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TMI Blog1991 (10) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... nylon twine is taxable as a multi-point item. Depending upon our ultimate decision, the fate of each case shall be determined at the end of our judgment. 2.. However, we will refer to the facts of T.C. No. 391 of 1991 for a proper understanding of the arguments and authorities cited before us in relation to the issues involved in the cases. For the assessment year 1983-84 the appellant in T.C. No. 391 of 1991 had returned a total and taxable turnover of Rs. 10,49,194 and Rs. 10,598.60, respectively. On scrutiny of the accounts it was found that the assessees had claimed exemption on the sale of nylon fishnet twines, the turnover in respect of which was Rs. 8,69,704.03. For this and certain other defects the assessing authority determined the total and taxable turnover to his best of judgment. Nylon fishnet twines were assessed at five per cent. On appeal, the assessees contended that the turnover relating to nylon fishnet twine would fall under entry 18 of the First Schedule of the Act and inasmuch as the assessees had purchased the same from registered dealers the second sales at their hands were not taxable. This contention was accepted by the appellate authority. On suo motu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We need not go on multiplying the decisions on this point, because it is now well-settled principle of law that articles are not listed according to the source material out of which they are made and the items in the Schedule have, therefore, to be interpreted according to their popular meaning or the meaning attached to them by those dealing in them and resort should not be had to the scientific or the technical meaning of such terms. 4.. One doubt which may arise on a first reading of the entry is whether nylon twine or nylon yarn will at all come within the words "artificial silk yarn". We find that this issue is no longer res integra because, as early as in Kishinchand Chellaram v. Joint Commercial Tax Officer [1968] 21 STC 367 (Mad.) the issue had been settled. In that case the stand of the Government of India that man-made fibres like nylon, terylene, terene, decron, etc., were artificial silk and actually and technically the above products are textiles coming under the category of "artificial silk", was accepted by the Division Bench of this Court, after referring to the literature on the subject. More recently in Sirsilk Ltd. v. Textiles Committee AIR 1989 SC 317 the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed nylon twine as netting yarn." 6.. The above averment in one of the writ petitions has not been disputed before us by the Revenue. All the three counsel who addressed us for various assessees had in fact adopted this fact situation relating to their goods. 7.. We will now do well to refer to the dictionary meaning of the relevant word "artificial", defined as being in opposition to the word "natural". This word need not detain us further because we have already held that nylon and rayon will come within the words "artificial silk product". The word "yarn" is defined in the Oxford Dictionary as fibre of cotton, wool, silk, flax, spun and prepared for use in weaving, knitting, etc. Webster's Third New International Dictionary defines "yarn" as "a continuous strand often of two or more plies that is composed of carded or combed fibres twisted together by spinning, filaments laid parallel or twisted together, or a single filament, is made from natural synthetic fibres and filaments or blends of these and as used in warp weft in weaving and for knitting or other interlacings that form cloth. The Mercury Dictionary of Textile Terms defines "yarn" as follows: "A continuous strand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twine and yarn mean more or less the something in Tamil as "nool" or "twisted nool". 10.. We will now refer to a set of decisions relating to cotton yarn and cotton thread. The first case is Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Khader Kunhi Sons [1976] 37 STC 227 (Ker). Though the Kerala High Court remitted the matter back to the Tribunal, there was a categorical expression of opinion on the crucial question. In that case the assessees had sold "twisted cotton fishing twine". The Tribunal relying on the judgment of this Court in Madura Mills Company Limited v. Government of Madras [1970] 25 STC 407 (Mad.) held that the goods sold were really "cotton yarn". The Kerala High Court relied on the judgment of the Supreme Court in Ganesh Trading Co. v. State of Haryana [ 1973] 32 STC 623 and held as follows: "When cotton yarn is understood as the thin thread spun out of cotton which is utilised for the purpose of making twine, cord, rope, etc., would it be possible to call the particular article-the article is not before us nowcotton yarn. If the common man would not understand the substance sold by the dealer in these cases as 'cotton yarn' and if in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Madras [1970] 25 STC 407 (Mad.), Muthusavari Pillai Sons v. State of Tamil Nadu [1977] 39 STC 359 (Mad.) and did not agree with Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Khader Kunhi Sons [1976] 37 STC 227 (Ker). In Muthusavari Pillai Sons v. State of Tamil Nadu [1977] 39 STC 359 (Mad.) it was held that the yarn does not lose its character as yarn merely by reason of its consisting of a bunch of threads, as in the case of doubling and twisting together of two or more threads to make a stronger or firmer thread in order to manufacture a specified kind of textile. They held that a bunch of spun thread could also come within the definition of "cotton yarn" if it can be used for the manufacture of any textile. Similarly in State of Tamil Nadu v. K.R. Lakshmana Pillai [T.C. (R) No. 1249 of 1991 dated March 25, 1991] a Division Bench of this Court took the view that the assessees who purchased cotton yarn from the State and rerolled the same as rolls and balls to suit the convenience of the users and thereafter sold them, continued to be cotton yarn and was not liable to tax. It was contended in that case that cotton yarn sold as cotton yarn thread retains it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... woollen goods are prepared. They opined that "woollen carpet kati" is neither "yarn" nor "woollen goods" and that it is an unclassified item. In Union of India v. Gujarat Woollen Felt Mills [1977] 3 SCR 472; AIR 1977 SC 1548 the assessees manufactured non-woven felts from the woollen fibres and they were treated as "woollen fabrics" covered by entry 21 to the First Schedule of the Central Excises and Salt Act, 1944. However the assessees later found that they were not liable to pay excise duty and sought for refund of the amount and succeeded before the Gujarat High Court. In dealing with the question the Supreme Court held that the felts did not fall under "woollen fabrics". It was held that a plain reading of the entry did not support the case of the Revenue. It was also held that the intention was not to cover non-woven material which was wool based in the entry. We will now take up the cases dealing with nylon, rayon and other polyester spun fabrics. In Garware Nylons Ltd. v. Union of India [1980] ELT 249 the Bombay High Court had to consider an identicial question with which we are concerned. The petitioners in that case were manufacturing nylon twine. Under item 18 of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yarn suitable only for manufacture of fishnets, the Division Bench in our opinion, we say with respects, was not right in holding that nylon twine satisfied the two tests in Commissioner of Sales Tax v. Sarin Textile Mills [1975] 35 STC 634 (SC); AIR 1975 SC 1262 and that it must be deemed to be yarn. 13.. The next judgment Sainet Private Ltd. v. Union of India [1984] 18 ELT 141 is also from the Bombay High Court and it relies on the earlier judgment in Garware Nylons Ltd. v. Union of India [1980] ELT 249 (Bom). But in the latter case the issue was slightly different because the petitioners in that case were carrying on the activity of making fishnets. The question was whether the fishnets fall within the tariff item 22 called "man-made fabrics", and offers no assistance to us in this case. In Polesanapalli Co. v. State of Andhra Pradesh [1988] 9 SISTC 33 the Andhra Pradesh High Court came to the conclusion as follows: "It is true that commercially speaking a fishing net is a different goods than the nylon yarn, but, having regard to the fact that essentially it is nylon yarn only twined in a particular fashion, we are of opinion that it still retains the character of nylon y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in Garware Nylons Ltd. v. Union of India [1980] ELT 249. In Importex International (P) Ltd. v. State of Kerala [1991] 81 STC 351, the Kerala High Court had to deal with an identical question. In that case the petitioners were dealers in nylon fishnets. In that case, a subsidiary question arose relating to the classification of nylon twine. The stand of the Government was that nylon twine was not nylon yarn within the meaning of entries 42 and 156 of the Kerala Act. For the purpose of proper appreciation of this decision we are extracting the said entries 42 and 156 of the Kerala Act: "42. Artificial silk yarn, synthetic polyester fibre, polyester fibre yarn and staple fibre yarn." "156. Plastics and articles made of plastics including plastic pipes." The Kerala High Court then proceeded to extract the stand of the Government, that nylon fishnet twine would not come within the ambit of either of the above entries, but should be taxed as general goods. The Kerala High Court put their seal of approval on the said stand of the Government. 15.. Reliance was also placed at the Bar on the judgment of the Supreme Court in Alladi Venkateswarlu v. Government of A.P. [1978] 41 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twine for the purpose of making fishnets. (2) Fishnets can be made only from nylon twine. (3) Fishnets cannot be made straightaway from nylon yarn. (4) Nylon yarn when converted into nylon twine cannot be recovered back as yarn by any process. In other words the process of making yarn into twine is irreversible. The entry 18 of the First Schedule to the Act only refers to artificial silk yarn. Therefore no other type of yarn material like "nylon twine" by whatever name called can be brought within the entry. In this connection reference may be made to entries 18-A, 18-B and even entry 19 of the Act, which show that when the Legislature wanted to include other types of yarn, they did make specific mention of the same in the entries. Similarly the learned Government Pleader refers to several other entries in the First Schedule of the Act which specifically included all other items coming under the generic description of a particular word. He argues that nylon twine which is not in the Schedule is sought to be brought in indirectly by the assessees by doing violence to the plain language of the entry. We find, in view of our discussion, force in his submission. 17.. For all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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