According to the said Dr. Gopal Kumar G. Nair, in the alcohol-based industry and trades only Ethyl Alcohol is known and referred to as alcohol. Other items like Glycol, Ethyline Glycol, Propylene Glycol, Isopropylene Alcohol, Propyl Alcohol, Methyl Alcohol, Isobutyl Alcohol, Butanol, etc., even though chemically referred to as alcohol because of the CH group in the chemical structure, in commercial parlance only Ethyl Alcohol is known as alcohol. Substantially the same view is expressed in the affidavit affirmed by S.P.S. Pundir, Deputy Collector of Customs, in reply dated 4th December, 1986. It is not necessary to set out the contents of the said affidavit..
4. In support of his submission about the true rules of interpretation of Statute and expressions given therein, Mr. Bhabha has relied upon the decision of the Supreme Court in the case of United Offset Process-Pvt. Ltd. v. Assistant Collector of Customs . In paragraph 4 of their judgment in the said case : (pages 475-476 of 18 ECC), the Supreme Court, inter alia, observed:
If there is no meaning attributed to the expressions used in the particular enacted statute then the items in the customs entries should be judged and analysed on the basis of how these expressions are used in the trade or industry or in the market or, in other words, how these are dealt with by the people who deal in them, provided that there is a market for these types of goods. This principle is well-known as classification on the basis of trade parlance. This is an accepted from of construction."
The Court emphasized that in incorporating items in the statutes like Excise, Customs, or Sales-tax whose primary object is to raise revenue and for which to classify diverse products, articles and substance, resort should be had not to the scientific and technical meaning of substance but to their popular meaning viz., the meaning attached to these expressions by those dealing in them. These principles have not been challenged and, therefore, it is unnecessary to refer to other judicial decisions on the question which were also relied upon.
5. We may further point out that in the present case the ratio of the decision of the Supreme Court in the case of Orient Paper Mills Ltd. v. Union of India (1978) 2 Excise Law Times (J 345) is totally inapplicable because we are not required to decide whether the administrative directions, if any, are contrary or contradictory to statutory provisions. Undoubtedly, in the event administrative directions or circulars run counter to statutory provisions, the Court has no option but to apply the law and disregard the administrative directions which are at variance with the statutory provisions. In the case of Orient Paper Mills Ltd. v. Union of India (supra), the Collector had rejected the appeals of the appellant, inter alia, with the observation that the Central Board of Revenue had already made it clear that "all types of poster paper of whatever colour including white should not be treated as 'printing and writing paper' but as 'packing and wrapping paper'. As such, the poster paper has not been wrongly assessed." In paragraph 7 of their judgment the Supreme Court had, inter alia, observed that whether a particular kind of paper was a printing and writing paper or a packing and wrapping paper was essentially a question of fact. That had to be decided by the authorities under the Act It was held that the power exercised by the Collector was a quasi-judicial power. The Supreme Court observe that the said power could not be controlled by the directions issued by the Board. No authority however high placed could control the decision of a judicial or a quasi-judicial authority. It was held that the directions were invalid and the same had vitiated the proceedings before the Collector as well as the Government. As already stated, the situation in the present case i entirely different. We are not merely required to ascertain the meaning of the word "alcohol" according to common parlance but also to find out the true interpretation of the expression "alcohol of all sorts"; was the exclusion from Tariff Item 68 confined to only alcohol for human consumption or the said expression covered all varieties of alcohol? It was not disputed by the Appellants that the article imported by the Writ Petitioner (Respondent in the Appeal) was derived or made out of alcohol.
6. At this stage, we may again refer to the contents of the Circular Letter in question issued by the Board. In the first place, the Board was a statutory authority constituted by the Central Government itself. The Board was seized of the question about the scope of the phrase "alcohol of all sorts" appearing in T.I.68 and the same had been engaging the attention of the Court according to the opening words of the said Circular Letter. At that time, a doubt had arisen as to whether alcohol of all sorts included all varieties of alcohol whether meant for human consumption or for industrial purpose or for any other purpose or only meant ethyl alcohol of various purities and grades.
7. The expression "alcohol of all sorts" appearing in Tariff Item 68 admitted of more than one possible meaning. We are unable to attach much importance to the fact that the expression used was "alcohol" and not "alcohol of all sorts" because the same did not at all indicate the answer to the question whether the said Tariff Item referred only to ethyl alcohol or to all products derived or prepared out of alcohol. We are not faced with the situation where the expression "alcohol of all sorts" admitted of one and only one meaning, viz. alcohol that is prepared out of ethyl alcohol. In expressing its view that the expression "alcohol of all sorts" should be imparted the widest possible meaning to include not only alcohol for human consumption but also all other sorts of alcohols, the Board had legitimately referred to the legal position that the Central Government was not constitutionally competent to levy duties on alcoholic liquor for human consumption - vide Entry 51 List II Schedule VII of the Constitution of India. The Board had interpreted Tariff Item 68 in such a way as not to have the effect of taking away the saving provision under Article 277 of the Constitution. In the event the interpretation of the expression "alcohol of all sorts" in the said Tariff Item 68 is made in the way suggested by Mr. Bhabha appearing on behalf of the Appellants, the same would have the effect of rendering pre-Constitution levies by the different States upon alcohol products illegal and thereby depriving them of the saving provision under Article 277 of the Constitution. In our view, the said considerations were certainly very legitimate and proper. In fact, the opinion recorded by the Board in the Said Circular Letter was arrived at only after consulting the Law Ministry and an extract from the same was set out in the Circular Letter. Therefore, when two views were possible about the Tariff Item 68 and a particular view has been taken by the Board in the said Circular Letter, there is no reason to strike down the same and thereby create the constitutional difficulties pointed out by the Board itself.
8. There is another aspect of the matter. The Central Government itself, in exercise of the statutory powers, has constituted the Board. Ordinarily, only because another view was possible about the scope of a particular tariff item, the Central Government ought not to be permitted to depart from a view expressed by its own Board upon interpretation of the said tariff item when the Board's view does not in any way run contrary to the statutory provisions themselves. Our attention was not drawn to any reported decision in which the Central Government itself has been permitted to resile from the views of its own authority about the scope of a tariff item especially where there were two possible views and the said authority had opted for one particular view after giving cogent reasons. In fact, it will be not even in consonance with public policy to allow the Union Government to urge in a particular case before the Court of law a point which is contrary to the statutory interpretation put by its own authority. The same is likely to result in bringing about uncertainty and inconsistency in the matter of enforcement of laws and recovery of taxes and duties.
In the result, this Appeal fails. We accordingly dismiss the Appeal. There will be no order as to costs.