Full Judgment Text
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PETITIONER:
SIDDESHWARI COTTON MILLS (P) LTD.
Vs.
RESPONDENT:
UNION OF INDIA & ANR.
DATE OF JUDGMENT17/01/1989
BENCH:
VENKATACHALLIAH, M.N. (J)
BENCH:
VENKATACHALLIAH, M.N. (J)
PATHAK, R.S. (CJ)
CITATION:
1989 AIR 1019 1989 SCR (1) 214
1989 SCC (2) 458 JT 1989 (1) 150
1989 SCALE (1)101
ACT:
Central Excises and Salt Act, 1944: Section 2(f)(v),
First Schedule Item No. 19(1) and Notification Nos. 230 and
231 of 1977-Cotton fabric if subjected to
’calendering’---Whether ceases to be ’unprocessed’ cotton
fabric--Levy of excise duty--Expression ’any
otherprocess’--Interpretation of.
Statutory Construction: ’Ejus dem generis’ rule--Ap-
plicability of--Preceding words to control and limit the
subsequent words must rep resent a genus.
HEADNOTE:
The appellant manufactures cotton fabric on power looms.
By virtue of two notifications issued under Rule 8(1) of the
Central Excise Rules 1944 unprocessed cotton fabric was
exempt from excise duty as also additional duties. Since the
appellant was using the process of ’calendering’, the Cen-
tral Excise authorities held that the cotton fabric manufac-
tured by it ceases to be "unprocessed". The collector of
Central Excise, directed the appellant to pay levy on the
manufacture of the calendered cotton fabric, and also levied
a penalty of Rs. 1,00,000 under Rule 173.
On appeal, the Central Board of Excise and Customs
affirmed the levy of duty, but set aside the imposition of
penalty. The appellant preferred an appeal before the Cus-
toms, Excise and Gold (Control) Appellate Tribunal. The
Tribunal held that calendering is a finishing process and it
was not necessary for the process of calendering to be a
process which belonged to the same genus as those enumerated
in Sec. 2(f)(v) to take the cotton fabric out of the exemp-
tion. It would be sufficient that of calendering is a
"process" of cotton fabric even if it does not partake of
the other processes specifically enumerated in the preceding
expression in section 2(j)(v)2. In that view of the matter
the Tribunal
215
dismissed the appeal preferred by the appellant.
This appeal under Sec. 35L of the Act is against the
Tribunal’s Order.
On behalf of the appellant, it was contended that
"plaincalendering" process neither adds anything to the
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cotton fabric nor the effect brought about by it is lasting;
it was purely a temporary finish and that having regard to
the nature of the process it is plainly manifest that it
does not impart to the fabric either of the two ingredients
necessary to bring the process into the family of processes
envisaged by the preceding expressions in Sec. 2(f)(v).
On behalf of the Revenue it was submitted that since the
Tribunal had not specifically examined this aspect and
recorded its finding thereon, it would be appropriate to
remit the matter to the Tribunal.
Allowing the appeal, and remitting the matter to the
Appellate Tribunal for a fresh disposal, the Court,
HELD: 1. The expression ejus dem generis---’of the same
kind or nature’--signifies a principle of construction
whereby words in a statute which are otherwise wide but are
associated in the text with more limited words are, by
implication, given a restricted operation and are limited to
matters of the same class are genus as preceding them. If a
list or string or family of genus-describing terms are
followed by wider or residuary or sweeping-up words, then
the verbal context and the linguistic implications of the
preceding words limit the scope of such words. But the
preceding words or expressions of restricted meaning must be
susceptible of the import that they represent a class. If no
class can be found, ejus-dem-generis rule is not attracted
and such broad construction as the subsequent words may
admit will be favoured. [220F; 221A-B]
S.S. Magnhild (owners) v. Mc Intvre Bros. & Co., [1920]
3 KB 321; Tribhuban Parkash Nayyar v. Union of India, [1970]
216
2 SCR 732 and U.P.S.E. Board v. Hari Shankar, AIR 1979 SC 65
relied on.
Statutory Interpretation by Rupert Cross; Statutory
Construction by Francis Bennian, relied on.
2. The definition of "manufacture" obtaining in Sec.
2(f) of the Central Excise Act was amended by Act 5 of 1986
giving it an extended meaning. [220A]
Empire Industries v. Union of India, [1985] Suppl. 1 SCR
292 relied on.
3. In the present case the expressions ’bleaching,
mercerising, dyeing, printing, water-proofing, rubberising,
shrink-proofing, organdie processing’ which precedes the
expression ’or any other process’ contemplate processes
which impart a change of a lasting character to the fabric
by either the addition of some chemical into the fabric or
otherwise. ’Any other process’ in the section must, share
one or the other of these incidents. The expression "any
other process" is used in the context of what constitutes
manufacture in its extended meaning and the expression
"unprocessed" in the exempting notification draws its mean-
ing from that context. [222G-H; 223A]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2 147 of
1984.
From the Judgment and Order dated 16.3. 1984 of the
Customs, Excise and Gold (Control) Appellate Tribunal, New
Delhi in Appeal No. ED(SB) No. 425/82-C (Order No. 15 1 of
1984).
Soli. J. Sorabjee, M.A. Rangaswamy and Ms. Radha Rangas-
wamy for the Appellant.
A.K. Ganguli, K. Swami and C.V. Subba Rao for the Re-
spondents.
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The Judgment of the Court was delivered by
217
VENKATACHALIAH J. This appeal under Section 35-L of the
Central Excise and Salt Act, 1944, (ACT) by Messrs Siddesh-
wari Cotton Mills (P) Ltd., preferred against the appellate
order dated 16.3.1984, of the Customs, Excise and Gold
(Control) Appellate Tribunal, New Delhi, raises a short
question whether the appellant, which manufactures cotton
fabric on power looms which is otherwise exempt from duties
of excise and the additional duties of excise respectively
under Notification No. 230/77 and 231/77 dated 15.7.1977,
looses the benefit of exemption by process of ’calendering’
on a calendering plant situated in the appellant’s premises.
The Notification 230/77. CE dated 15.7.1977 issued by
Central Government under Rule 8(1) of the Central Excise
Rules, 1944, exempts from the whole of the duty of Excise,
’unprocessed’ cottonfabric, falling under sub-item (1) of
item No. 19 of the First Schedule to the Act, which is
manufactured on power looms (without spinning or processing
plants) installed and worked with the permission of the
Textile Commissioner. Likewise, Notification No. 231/77. CE
dated 15.7.1977 exempts such cotton fabric from payment of
the additional duties of excise.
2. The question in the appeal is whether such cotton-
fabric ceases to be "unprocessed" cotton-fabric if it is
subjected to calendering. The Tribunal has held in the
affirmative and has upheld the levy of duty imposed on the
appellant.
We have heard Sri Soli J. Sorabjee, learned Senior
Counsel for the appellant and Sri A,K. Ganguly, learned
Senior Counsel for the Revenue.
3. The facts which are not in dispute may briefly be
stated. The Central Excise authorities held appellant to
have contravened the provisions of the relevant rules by
manufacturing and removing, between 14.5. 1981 and
19.9.1981.6,09,848.47 Sq. Metres of calendered cottonfabric
falling under item 19-l(b) of the First Schedule to the Act
without payment of Rs.2,62,767.04 leviable thereon as excise
duty. The Collector of Central Excise, Calcutta, directed
the appellant to pay the said duty and also imposed on the
appellant a penalty of Rs. 1,00,000 under rule 173-Q. The
Central Board of Excise and Customs, by its order dated
24.8.1982, partly allowed the appellant’s appeal and while
218
affirming the levy of the duty, however, set aside the
imposition of the penalty. The further appeal before the
Appellate-Tribunal preferred by the appellant against the
confirmation of the levy and the duty came to be dismissed
by the Tribunal’s order dated 16.3.1984 now under appeal.
4. Before the Appellate Tribunal it was contended for
the appellant that the process of plain-calendering to which
the cotton fabric was subjected, though might, in itself, be
a process in the larger and general sense of that term,
would not, however, fall under "any other process’ within
the meaning of Sec. 2(f)(v) the Act. It was contended that
even after the calendering, the cotton-fabric remained an
"unproceased" cotton fabric and the expression "any other
process" in Sec. 2(f)(v) must be considered ejus-dem-gener-
is, so as to partake of the nature and character of the
processes--and belong to the same genus--as those envisaged
in the preceding expressions in that clause. Sec. 2(f)(v’)
reads:
"in relation to goods comprised in Item No.
19-I of the Schedule to the Central Excise
Tariff Act, 1985, includes bleaching, merce-
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rising, dyeing, printing, water-proofing,
rubberising, shrink-proofing, organdie proc-
essing or any other process or any one or more
of these processes;"
The Appellate Tribunal did not accept this contention. It
held:
" .... There is prima facie nothing in the
language employed in Section 2(f) and item
19-1 of the CET to suggest that the words "any
other process" will take within sweep only
such processes as are of the same class or
genus as the specifically enumerated process-
es. It may be that for the enumerated process-
es some extreneous substance may be required.
That, however, would’not make the processes a
class. They enumerated processes from a group
of disparate and dissimilar processes for
example, bleaching and rubberising or dyeing
and organdie processing. Sigficantly, what
follows the enumerated process is not an
expression like "any other like process or any
such process", in which case it could be
argued that the non-enumerated process should
of the same genus or class as the enumera-
219
ted ones......."
" ..... Admittedly, calendering is a fin-
ishing process. The machine employed may be a
simple or complex one. The effect ought to be
brought about may be simple or not. That,
however, would not mean that calendering is
not a process. In fact, from the sample pro-
duced by the appellants before us it was seen
that the appellants had stamped cotton sarees
as calendered. It was stated before us that
the sarees were sold as calendered. Saree
calendering will thus fail within the ambit of
the expression "any other process" occurring
in Section 2(f) and Item 19-I CET particularly
when sub-item (b) of Item 19-1 is read in
juxta position with sub-item (a) which covers
cotton fabrics not subjected to any process."
5. In this view of the matter; the Appellate Tribunal
did not accept the contention that though "calendering"
might be a "process", it is not any ’process’ that satisfies
the requirement of "any other process" occurring in sec.
2(f)(v), but only those processes that partake of the same
common characteristic of and belong to same genus as the
processes such as bleaching, mercerising, dyeing, printing,
waterproofing, rubberising, shrink-proofing, or organdie-
processing occurring in Section 2(f)(v).
The Appellate Tribunal held that it was not necessary
for the "process" ,--process of calendering in’ the present
case--to be a process which belongs to the same genus as
those enumerated in sec. 2(f)(v) to take the cotton-fabric
out of the exemption and that it would be sufficient that if
calendering is a "process" of cotton fabric even if it does
not partake of the other processing specifically enumerated
in the preceding expressions in Section 2(f)(v). According-
ly, the Appellate Tribunal did not specifically examine the
alternative position whether the process of calendering of
the type and kind adopted by the appellant really shared the
common element or characteristic possessed by the other
processes specifically enumerated. Therefore, if it is to be
held that the expression "any other process" in Sec. 2(f)(v)
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must be understood and construed ejus-dem-generis, then the
question whether the "process" of calendering employed in
the present case belongs to the same genus as the processes
envisaged in the preceding expressions in the section would
have to be examined afresh.
220
6. The definition of "manufacture" obtaining in Sec.
2(f) of the Act was amended by Act 5 of 1986 giving it an
extended meaning. In repelling the contention that the
extended meaning was introduced as an artificial concept of
"manufacture" not belonging to, but outside, Entry 84 of
List 1 of the Seventh Schedule to the Constitution, this
Court in Empire Industries v. Union of India, [1985] Suppl.
1 SCR 292 held:
"As has been noted, processes of the type
which have been incorporated by the impugned
Act were not so alien or foreign to the con-
cept of "manufacture" that these could not
come within that concept."
(p.323)
If, accordingly, the processes such as bleaching, merce-
rising, dyeing, printing, water-proofing, rubberising,
shrink-proofing, organdie-processing, are not unrelated to
the concept of manufacture and bring .about such a change in
the cotton-fabric as to render it a commercially different
product, then by parity of reasoning, "any other process" in
Sec. 2(f)(v) which is a part of the scheme of the extended
meaning of "manufacture" must also share the same character-
istic of those other expression. That apart, even if the
amendment is beyond Entry 84 of List 1 and is supportable
under or referrable to the residuary Entry 97 of List 1, on
the principles of construction appropriate to the provision
in Sec. 2(f)(v), is "any other process" in Sec. 2(f)(v),
though otherwise of wide import, must share the characteris-
tics of and be limited by the preceding expressions.
7. The expression ejus-dem-generis, ’of the same kind or
nature’--signifies a principle of construction whereby words
in a statute which are otherwise wide but are associated in
the test with more limited words are, by implication, given
a restricted operation and are limited to matters of the
same class or genus as preceding. If a list or string or
family of genus-describing terms are followed by wider or
residuary or sweeping-up words, then the verbal context and
the linguistic implications of the preceding words limit the
scope of such words.
In ’Statutory Interpretation’ Rupert Cross says:
" ...... The draftsman must be taken to have
inserted the general words in case something
which ought to have been included among the
specifically enumerated items had been
omitted ..... " (Page
116)
221
The principle underlying this approach to statutory
construction is that the subsequent general words were only
intended to guard against some accidental omission in the
objects of the kind mentioned earlier and were not intended
to extent to objects of a wholly different kind. This is a
presumption and operates unless there is some contrary
indication. But the preceding words or expressions of re-
stricted meaning must be susceptible of the import that they
represent a class. If no class can be found, ejus-dem-gener-
is rule is not attracted and such broad construction as the
subsequent words may admit will be favoured. As a learned
author puts it:
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" ..... if a class can be found, but the
specific words exhaust the class, then rejec-
tion of the rule may be favoured because its
adoption would make the general words unneces-
sary; if, however, the specific words do not
exhaust the class, then adoption of the rule
may be favoured because its rejection would
make the specific words unnecessary."
[See: Construction of Statutes by E.A. Driedg-
er p.95 quoted by Francis Bennion in his
Statutory Construction page 829 and 830].
Francis Bennion in his Statutory Construction observed:
"For the ejus dem generis principle to apply
there must be a sufficient indication of a
category that can properly be described as a
class or genus, even though not specified as
such in the enactment. Furthermore the genus
must be narrower than the words it is said to
regulate. The nature of the genus is gathered
by implication from the express words which
suggest it .... "
[p
.
830]
" It is necessary to be able to formulate
the genus; for if it cannot be formulated it
does not exist. ’Unless you can find a catego-
ry’, said Farwell L J, ’there is no room for
the application of the ejus dem generis doc-
trine’."
[p. 831]
In SS. Magnild (Owners) v. Macintyre Bros. & Co., [1920]
3 KB 321 Mc Cardie J said:
222
"So far as I can see the only test seems to be
whether the specified things which precede the
general words can be placed under some common
category. By this I understand that the speci-
fied things must possess some common and
dominant feature."
In Tribhuban Parkash Nayyar v. Union of India, [1970] 2
SCR 732 the Court said:
" ..... This rule reflects an attempt to
reconcile incompatibility between the specific
and general words, in view of the other rules
of interpretation, that all words in a statute
are given effect if possible, that a statute
is to be construed as a whole and that no
words in a statute are presumed to be super-
fluous .... "
[p. 740]
In U.P.S.E. Board v. Hari Shanker, AIR 1979 SC 65 it was
observed:
" ..... The true scope of the rule of "ejus
dem generis" is that words of a general nature
(following specific and particular words
should be construed as limited to things which
are of the same nature as those specified. But
the rule is one which has to be "applied with
caution and not
pushed too far" ..... "
[p
.
73]
8. The preceding words in the statutory provision which,
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under this particular rule of construction, control and
limit the meaning of the subsequent words must represent a
genus or a family which admits of a number of species or
members. If there is only one species it cannot supply the
idea of a genus.
In the present case the expressions bleaching, merceris-
ing, dyeing, printing, water-proofing, rubberising, shrink-
proofing, organdie processing’ which precede the expression
’or any other process’ contemplate processes which impart a
change of a lasting character to the fabric by either the
addition of some chemical into the fabric or otherwise. ’Any
other process’ in the section must, share one or the other
of these incidents. The expression "any other process" is
used in the context of what constitutes manufacture in its
extended meaning and the expression "unprocessed" in the
exempting notification draws
223
its meaning from that context. The principle of construction
considered appropriate by the Tribunal in this case appears
to us to be unsupportable in the context in which the ex-
pression "or any other process" has to be understood.
9. It was then contended by Sri Sorabjee that "plain-
calendering" process neither adds anything to the cotton-
fabric nor the effect brought about by it is lasting. It is,
according to learned counsel, nothing more than pressing the
cotton-fabric by running it between plain Rollers to improve
its appearance. Learned counsel submitted that it was purely
a temporary finish and that having regard to the nature of
the process it is plainly manifest that it does not impart
to the fabric either of the two ingredients necessary to
bring the process into the family of processes envisaged by
the preceding expressions in the section. Sri A.K. Ganguly,
learned counsel for Revenue, however, submitted that this
aspect requires investigation of the factual aspects and
that since the Appellate-Tribunal had not specifically exam-
ined this aspect and recorded its finding thereon, it would
be appropriate to remit the matter to the Appellate Tribunal
for a fresh disposal of the appeal in the light of the
pronouncement of this Court on the proper rule of construc-
tion to be applied in the understanding of the expression
"any other process" in Sec. 2(f)(v) and to consider whether
the particular process of calendering adopted by the appel-
lant would satisfy that requirement. We think we should
accept this submission of Sri Ganguly.
10. In the result, this appeal is allowed, the order
under appeal is set-aside, and the appeal No. 151 of 1984
before the Appellate Tribunal is remitted to it for a fresh
disposal in accordance with law. There will be no order as
to costs in this appeal.
G.N. Appeal allowed.
224