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Judgment
U.L. Bhat, C.J.—Appellants herein filed separate writ petitions challenging various orders and proceedings of the authorities under the Central Excise and Salt Act, 1944, the effect of which is to require them to pay excise duly on their products under 4403.90 of the Tariff Schedule instead of under 4410.90 of the Tariff Schedule, as contended by them. Learned Single Judge disposed of the writ petitions by separate judgments. Having heard the appeals together we propose to dispose them by this common judgment. We have heard Sri J.P. Bhattacharjee Sri P. Chidambaram, Sri M.L. Lahoty, Sri P.P. Tripathi and Sri R. Gogoi, learned Counsel appearing for various, Appellants and Sri K.N. Choudhury, learned Central Government Standing Counsel.
Appellants carry on business, inter alia, of manufacture of plywood, laminated wood; block board etc. According to them block board manufactured by them is not laminated wood. The Appellants'' factories are situated in the State of Assam. The controversy these cases centres round the Tariff Item applicable in the light of the amendment introduced by the Finance Act, 1992. According to the State, block board manufactured by the Appellants is liable to duty under Tariff Item 4408.90 while according to the Appellants the liability falls under 4410.90 both being the residury sub-items under the items. Learned Single Judge upheld the contention of the State.
Appellants have shown us various types of block boards being manufactued by them.
Learned Counsel appearing for the Appellants have placed reliance on legislative history of the provisions and explained how the provisions at various stage were dealt with by the Tribunals or Courts. We deem it necessary to refer to the same. Chapter 44 of the Third Schedule to the Central Excise Tariff Act, 1985 applies to wood and articles of wood Chapter 44 did not specifically refer to any article by name "block board". The items as originally stood were as follows:
44.08 Plywood Veneered panels and similar laminated wood.
4408.10 Marine plywood and aircraft plywood. 30%
4408.20 Plywood for tea-chests when cut to size in panels or shooks and packed in sets. 30%
4408.30 Decorative plywood. -
4408.10 Cutting and trimmings of plywood of width not exceeding 5 centimetres. Nil
4408.90 Others 30%
44.10 Articles of wood not elsewhere specified. 20%
4410.10 Flush Doors. 30%
4410.90 Others. 12%
Controversy arose between the manufacturers and the Excise authorities regarding the item applicable to block board, whether it was 4408.90 or 4410.90. We are told that some writ petitions are pending, in this Court. Some of the manufacturers including some of the Appellants before herein filed appeals before the Collector of Appeals, Calcutta and ultimately before the CEGAT. The CEGAT by judgment dated 18.10.1989 in Wood Craft Products Ltd. v. Collector of Central Excise 1992 (50) ELT 668 (Tribunal), upheld the contention of the manufactures that Item 4410.90 was applicable on the ground that block board is not laminated wood as understood in the commercial sense and according to the specifications of the Indian Standard Institute and therefore, does not fall under the heading "similar laminated wood" in Item 44.08 and would fall under residuary. Item 1410.90 in the absence of any contra evidence adduced by the Department to show that block board is known in the trade as laminated wood similar to plywood and panels. We are told that an appeal against the judgment is pending in the Supreme Court.
The Finance Act 1990 amended Chapter 44 of the Tariff Act in certain respects. Notes 5 and 6 were re-numbered as Notes 6 and 7 respectively and the following Note was inserted as Note 5:
For the purpose of Heading No. 44.08 the expression ''similar laminated wood'' includes block board, lamin board and batten board, in which the core is thick and composed of blocks, laths or battens of wood glued together and surfaced with the outer plies and also panels in which the wooden core is replaced by other materials such as layer or layers of particles board, fibre board, wood waste glued together, asbestos of cork.
Tariff of 4410.90 was changed to 15%. The statement of object and reasons of the Finance Bill, 1990 indicated that the change was made to introduce a new Chapter Note to provide a definition for "similar laminated wood". The Excise authority once again took the view that duty leviable on block beard was under 4408.90 and not under 4410.90 and the manufacturers persisted in their contention that 4410.90 was applicable. We are told that few writs petitions are pending in this Court, which has granted partial interim relief.
The Tariff Act was further amended by the Finance Act, 1992, Note 5 of Chapter 44 was amended substituting the words "glued or otherwise joined together" for the words "glued together." The amended Note 5 reads as follows:
For the purpose of Heading No. 44.08 the expression ''similar laminated wood'' includes block board, lamin board and batten board, in which the core is thick and composed of blocks, laths or battens of wood glued or otherwise Joined together and surfaced with the outer plies and also panels in which the wooden core is replaced by some other materials such as layer or layers of particles board, fibre board, wood waste glued together, asbestos or cork.
The Excise authorities took steps to classify block board manufactured by these manufacturers under heading 4408.90. Hence the Appellants were constrained to file writ petitions which were disposed of by the learned Single Judge by judgments under appeal under appeal in this batch of appeal.
The contentions of the learned Counsel for the Appellants can be summarised as follows:
Nomenclature used in Tariff Items must be understood in their commercial sense, that is, sense in which the particular trade understands the same Block board is quite different from plywood or veneered panel or "similar laminated wood". Block Board, according to Glossary of Terms published by the Indian Standard Institution and British Standard Institution, can be of three types depending on the nature of the core which is made up of strips of wood not exceeding 25 mm. in width, (a) laid separately to form a slab, or (b) glued together to form a slab or (c) otherwise joined to form a slab. There is no dispute that the rest of the definition given in the glossary of Terms would apply to block board of all kinds. Prior to the Finance Act, 1990 which introduced Note 5; block board not being "similar laminated, wood" did not fail under any of the sub-items 4408. By the Finance Act, 1990, the Legislature sought to include in the definition of "similar laminated wood", only one type of block board, namely block board "in which the core is thick and composed of wood" glued together" and not block board in which the thick core is composed of "blocks laid separately" or block board in which the thick core is "otherwise joined together". By the amendment introduced to Note 5 by Finance Act, 1992 one more type of block board was included namely block board in which the thick core is "otherwise joined together". The legislature did not include the third type of block board in which the thick core is composed of block board, namely, blocks "laid separately". The Legislature must have taken note of the judgments or the Tribunal as well as the Glossary of Terms issued by the Indian Standard Institution. Block board, which is not similar to laminated wood, can be brought under heading 4408 only to the extent the words used therein strictly and specifically attract it. The words used in Note 5, as it stands at present, attracts only two kinds of block board and the third kind of block board in which the thick-core is made up of blocks of wood, "laid separately form a slab cannot be brought under this heading and must fall under the residuary heading and sub-heading. "Togetherness" of the blocks in the core must he brought about by use of glue (in which case it is regarded us "glued together," as contemplated by Note 5 introduced in 1990) or by other chemical or mechanical means (in which case it can be said to be "otherwise joined together") Where the thick core is formed into a slab by laying blocks board separately, they cannot be said to be joined together at all or otherwise joined together. Formation of the slab by laying blocks separately is a manual operation while formation of slab by using glue is by using capital intensive technology and formation of slab by Joining blocks by mechanical means is also a complicated operation. The legislative intention is to give tariff relief to products manufactured using labour intensive operation. Learned Single Judge was in error in thinking that the trade meaning or the ISI specification cannot be considered in the light of the definition of block board given in Note 5 for the reason that there is no such definition in Note 5.
Respondents, besides rebutting the above contentions, contended as follows:
If a plain reading of the entries makes it apparent that the words have not been used in commercial sense or trade parlance, the plain meaning is to be accepted. The trade meaning must give weight in cases where the statutory context requires such a departure. Whether thick core is made up of blocks of wood "laid separately" or "glued together" or "otherwise joined together" to form a slab, has to be decided on appreciation of the question whether when the manufacture of the product, namely, block board is complete, it can be said that the blocks of wood are joined together. Blocks of wood are placed in between outer veneers, the inner surface of which is applied with glue and the pressure is applied thereon. Necessarily blocks of wood which are laid separately are thereby joined together, even though in between every two blocks glue is not artificially introduced and every set of two blocks is not connected by clip or other means. The examination of the core must be as it exists when the product is manufactured and not as it existed in the process of manufacture. ISI specifications may deserve respect in under standing the manner in which the trade looks at products or their nomenclature, but cannot have any relevance in understanding the process, if any, referred to in the Tariff Act. Even in cases where glue or clip of other means is not used in the formation of slab out of blocks of wood, the process of manufacture adopted would result in joining together of the blocks of wood even if they are laid separately. The broad description used in the heading 4408 would take in block board manufactured by the Appellants.
It is necessary to appreciate the principles to be followed in interpreting a taxing provision or an entry in Tariff Act. In construing a fiscal statute and in determining the liability of a citizen to tax, court 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 a taxing provision is ambiguous and is reasonably capable of more than one interpretation, that which is beneficial to the citizen must be adopted. It is impermissible for the court to read into a taxing provision any words which are not there or exclude words which are there. The words found in the provision must be given their natural meaning. See A.V. Fernandez Vs. The State of Kerala, and Collector of Estate Duty v. R. Kanakasabai and Ors. AIR 1971 SC 1214.
Whether the Statute provides a definition of any word in a fiscal entry, the definition itself must be examined. If no definition is provided, for ascertaining the correct meaning of a fiscal entry, reference to a dictionary is not always safe. The correct guide is the context and the trade meaning which is prevalent in that particular trade where that particular goods is known, if there is no evidence either way. Where the word used has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sence that the word must be held to have been used, unless contrary intention is clearly expressed by the legislature. If in respect of a particular item, an artificial definition is given in the sense that a special meaning is attached to a particular word in the Statute, then the ordinary sense or dictionary meaning could not be applicable but the meaning of that type of goods in that type of market should be searched. See Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co. AIR 1988 SC 2223 . If the dictionary gives all the different shades of meaning attributable to the word referred, that is hardly helpful to the court. See Commissioner of Sales Tax, U.P. Vs. S.R. Brothers, Kanpur,
Whether in a given case the scientific or technical meaning or the ordinary popular meaning must be preferred depends on the particular entry and the context. In Akbar Badrudin Jiwani of Bombay Vs. Collector of Customs, Bombay, the Supreme Court observed:
...the general principle of interpretation of Tariff Entries occurring in a taxing statute is of a commercial nomenclature and undemanding between persons in the trade but it is also a settled legal position that the said doctrine of commercial nomenclature or trade understanding should be departed from in a case where the statutory content in which the Tariff Entry appears, requires such a departure. In other words, in cases where the application of commercial meaning or trade nomenclature runs counter to the statutory context in which the said word was used, then the said principal of interpretation should not be applied. Trade meaning or commercial nomenclature would be applicable if a particular product description occurs by itself in a Tariff Entry and there is no conflict between the Tariff Entry and any other Entry requiring to reconcile and harmonise that Tariff Entry with any other Entry.
(Emphasis supplied)
See also Commissioner of Commissioner of Sales Tax, Madhya Pradesh Vs. Jaswant Singh Charan Singh, , Minerals and Metals Trading Corporation of India, Ltd. Vs. Union of India (UOI) and Others, , State of Uttar Pradesh and Another Vs. Kores (India) Ltd., Dunlop India Ltd. v. Union of India and Ors. AIR 1977 SC 597.
In Indian Aluminium Cables Ltd. Vs. Union of India and Others, the Supreme Court held:
...the process of manufacture of a product and the end use to which it is put, cannot necessarily be determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the brord description of the article fits in with the expression used in the Tariff.
(Emphasis supplied)
There is a controversy at the Bar regarding the extent to and the manner in which nomenclature and description given in the Glossary of Terms prepared by the Indian Standards Institution can be used in interpreting words used in Tariff Entries. Views of the Indian Standards Institution have been relied on by courts in several decisions. In Union of India (UOI) Vs. Delhi Cloth and General Mills, it has been stated:
Specifications issued by Indian Standards Institution are for ensuring quality control and have nothing to do with the class to which the goods belong in a tariff schedule.
In Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co. AIR 1988 SC 2223 the Supreme Court acted upon the opinion of the I.S.I. in its specifications, in the absence of any other reliable evidence and in the light of some of the materials placed before the court.
For the purpose of these appeals, we will assume that as the Entry or Heading stood before the Finance Act, 1990, Block board was not included in item 48.08, i.e. "Plywood veneered panels and similar laminated wood" as held by the CEGAT. Note 5 introduced by the Finance Act, 1990 included Block Board in the expression "similar laminated wood", subject to a qualification that the core of the Block Board is thick and composed of blocks of wood glued together and surfaced with the outer plies etc. There is a controversy whether the words "composed of blocks of wood glued together" will take in one type of Block Board or all types of Block board and writ petitions involving this controversy and pending in this Court. This Court has not expressed any opinion in regard to the controversy. During the pendency of those writ petitions Finance Act, 1992 was enacted amending Note 5 by substituting the words "glued or otherwise joined together" for the words "glued together". The controversy in these appeals relates to the meaning of these words.
Samples of Block board manufactured by Appellants have been shown to us. Cross-sections of the core are visible in these samples. Core is prepared by adopting different methods, in one method, glue is applied (it is said by a machine) between adjoining blocks and thereby the wooden blocks adhere to each other to form a slab and then slab is placed in between two outer veneers, the inner surfaces of which are applied with glue and pressure is applied. In another method, the wooden blocks are held together by using a clip, or other device thereby forming a slab and the slab is placed as indicate above. In yet another method, wooden blocks are laid separately on a veneer with glue its inner surface and the wooden blocks are covered with another veneer with glue on its inner surface and pressure is applied. In this method, no separate slab is formed, unlike in the two other methods. The controversy in these appeals is whether core formed by this method falls in Entry 44.08. The Block board formed by this method differs from Block board used following the other methods in the following ways:
(1) No separate slab of wooden Block is formed in the third method while a slab is formed in the two other methods even before the product is finished.
(2) In the first method glue is applied in between adjacent wooden blocks in the slab.
In the second method, adjacent wooden blocks are held together using a metal clip or other mechanical device.
In the third method adjacent wooden blocks are not held together by putting glue in between them or using metal device.
The common factor is that slab consisting of wooden blocks in the first two methods and the wooden blocks in the third method are placed in between veneers with glue on their inner surface and pressure is applied. The only difference is that in the first two methods, wooden blocks are held together by two means, i.e. application of glue or adoption of metal device and the application of glue or on the inner surfaces of the outer veneers, while in the third method wooden blocks are held together only by application of glue on the inner surface of the outer veneers. The Block boards manufactured by these three methods are similar in appearance and used for similar purposes; although the black boards manufactured using the first two methods may be stronger than the Block boards manufactured using the third method.
It is argued that in the first two methods, the wooden blocks are "joined together" and in the third method, they are not "joined" together. If this contention is accepted it must follow that Block Board manufactured using the third method does not have a core in which wooden blocks are "otherwise joined together" and will not attract item 44.08 and will fall under item 44.10 No doubt Note 5 gives an inclusive definition of "lamin board"; but it also describes Block board which is included by the inclusive definition. The court is required to construe the words used in the definition and not the nomenclature of the article. In particular the court is required to construe the word''s "joined together". These are words of general usage and not words peculiar to a particular trade or a particular type of article. It will not be correct to assume that the words "joined together" will have different meanings among different trades. It is therefore not inappropriate to look to the dictionary meaning of these words. The learned Single Judge relied on the following meaning of the words "join" given in Corpus Juris Secundrum:
JOIN,--to connect, to unite, to combine or unitre in time, effort, or action; to come together to come together to as to be united and connected; to act together; to enter into association or a liance; to form a union.
The caution uttered in Commissioner of Sales Tax, U.P. Vs. S.R. Brothers, Kanpur, is that dictionary may give different shades of meanings attributable to the word referred to. But the dictionary does not give different shades of meaning to the word "join". The meanings given "to connect, to unite, to combine" convey the same meaning. There is nothing in the text or the context which renders these meanings inapplicable or inappropriate in the present case.
The Wooden blocks used in the the methods explained in para 13 above are "connected" or "united." or "combined" to form the core of the end product. In the third method also, the wooden blocks are joined or connected or united or combined together to form the core. The core is to be examined not during the process of manufacture but as part of the final product. The core in the final product manufactured by the third method is composed of wooden blocks "joined together" or "otherwise joined together." This is so, even though glue is not put in between adjacent wooden blocks or other devices are not used. The plain meaning of the words used in Note 5 conveys a clear intent. The legislative intention is apparent, namely, to attract Block board manufactured by the third method referred to in paragraph 13 above, that is, the articles in controversy in those appeals. Going by the plain meaning of the the words used in Note 5, Block board in which core is composed of wooden Blocks merely placed adjacent to each other without glue in between or which are held together by metal or other devices would also fall under Item 44.08.
Contention of the Appellants is that Block boarding different from laminated wood cannot fall within the category of "similar laminated wood" in item 44.08. To meet this situatton or to clarify the matter, Note 5 was introduced and later Note 5 was amended. The popular sense or trade meaning of "laminated wood" or "Block board" is not relevant in this context, because of the inclusive definition introduced in Note 5. Learned Counsel for the Appellants have placed reliance on T.S.I. specifications. I.S.I. Glossary of Terms states, thus:
Block Board--A board having a core made up of strips of wood, each not exceeding 25 mm in width laid separately or glued or otherwise, joined to form a slab which is glued between two or more outer veneers with the direction of the grain of the core blocks running at right angles to that of the adjacent outer veneers.
The following differences between I.S.I. specifications and the inclusive definition in Note 5 are noticeable.
(a) Note 5 refers to the core being thick which is absent in I.S.I. Specifications.
(b) Note 5 does not prescribe limit of width of wooden blocks while I.S.I. specifications prescribe a limit.
(c) Note 5 does not mention "laid separately" while I.S.I. specifications mention those words.
(d) Note 1 does not prescribe angulation of direction of grain of core blocks while I.S.I. specifically prescribes angulation with reference to outer veeners.
Thus it can be seen that the legislature has deliberately departed from the specifications given by I.S.I. Hence I.S.I. specifications cannot be of much assistance in the instant case.
I.S.I. specifications refer to strips of wood making up the core being-
(a) laid separately, or
(b) glued, or
(c) otherwise joined together.
Note 5 refers to core composed of blocks of wood-
(a) glued, or
(b) otherwise joined together,
It is contended that Category (a) of I.S.I. specifications, namely, "laid separately" is absent in Note 5 and this shows the legislative intention to exclude from the inclusive definition in Note 5 and item 44.08 the particular type of Block board in which the core is made up of strips of wood laid separately and to include only Block board in which core is composed of Blocks of glued or otherwise joined together. We have seen that going by the plain meaning of the words "joined together" they must take in Blocks of wood placed together without introducing glue in between adjacent Blocks of wood or without holding adjacent Block of wood by clip or other device. Even if originally the Blocks of wood were laid separately and not glued together or held together by any device, when they form the core in the end product they are joined together. It is not the case of Appellant that in the end product, the Blocks of wood remain loose. If they remain loose, the end product will not be Block board. If the end product is Block board, the wooden blocks forming the core must be joined together and cannot remain "separately". What is comprehended by the words "laid separately in I.S.I. Specifications is comprehended by the words "joined together" occurring in Note 5. We are, therefore, unable to accept the argument based on I.S.I specifications. Importance and relevance of I.S.I. specifications are in the domain of quality control and in understanding the nomenclature of products. There is no controversy in the instant case regarding quality control or nomenclature.
We, therefore, hold that Block manufactured by Appellants falls within the ambit of entry 4408.90 and not of entry 4410.90 and that such products are liable to be classified and assessed accordingly.
Since the controversy regarding the entry applicable to the goods manufactured by Appellants has been projected in these appeals and decided by this judgment other contentions raised in writ petitions and appeals regarding regularity of particular notices, orders or proceedings issued by the department loose all significance.
We find no ground to interfere and accordingly dismiss the appeals with costs.