1984 (8) TMI 85 - SC - Central Excise

Whether plastic torch manufactured by the petitioner was covered by residuary Tariff Item No. 68 and not by Tariff Item No. 15A(2) of Schedule I to the Central Excises and Salt Act, 1944? Held that - By a catena of decisions it is settled law that an expression used in a taxing statute for describing a commodity must be given the meaning which is generally given to it by a person in the trade or in the market of commodities and should be interpreted in the sense the person conversant with the subject-matter of statute and dealing with it would attribute to it. The High Court approached the matter from this angle and reached the correct conclusion that the expression article s made of plastics used in Tariff Item No. 15A(2) do not cover such articles which are not directly made from the material indicated in sub-item (1) but are made from articles made out of such material.We are in agreement with the view taken by the High Court that plastic torches manufactured by the petitioner do not fall under Tariff Item No. 15A(2) and has rightly been included in the residuary Tariff Item No. 68. Appeal dismissed.

Summary

Issues:
Interpretation of Tariff Item No. 15A(2) of Schedule I to the Central Excises and Salt Act, 1944 for plastic torches.
Classification of plastic torches under Tariff Item No. 15A(2) or residuary Tariff Item No. 68.
Applicability of the principle that expressions in a taxing statute should be interpreted based on their common market understanding.

Analysis:
The Supreme Court heard a special leave petition challenging the Allahabad High Court's judgment, which classified plastic torches under the residuary Tariff Item No. 68 instead of Tariff Item No. 15A(2). The petitioner argued that plastic torches should be governed by Tariff Item No. 15A(2) as they are made of plastic tubes. However, the Court agreed with the High Court that plastic torches do not fall under Tariff Item No. 15A(2) but are appropriately classified under the residuary Tariff Item No. 68. The Court emphasized that the expression "articles made of plastics" in Tariff Item No. 15A(2) refers to articles directly made from plastic material, not items made from articles created from plastic material. This interpretation aligns with the common understanding in the market and trade practices. The Court highlighted that labeling a product as an article made of plastic merely by incorporating a small plastic tube could lead to misuse of the tariff classification system.

The Court further clarified that the introduction of Tariff Item No. 68 in 1975 aimed to cover items not falling under specific tariff classifications, including plastic torches. Therefore, the High Court's decision to classify plastic torches under the residuary Tariff Item No. 68 was deemed legally sound and justified. The Court rejected the special leave petition, affirming the High Court's interpretation and classification of plastic torches. The judgment underscores the importance of interpreting taxing statutes based on industry norms and market perceptions to prevent misclassification and misuse of tariff classifications.