Asian Paints India Ltd vs Collector Of Central Excise on 23 March, 1988

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Supreme Court of India
Asian Paints India Ltd vs Collector Of Central Excise on 23 March, 1988
Equivalent citations: 1988 AIR 1087, 1988 SCR (3) 339
Author: S Mukharji
Bench: Mukharji, Sabyasachi (J)
           PETITIONER:
ASIAN PAINTS INDIA LTD.

	Vs.

RESPONDENT:
COLLECTOR OF CENTRAL EXCISE

DATE OF JUDGMENT23/03/1988

BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
RANGNATHAN, S.

CITATION:
 1988 AIR 1087		  1988 SCR  (3) 339
 1988 SCC  (2) 470	  JT 1988 (2)	  8
 1988 SCALE  (1)628
 CITATOR INFO :
 RF	    1991 SC 999	 (14)


ACT:
     Central Excise  and  Salt	Act,  1944-Section  35L	 and
Tariff Item  Nos. 14(1)(3)(iv)	and 14	(1)(v) of  the First
Schedule-Classification for  purpose of	 excise levy-Whether
"Decoplast" is	plastic emulsion  paint-Resort to be made to
the commercial	and popular meaning attached to the items by
those  dealing	in  them-Not  to  scientific  and  technical
meaning.
     Statutory Construction-Excise  Act-Sales tax Act-Tariff
Items  not  defined-Interpretation  of-To  be  construed  in
popular sense-Commercial meaning attached to items by people
who deal in them to be given.



HEADNOTE:
%
     The question  as to whether "Decoplast" manufactured by
the appellant  is plastic  emulsion paint  or not  had	been
determined in  the affirmative	by the Revenue, and revision
application before the Government of India was rejected.
     Thereafter the  appellant moved  the Bombay High Court,
which  directed	  the  Customs	Excise	and  Gold  (Control)
Appellate Tribunal  to hear  the petition  and to decide the
same as	 an appeal  before it.	On behalf  of the appellant,
elaborate evidence  had been  adduced before  the  Tribunal.
Reference was made to the specifications of plastic emulsion
paint and  the definition  as given  by	 ISI.  The  Tribunal
addressed itself  to the  question whether "Decoplast" could
be considered as plastic emulsion paint having regard to (i)
its composition;  (ii) its  characteristics; (iii)  its uses
and (iv)  its reputation  in trade  parlance, and  held that
"Decoplast" is a plastic emulsion paint.
     Aggrieved by  the order  the appellant  appealed  under
Section 35L of the Central Excise and Salt Act, 1944 to this
Court, which.
     Dismissing the appeal,
^
     HELD: 1.1 The commercial meaning has to be given to the
expressions in	Tariff items. Where definition of a word has
not been given, it
340
must be	 construed in its popular sense. Popular sense means
that sense  which people  conversant with the subject-matter
with which  the statute	 is dealing,  would attribute to it.
[343G]
     1.2 In  the instant case the use of these two items and
their composition,  when analysed,  revealed that in essence
they performed	the same functions as plastic emulsion paint
does,  though	there  was  some  difference  in  them.	 The
affidavits of  traders	and  others  were  examined  by	 the
Tribunal. The  Revenue did  not adduce evidence in rebuttal.
Therefore, in view of the composition, characteristics, uses
and how	 it is	known in the trade, the Tribunal came to the
conclusion that "Decoplast" was plastic emulsion paint. This
is a  finding of  fact arrived	at  on	relevant  and  valid
materials. There was no misdirection in law. [344C-E]
     2. In  interpreting items	in statutes  like the Excise
Act or	Sales Tax  Act, resort	should be  had, not  to	 the
scientific and technical meaning of the terms or expressions
used, but  to the  popular meaning,  that  is  to  say,	 the
meaning	 attached   to	them   by  those  dealing  in  them.
[343H; 344A-B]
     C.l. T.,  Andhra  Pradesh	v.  M/s.  Taj  Mahal  Hotel,
Secunderabad  [1972]   1  SCR  168  and	 Indo  International
Industries v.  Commissioner of Sales Tax, U.P., [1981] 3 SCR
294,referred to.
     King v.  Planter's Co.  [1951] CLR	 (Ex.) 122  and 'Two
Hundred Chests of Tea', [1824]6 L.Ed. 128, referred to.



JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2456 of
1987.

From the Order dated 27.5.1987 of the Customs Excise
and Gold (Control) Appellate Tribunal, New Delhi in Appeal
No. E-2312/85-C.

K.K. Venugopal, R. Narain, S. Ganesh, R. Shah, R.K. Ram
and D.N. Mishra for the Appellant.

The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. In this appeal under section
35L of the Central Excise and Salt Act, 1944 (hereinafter
called ‘the Act’), the question involved is whether
“Decoplast” manufactured by the Asian Paints India Ltd., the
appellant herein, is plastic emulsion paint
341
and, therefore, classifiable under Tariff Item 14(I)(3)(iv)
of the First Schedule of the Act as plastic emulsion paint
or it should be classifiable under Tariff Item No. 14(I)(v)
that is as “paints not otherwise specified”.

The Customs Excise and Gold (Control) Appellate
Tribunal (hereinafter called ‘the CEGAT’), by the impugned
order challenged in this appeal held that Decoplast is
plastic emulsion paint. The appellant felt aggrieved
thereby. In so holding the Technical Member of the Tribunal
observed that in view of its composition, characteristics
and uses, Decoplast should be considered as emulsion paint.
The Judicial Member of the Tribunal was of the view that the
Revenue had not adduced any evidence of rebuttal of the
evidence adduced by the appellant as the commercial
understanding but the evidence adduced by the appellant was
intrinsically untrustworthy. Therefore, inspite of the
affidavits and absence of evidence in rebuttal, he agreed
with the other member that Decoplast is plastic emulsion
paint and the appeal before the Tribunal should be
dismissed.

It appears that the appellants had filed revision
application before the Government of India against the order
of the Revenue authorities. Ultimately, the same was
rejected by the Government of India. It is not necessary to
set out in detail all the events. The appellant had moved
the High Court of Bombay against the order of the Government
of India and the High Court by its order directed as
follows:

“The order dated 17th December, 1979 passed by the
Govt. Of India in revision in the Petitioners’
case is set aside inasmuch as the Revision
Authorities have not controverted or rebutted the
evidence in the form of affidavits relied on by
the Petitioners to show that their product could
not be regarded as a plastic emulsion paint
amongst persons dealing in such products. The
Revision order thus failed to follow the well
established rule of interpreting entries in the
Excise Tariff namely to classify products by their
common parlance and trade understanding and not by
their scientific or technical meaning. It is
necessary that the matter be remanded to the
Revision Authorities to decide the same afresh
according to law. However, as the Revision
Authority under the demanded Central Excise and
Salt Act has been replaced by the Customs Excise
and Gold (Control) Appellate Tribunal, the said
Tribunal is directed to
342
hear the Petitioners’ Revision Petition and to
determine the same as an appeal before it. The
Tribunal shall give an opportunity to both the
petitioners and the Excise Authorities to rely on
any evidence and material either on record or
otherwise which they may lead or produce in
support of their case. The parties will be given
full opportunity of affidavits if any during the
hearing”.

In pursuance to the said order, the matter came before
the Tribunal. Before the Tribunal it was contended on behalf
of the appellant that the manufacture was water thinable
paint but the same could not be held to be plastic emulsion
paint for the product was not known in the trade as plastic
emulsion paint nor was it bought and sold so. According to
the appellant, the paint essentially comprised of pigment
and a binder or a vehicle and that while the binder and the
vehicle were interchangeable, it was stated that the binder
generally referred to solid part which in this case was
synthetic resin and the solvent could be water or some other
diluent. There was elaborate evidence adduced before the
Tribunal on behalf of the appellant. Reference was made to
the specifications of plastic emulsion paint as given by
ISI. It was contended on behalf of the appellant that
Decoplast could not be considered as plastic emulsion paint
for reasons, inter alia, as follow:

i) Plastic emulsion paint comprises of one
emulsion as against two contained in
Decoplast;

ii) In the case of plastic emulsion drying takes
place by evap oration of water whereas in the
case of decoplast by oxidation of alkyd;

iii) Trade did not recognise decoplast as plastic
emulsion paint;

iv) In the literature published by them,
decoplast was not described as plastic
emulsion paint;

v) Decoplast was substitute for cement paint;

vi) Even though decoplast could be used both for
interior and exterior use, it was a product
inferior to plastic emulsion paint;

vii) In case of plastic emulsion paint, primer had
to be applied to The surface to be pained
while in the case of Decoplast on
343
coating on Decoplast itself serves as a
primer. A
In support of appellant’s contention, affidavits had
been filed by them and the same were considered in extenso
by the Tribunal. Reference has also been made to the Book
“Outlines of Paint Technology” by W.M. Morgan. On the other
hand, on behalf of the Revenue, it was stated that it was
not disputed that Decoplast is a water soluble paint and
that it had got two resins in emulsion form, namely, Polymer
Vinyle Acetate and copolymer alkyds. Attention was drawn to
the Indian Standard Specification for plastic emulsion
paint, which is as follow:

“The material shall consist of pigments with
suitable extenders in suitable proportions, in a
medium consisting of any state synthetic polymer
emulsion in water with other suitable ingredients
as may be necessary to produce a material so also
satisfy the requirements of this standard. “

Our attention was also drawn to the definition given by
ISI, which is as under:

“Generally, a paint in which the medium is an
’emulsion’ or an emulsion-like dispersion of an
organic binder in water. Industrially the same is
mainly restricted to those paints in which the
medium is an ’emulsion’ of a synthetic resin. The
medium may also be called a latex by analogy with
a natural rubber latex, polyvinyl acetat emulsion
paint is a typical example”.

The Tribunal addressed itself to the question whether
Decoplast could be considered as plastic emulsion paint in
view of (i) its composition; (ii) its characteristics; (iii)
its uses; and (iv) its reputation in trade parlance.

It is well settled that the commercial meaning has to
be given to the expressions in Tariff items. Where
definition of a word has not been given, it must be
construed in its popular sense. Popular sense means that
sense which people conversant with the subject-matter with
which the Statute is dealing, would attribute to it. See-
C.I.T., Andhra Pradesh v. M/s. Taj Mahal Hotel,
Secunderabad,
[1972] 1 SCR 168. This Court observed in Indo
International Industries v. Commissioner of Sales Tax, U.P.,

[1981] 3 SCR 294 that in interpreting items in statutes like
the Excise Act or Sales Tax Acts, whose primary object
344
was to raise revenue and for which purpose to classify
diverse products, articles and substances, resort should be
had, not to the scientific and technical meaning of the
terms or expressions used but to their popular meaning, that
is to say, the meaning attached to them by those dealing in
them.

Justice Cameron of the Canadian Exchequer Court in King
v. Planter’s Co., [1951] CLR (Ex.) 122 and the decision of
the United States Supreme Court in ‘Two Hundred Chests of
Tea’, [1824] 6 L.Ed. 128 emphasised that commercial
understanding in respect of the tariff items should be
preferred. It was observed that the legislature does not
suppose our merchants to be naturalists or geologists, or
botanists.

In this case the use of these two items and their
composition when analysed, revealed that in essence they
performed the same functions as plastic emulsion paint does,
though there was some difference in them. Affidavits of
traders and others had been filed. These were examined and
accepted by the Technical Member and these were not rejected
by the Judicial Member. The Revenue did not adduce any
evidence in rebuttal. Therefore, in view of the composition,
characteristics, user and how it is known in the trade, the
Tribunal came to the conclusion that Decoplast was plastic
emulsion paint. This is a finding of fact arrived at on
relevant and valid materials. There was no misdirection in
law. Therefore, there is no ground for interference with the
said order.

In the aforesaid view of the matter, we decline to
entertain the appeal under section 35L of the Act. The
appeal is, therefore, dismissed.

G.N.					   Appeal dismissed.
345



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