1990 (4) TMI 54 - SC - Central Excise

Whether art paper and chromo paper were eligible for the exemption granted under Notification No. 25 of 1984? Held that - Accept the appellant s submission that coated paper in the second proviso refers only to coated paper used for industrial purposes and not to coated varieties of printing and writing paper. The Tribunal s order is set aside and the appellant held entitled to the concessional rates specified in Notification No. 25/84. In favour of assessee.

Issues Involved:
1. Eligibility for partial exemption from excise duty under Notification No. 25/84.
2. Interpretation of the term "coated paper" in the context of the proviso to Notification No. 25/84.
3. Application of the "noscitur a sociis" principle in statutory interpretation.

Issue-wise Detailed Analysis:

1. Eligibility for partial exemption from excise duty under Notification No. 25/84:
The assessee, M/s. Rohit Pulp and Paper Mills Ltd., claimed partial exemption from excise duty for art paper and chromo paper under Notification No. 25/84. The factory used unconventional raw materials, and the pulp contained more than 50% weight of such materials. The Excise Department denied the exemption, arguing that these papers were "coated paper," excluded from the notification's benefits. The Central Excise and Gold Control Appellate Tribunal (CEGAT) upheld this denial, leading to the present appeals.

2. Interpretation of the term "coated paper" in the context of the proviso to Notification No. 25/84:
The core issue was whether "coated paper" in the proviso should include all coated papers or only those used for industrial purposes. The assessee argued that "coated paper" should be interpreted in a restricted manner, excluding printing and writing papers, based on the principle of "noscitur a sociis." The Solicitor General contended that the term "coated paper" should be given its plain and natural meaning, encompassing all coated papers.

3. Application of the "noscitur a sociis" principle in statutory interpretation:
The Court applied the "noscitur a sociis" principle, which means that the meaning of a word is to be judged by the company it keeps. The proviso listed five types of paper excluded from the exemption: cigarette tissue, glassine paper, grease proof paper, coated paper (including waxed paper), and paper of a substance not exceeding 25 grams per square meter. The Court noted that three of these types were indisputably industrial papers, and light paper was generally used for industrial purposes. Thus, it inferred that "coated paper" should also be interpreted as industrial paper.

Detailed Analysis:

Eligibility for partial exemption:
The assessee initially paid excise duty under Notification No. 24/84 but later sought the concessional rates under Notification No. 25/84 for art paper and chromo paper. The Excise Department refused, stating these were "coated papers" excluded from the exemption. The Tribunal confirmed this view, leading to the present appeals.

Interpretation of "coated paper":
The assessee argued that "coated paper" should be interpreted narrowly, excluding printing and writing papers, based on the principle of "noscitur a sociis." The Solicitor General argued for a broader interpretation, including all coated papers. The Court noted that the notification aimed to grant concessions to small factories using unconventional raw materials and that the exceptions listed in the proviso were primarily industrial papers. Thus, it concluded that "coated paper" should be interpreted as industrial paper.

Application of "noscitur a sociis":
The Court applied the "noscitur a sociis" principle, noting that the exceptions in the proviso were primarily industrial papers. It found that interpreting "coated paper" as industrial paper was consistent with the other exceptions and the notification's purpose. The Court cited several precedents supporting this principle, emphasizing that the broader meaning of a word should be limited by its context.

Conclusion:
The Court concluded that "coated paper" in the proviso referred only to industrial coated paper, not to coated varieties of printing and writing paper. It set aside the Tribunal's order and held the assessee entitled to the concessional rates specified in Notification No. 25/84. The appeal was allowed without any order as to costs.

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