ORDER
Shamim Yahya, A.M.
1. These appeals by the Revenue are directed against the orders of CIT(A) for respective assessment years. Since common issue has been raised, these appeals are consolidated and disposed of together by this common order.
2. The issue raised is that the CIT(A) erred in allowing the deduction claimed by the assessee company under Section 80-IA of the IT Act, 1961 by holding that soaps are different from detergents.
3. The factual matrix of the case in brief in as under:
The assessee in this case is a manufacturer of detergent cakes. It claimed deduction under Section 80-IA of the IT Act. This claim was disallowed by the AO on the ground that the assessee is not a small-scale industry and the item “soaps” falls under Entry No. 4 of Sch. XI to the IT Act. The AO rejected assessee’s submissions in this regard and held that “technically soaps and detergents may be different items but under common law parlance and common usage, the term ‘soap’ includes ‘detergents’ also.
4. Upon assessee’s appeal, the learned CIT(A) made distinction between “soaps” and “detergents” on the basis of descriptions in Central Excise Tariff of India, 2001-02. He further placed reliance upon Central Excise Tribunal decision for the said distinction on the decisions of Beekay Cosmetics v. CCE and Hon’ble Allahabad High Court decision dt. 22nd July, 1976 in the case of Harichand Ratanchand v. CST. The learned CIT(A) further dwelt upon the materials used in the manufacture of soaps and detergents respectively and finally held that,
The soaps which are used as toiletry is scented and may be considered as a luxury item. Therefore, the properties and. usage of soap and detergent are different, the soap being mainly used for body and the detergent is used for washing clothes. Therefore, the application of Entry 4 of Sch. XI does not apply to this case since the item mentioned in the Schedule is soap which is used as a toiletry item.
5. Aggrieved by learned CIT(A)’s order, Revenue is in appeal before us. On behalf of the Revenue, the learned Departmental Representative Shri C. Venkateswarlu vehemently supported the AO’s order. He further submitted that,
(i) The CIT(A) failed to understand that in common parlance, “soaps” include “detergents” also, though its utility by the consumers is for different purposes.
(ii) The CIT(A) failed to appreciate that Sections 80-IA is not applicable, for items manufactured by assessee company (i.e. Wheel, OK and 501 detergents were washing soaps) fall under Entry No. 4 of Sch. XI.
(iii) The learned CIT(A) erred in holding that “soaps” and “detergent” cakes are separate with different tax rates as per central excise and sales-tax classifications. But the item “soaps” commonly comes under the Entry No. 4 of Sch. XI.
6. The learned Counsel of the assessee Shri S. Sridhar, on the other hand, supported the order of the learned CIT(A) and claimed that detergent cake being manufactured by the assessee cannot be termed to be falling under the term “tooth paste, dental cream, tooth powder and soap” as envisaged under item No. 4 in the Sch. XL In this regard, the learned Counsel placed reliance upon the principle of ‘ejusdem generis’ to oxygenate the submission that detergent cakes cannot be said to be coming under the aforesaid term. He further referred to the dictionary meaning of the two terms and also brought to our notice the decision of the Special Bench of CEGAT for making distinction between “soaps” and “detergents”.
7. We have heard the rival contentions and perused the relevant records. Admittedly, in this case, the assessee is not a small-scale industry. The question for our adjudication is whether the products being manufactured by the assessee, namely, Wheel, OK and 501 detergents fall under item No. 4 in Sch. XI of the IT Act.
8. We find that “soap” has been defined in Concise Oxford English Dictionary X Revised Edition as,
a substance used with water for washing and cleaning, made of a compound of natural oils or fats with sodium hydroxide or another strong alkali and typically perfumed.
The word “detergent” has been defined in the same dictionary as,
A soluble cleansing agent which combines with impurities and dirt to make them more soluble.
From the dictionary meaning, it transpires that it will be fallacious to assume the terms “soap” and “detergent” as synonymous or interchangeable.
9. We further find that a Special Bench of CEGAT in the case of Beekay Cosmetics v. CCE (supra) has held that,
Soaps and detergents are two different commodities known to the market as such. Their process of manufacture is different and their chemical composition is different. Chemically soaps are the result of hydrolysis of fats and oils with alkalies. The process is called saponification. The soaps themselves are in the form of sodium or potassium salts of fatty acids chiefly oleic, stearic, palmitic, etc. On the other hand, detergents are the result of action between alkalies and long chain hydrocarbons derived from petroleum refining such as long chain organic acids.
The above exposition clearly amplifies that technically the terms “soap” and “detergent” are quite different items.
10. “Ejusdem generis” has been defined in Dictionary of Law by L.B. Curzon to mean,
Of the same kind or nature. Rule of construction whereby if particular words forming a genus or kind are followed by general words, the general words are construed ejusdem generis i.e., are held to be intended to describe only other things of the same kind as those enumerated by the particular words.
11. In Salmond on Jurisprudence Twelfth Edition, it has been referred that, “another example of a rule of law in a legal maxim is the ejusdem generis rule which serves to restrict the meaning of general words to things or matters of the same kind (genus) as the preceding particular words.”
12. The learned authors Chaturvedi & Pithisaria in Income-tax Law Fifth Edition define the expression “ejusdem generis” as under:
It 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 or 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. The preceding words in the statutory provision which, 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.
13. The ejusdem generis rule strives to reconcile the incompatibility between specific and general words. This doctrine applies when (i) the statute contains an enumeration of specific words; (ii) the subjects of the enumeration constitute a class or category; (iii) that class or category is not exhausted by the enumeration; (iv) the general terms follow the enumeration and (v) there is no indication of a different legislative intent [Amar Chandra Chakraborty v. CCE , quoted in General Marketing & Manufacturing Co. Ltd v. State of Tamil Nadu (1992) 86 STC 434, 438 (Mad)].
14. On the anvil of aforesaid, we have to examine whether the term “tooth paste, dental cream, tooth powder” has a generic unity or not. In other words, whether or not they represent things of the same kind has to be ascertained for application of the principle of “ejusdem generis”. In our opinion, there is a generic unity in these terms and the distinct genus or category present in these terms is their application on human body. Hence, the term “tooth paste, dental cream, tooth powder” having the same genus is followed by the expression of residuary nature i.e. soap. Applying the principle of ejusdem generis, we find that the word “soap” mentioned here has also to belong to the same genus. This means that soap which has application on human body can come under the term “tooth paste, dental cream, tooth powder”. Thus the term “soap” here should not apply to “detergent” which has application on objects other than human body. The term “tooth paste, dental cream, tooth powder and soap” should be read in the same context as their application on human body. If the same extrapolated to use detergent cakes, we find that there will be complete absence of generic unity.
15. Hence, from the aforesaid, we find that the dictionary meaning, exposition by the Special Bench of CEGAT (cited supra) as well as the principle of ejusdem generis do not warrant inclusion of “detergents” under the item 4 of Sch. XI i.e. tooth paste, dental cream, tooth powder, soap. Hence, we countenance the order of the learned CIT(A) holding that the assessee is entitled to deduction under Section 80-IA.
16. In the result, the Revenue’s appeals stand dismissed.