Full Judgment Text
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PETITIONER:
MAHINDRA ENGINEERING AND CHEMICAL PRODUCTS LTD.
Vs.
RESPONDENT:
UNION OF INDIA AND ORS.
DATE OF JUDGMENT21/01/1992
BENCH:
SAHAI, R.M. (J)
BENCH:
SAHAI, R.M. (J)
PANDIAN, S.R. (J)
CITATION:
1992 SCR (1) 254 1992 SCC (1) 727
JT 1992 (1) 276 1992 SCALE (1)95
ACT:
Central Excise-Tariff-Item NO. 22 F(4)-Construction-
Legislative intention-"Following namely", "that is to say",
"other manufacture", "manufacture therefrom"-Meaning.
Central Excise-Tariff-Item No.22F (4), Item No.68-Glass
fabric manufactured out mineral fiber-Whether exigible to
duty-Arc Chamber housing manufactured from glass fabric-
Duty-Exigibility.
HEADNOTE:
The appellant was manufacturing the tubular shaped are
chamber housings from glass fabrics.
The Assistant Collector levied duty under tariff Item
No.22F(4) of the Central Excise and Tariff Act. It was held
that the goods were covered under tariff item 22F(4) as the
percentage of the mineral fibre yarn was predominant in the
weight.
The Collector in appeal held that the words
"manufactured therefrom" in tariff Item No. 22F(4) would
include not only first manufacture of mineral fibre and yarn
but also subsequent manufacture where in mineral fibre or
yarn was used.
The Tribunal affirmed the order of the Collector, on
construction of the expression "manufacture therefrom", and
held that the goods should be manufactured from mineral
fibre and yarn, that glass fabric was an intermediate stage
between glass are housing and glass fibre or yarn, yet the
goods were exigible to duty under item 22F(4), as the arc
housing chamber did not cease to be manufactured of glass
fibre/yarn, merely because the fibre/yarn was first woven
into glass fabric, and that if glass fibers/yarn were to be
woven into fabrics before they could be used in the
manufacture of the housing, the housing would not cease to
be a manufacture of glass fibres/yarn.
A five-judge Bench of the CEGAT did not agree with the
interpretation
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put by the Tribunal and held that the entry applied to only
those products the manufacture or attendant function of
which was to do something with mineral fibre and yarn and it
did not apply to a product in which only mineral fibre or
yarn was used.
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Against the order of CEGAT, the appellant manufacturer
preferred the appeal before this Court by special leave.
Allowing the appeal, this Court,
HELD: 1.01. The entry is in two parts, one, descriptive
and the other explanatory. Both are to be read together to
bring out the scope and extent of its applicability fully.
The first declares the items which are exigible to duty but
restricts it to only those in relation to the manufacture of
which any process is ordinarily carried on with the aid of
power. The words ‘following namely’ used in the second part
explains the items that were intended to be covered in this
entry. Use of expressions ‘namely’ or ‘that is to say’
followed by description of goods is usually exhaustive
unless there are strong indications to the contrary. [257 G
258 A]
1.02. Language of serial no. 4 is plain and simple. It
intends to clarify the expression ‘manufacture therefrom’ by
expanding it to include in its ambit even those manufactures
in which fibre or yarn predominated in weight. But it did
not go beyond it and purported to include manufactures out
of manufacture of a commodity in which mineral fibre or yarn
predominated. Any other construction would result in
altering the principal clause. That would be contrary to
the scheme of the entry and principle of construction. Its
only effect was to include even those manufactures in which
mineral fibre or yarn or both predominate. It could not be
extended to those goods which were manufactured out of
certain commodity in which mineral fibre or yarn had been
predominately used. [258 A-B, D]
1.03. The word ‘other manufacture’ has to be read in
the same sense as ‘manufacture therefrom’ used in the main
part. The only difference is that the scope has been
widened to include not only those goods which were
manufactured from mineral or yarn but even to those in which
they predominate. [258 D-E]
2.01. Glass fabric manufactured out of mineral fibre
is exigible to duty under Item no. 4 but arc chamber housing
manufactured
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from glass fabric cannot be placed at par with glass fabric
and cannot be considered as ‘other manufacture’ of glass
fibre or yarn. [258 F]
2.02. The arc chamber housing manufactured out of
glass fabric are held to be exigible to duty during the
relevant period under item no.68. [258 F]
JUDGMENT:
Geep Flashlight Industries v. Union of India, 1986(6)
ELR 430, referred to.
&
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3251 of
1984
From the Judgment and Order dated 8.3.1984 of the
Customs Excise and Gold (Control) Appellate Tribunal, New
Delhi in Appeal No. ED(SB)(T) A.No 1132 of 1983-D. [Order
No.168/84-D).
S.Ganesh and Amitabh Marwah for the Appellants.
C.V. Subba Rao for the Respondents.
The Judgment of the Court was delivered by
R.M.SAHAI, J. The question of law that arises for
consideration in this appeal directed against Order of the
Customs, Excise & Gold (Control) Tribunal (hereinafter
referred to as ‘CEGAT’), New Delhi, is if the tubular shaped
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arc chamber housings manufactured by the appellants from
glass fabrics which they purchased from manufacturers was
exigible to duty under tariff Item No. 2 F(4) or under
residuary Item No. 68 of the Central Excise and Tariff Act.
Manner of manufacture of arc chamber housing was not in
dispute nor there was any dispute that it was manufactured
from glass fabric purchased from open market in which glass
fibre predominated. The issue was whether the arc chamber
manufactured from glass fibre, a product of intermediate
stage and not directly from mineral fibre or yarn was
exigible to duty under Item 22F(4) which read as under:
"22.F. Mineral fibres and yarn and manufacturers
therefrom, in or in relation to the manufacturer of
which any process is ordinarily carried on with the
aid of power, the following, namely;
257
(1) Glass fibres and yarn including glass tissues
and glass wool;
(2) asbestos fibre and yarn;
(3) any other mineral fibre or yarn, whether
continuous or otherwise, such as, slag wool and
rock wool;
(4) Other manufacturers in which mineral fibres or
yarn or both predominate or predominates in weight.
Explanation:- This item does not include asbestos
cement products."
The Assistant Collector held that the goods were covered
under tariff Item 22 F(4) as the percentage of the mineral
fibre yarn was predominant in the weight. In appeal it was
held that the words "manufactured therefrom" in tariff Item
No. 22 F(4) would include not only first manufacture of
mineral fibre and yarn but also subsequent manufacture
wherein mineral fibre or yarn was used. The order was
affirmed by the Tribunal on construction of the expression
"manufacture therefrom" which were capable of a simple and
straight away meaning that the goods should be manufactured
from mineral fibre and yarn. The CEGAT held that glass
fabric was no doubt an intermediate stage between glass arc
housing and glass fibre or yarn yet the goods were exigible
to duty under 22 F(4), as the arc housing chamber did not
cease to be manufacture of glass fibre/yarn merely because
the fibre/yarn was first woven into glass fabric. It
rejected the claim of appellant as the construction
suggested would result in reading the word directly in item
No. 22 F(4). It was found that if glass fibres/yarn were to
be woven into fabrics before they could be used in the
manufacture of the housing, the housing would not cease to
be a manufacture of glass fibres/yarn. Subsequently a five-
Judge Bench of the CEGAT did not agree with the
interpretation put by the Tribunal in this case, and held
that the entry applied to only those products the
manufacture or attendant function of which was to do
something with mineral fibre and yarn. It did not apply to
a product in which only mineral fibre or yarn was used.
The entry is in two parts, one descriptive and the
other explanatory. Both are to be read together to bring
out the scope and extent of its applicability fully. The
first declares the items which are exigible to duty. But
restricts it to only those in relation to the manufacture of
which any process is ordinarily carried on with the aid of
power. Having thus specified the items and the condition on
which it would be covered in the entry it proceeds to
amplify it in the second part by using the words ‘following
258
namely’ thus explaining the items that were intended to be
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covered in this entry. Use of expressions ‘namely’, or
‘that is to say’ followed by description of goods is usually
exhaustive unless there are strong indications to the
contrary. Language of serial no. 4 is plain and simple. It
intends to clarify the expression ‘manufacture therefrom’ by
expanding it to include in its ambit even those manufacture
in which fibre or yarn predominated in weight. But it did
not go beyond it and purported to include manufactures out
of manufacture of a commodity in which mineral fibre or yarn
predominated. The entry was added in 1980. That gave an
occasion for the learned counsel for Union of India to urge
that it was intended to evade payment of duty by widening
and expanding the ambit of entry. In our opinion the item
cannot be construed in the manner suggested. The entry was
widened but to the extent indicated above. Any other
construction would result in altering the principal clause.
That would be contrary to the scheme of the entry and
principle of construction. Its only effect was to include
even those manufactures in which mineral fibre or yarn or
both predominate. It could not be extended to those goods
which were manufactured out of certain commodity in which
mineral fibre or yarn had been predominantly used. The word
‘other manufacture’ has to be read in the same sense as
‘manufacture therefrom’ used in the main part. The only
difference is that the scope has been widened to include not
only those goods which were manufactured from mineral or
yarn but even to those in which they predominate. The
construction as suggested by the learned counsel for Union
of India shall not only change the nature of entry but it
shall result in extending to manufactures at any stage. In
Geep Flaslight Industries v. Union of India,[1986]6 ELR 430,
the entry or ‘articles of plastic’ was construed to mean as
article made wholly of commodity commonly known as plastic
to avoid any artificial reading. The word ‘wholly’ was read
in the entry to render it workable. Thus glass fabric
manufactured out of mineral fibre is exigible to duty under
item no. 4 but arc chamber housing manufactured from glass
fabric cannot be placed at par with glass fabric and cannot
be considered as ‘other manufacture’ of glass fibre or yarn.
For reasons stated above this appeal succeeds and is
allowed. The orders of Tribunal, Collector and Assistant
Collector are set aside. The arc chamber housing
manufactured out of glass fabric are held to be exigible to
duty during the relevant period under item no 68. The
appellant shall be entitled to its costs.
V.P.R. Appeal allowed.
259