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TMI Blog2015 (3) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... rlance or in the commercial sense means paper which is used for printing, writing or packing purposes. From the said various definitions, it is clear that in popular parlance the word "paper" is understood as 'a substance which is used for bearing, writing or printing, or for packing or for drawing on, or for decorating, or covering the walls'. Thus, the word 'paper' in the common parlance or in the commercial sense means 'paper' which is used for writing, printing, packing purposes or drawing or decorating or covering the walls. The legislative history of 'paper' indicates that the expression "paper" has been understood to include all kinds of paper including carbon paper, blotting paper, water proof paper, PVC coated paper, ferro paper, ammonia paper, stencil paper and the like. Therefore, the court should not merely be guided either by taking a narrow or common parlance meaning to the expression "paper" as it is used only for the purposes of writing or printing, when there is such legislative history or practice. There are a number of factors which have to be taken into consideration for determining the classification of a product. For the purposes of classification, the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intention was not to treat it as paper. In the trade parlance, it is understood as electrical goods. Therefore, that may be the reason why the legislature took the pain to expressly state as to what are the types of paper included in the expression 'paper of all kinds'. They have excluded this particular type of paper. Therefore, the paper of all kinds is a comprehensive and an inclusive definition. It is not possible to treat the Electrical Insulated Press Board/High Density Board as a paper, so as to fall within the third schedule of the KVAT Act, 2003. Insofar as the goods mentioned in the third schedule is concerned, the rate of tax is 4%. Therefore, the authorities are justified in levying tax under the heading 'all other goods' and the rate of tax at 12.5%. It is the finding which the Tribunal and suo motu revision authorities have concurrently recorded and therefore, there seems no justification to interfere with the well considered order of the authorities. - Decided against assessee. - STRP Nos. 389-435 of 2012 - - - Dated:- 20-8-2014 - N. Kumar And Pathnakala,JJ. For the Appellant : Sri R V Prasad, Adv. For the Respondent : Smt S Sujatha, AGA O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in emergence of a paper ply. Each consecutive turn of the making roll will add an additional ply (layer) on to the already existing ply on the making roll. The number of turns/rotations of the making roll will decide the thickness of the resultant board. 4. In the process, each ply/layer will get bonded together by hydrogen bonding with water only. The pressure of making roll enhances the bonding as well as removal of excess moisture content and no adhesive is used in between two ply. By the above mentioned process the Appellant can achieve thickness for 0.8mm to 6mm; for getting 0.8mm board, a minimum of 17 to 19 ply/layers of paper are required. Each ply will be of 80 to 100 grams/sq. mtr and for getting higher thickness, the number of ply is increased along with increase in grammage also (100 to 120 grams/sq mtr), then after completion of this stage wet board is formed. The wet board placed between two stainless steel wire mesh is taken through a conveyor to a hydraulic press where the Board will be subjected to pressing and drying. The drying is carried out by heating the metal plates and the board is then taken to the finishing section where the Board is trimmed and cut t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and assessee is entitled to the benefit of serial No.69 as these boards are nothing but products of paper. 6. Per contra, learned Counsel for the respondent department, Smt. S. Sujatha supporting the impugned order contended that in order to understand the nature of the goods, we cannot go by the scientific or technical meaning given. If that particular goods is not described in the Act or the Rules, one has to go by the theory of common parlance. All products of paper are sold in a stationery shop. The question is, whether this product is available in the stationery shop. If it is not available in the stationery shop, it cannot be grouped in serial No.69. Further, she also submitted that in deciding the nature of the goods, it is not permissible to look into the definition of another enactment as laid down by the Apex Court. The products should be understood under the provisions of the Karnataka Sales Tax Act or KVAT, 2003. Seen from any angle, when at serial No.69 after stating that 'papers of all kinds', if the legislature has used the phrase 'including', it means if the goods in question is not included then it cannot be brought into the said entry under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Webster's Dictionary - Paper, (ME Papire an Egyptian reed from the inner bark of which a kind of writing paper was made in ancient Egypt) A thin flexible material made in leaves or sheets from the pulp of rags, straw, wood or other fibrous material and used for writing or printing upon or for wrapping and various other purposes. A single piece, sheet or leaf of such material, smaller wrapper or card of paper usually including its contents; as a paper of pins; any material like paper, as papyrus. In Encyclopaedia Britannica [Volume 13 (15th Edition)], paper has been defined as basic material used for written communication and the dissemination of information. Paper, the general name for the substance commonly used for writing upon or wrapping things in. In Unabridged Edition of the Random House Dictionary of the English Language the word paper has been defined as a substance made from rags, straw, wood or other fibrous material, usually in thin sheets, used to bear writing or printing on or for wrapping things, decorating walls etc. Oxford Advanced Learners' Dictionary (Sixth Edition) page 917 - For writing/wrapping: (1) (Often in compounds) the thin mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r wrapping things, decorating walls etc. 11. The expression PAPER has been the subject matter of decisions by various Courts. It is useful to notice the same. 12. In the case of NANDI PRINTERS PVT. LTD. V. STATE OF KARNATAKA reported in STC V.122 Page 164, this Court has held as under: 4. Learned High Court Government Pleader submitted that the expression paper as understood by the Tribunal is in order and does not call for any interference at our hands. The question for consideration is whether the expression used in Explanation II to entry 16B as was in force at the relevant time would include paper boards, pulp boards, and duplex boards. The expression used in entry 16B is only paper . The legislative history indicates that the expression paper has been understood to include all kinds of paper including carbon paper, blotting paper, water proof paper, PVC coated paper, ferro paper, ammonia paper, stencil paper and the like. It is only by an amendment made to the Act on May 1, 1992. Entry No. 65 provides that paper (all kinds) including carbon paper, blotting paper, water proof paper, etc., but excluding certain other kinds of paper such as photographic paper, pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Excises and Salt Act, 1944. That levy is based on the test certificate issued by the National Test House, Alipore, Calcutta, which has classified the products manufactured by the assessee as presspapers of electrical trade grade. One Department of the Central Government has thus classified the product in question as paper and we fail to understand why another Department of the same Government should hold otherwise without any compelling reason. 14. In the case of 3m India Ltd. Bangalore vs. State of Karnataka reported in 2012 (74) Kar L.J. 1, this Court has held as under: 7. The records clearly disclose that the appellant imported jumbo rolls of paper of different colour, which contain strips of adhesive on one side, then cut the paper into pieces and prepare 'post-it-paper'. The adhesive at one edge on one side of the paper, which is generally used as a flag and also used for writing purposes. It can be reused number of times so long as the adhesive is working. The Customs authorities recognized it as a paper. Accordingly duty has been imposed. He made an application before the ACAR seeking clarification with regard to the applicability of rate of tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the Bombay High Court in the case of ADDITIONAL COMMISSIONER OF SALES TAX, BOMBAY. Paragraph 11 of the said judgment reads as under: 11. Coming then to sub-entry (2) of Entry 24 of Schedule C to the Bombay Sales Tax act, 1959, it is to be noted that sub-entry (1) of Entry 24 covers eight kinds of paper, art board, art cards and ivory cards. These are admittedly costly kinds of papers, cards and/or board. Sub-entry (2) opens with the expression paper of all other kinds........ The use of word other is not without significance. On the face of it is indicates that all items mentioned in sub-entry (1) are also kinds of paper including particular kind of cards and boards mentioned in the sub-entry and sub- entry(2) covers paper of all other kinds , i.e., other than the kinds of paper covered by sub- entry(1). If that is so, there is no good reason why mill board should not be taken as covered by the expression all other kinds of paper. X x x x x The normal function of the word 'including' in an entry, to our mind, is to indicate that the items following the word including are though of the type of the main item in the entry, there could be so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relates to paper of all kinds and cardboard boxes being made out of paper are also covered by the exclusion is not correct, because serial No.12 of the notification deals with paper of all kinds and paper products of the enumerated category. Stand of the State that papers of all kinds is included cannot be correct for the simple reason that had same been the intention, there was no necessity for enumerating various paper products. The notification No.154 dated 28.1.1985 cannot be pressed into service to take out the effect of Section 13(1)(e) of the Act which was inserted subsequently. 10. Description of the goods as indicted in serial No.12 relates to paper (of all kinds) and inclusive definition in clear terms refers to certain paper products. Those which are relevant for our purpose are cardboard and cartons . Had it been the intention to cover paper products of all kinds in the expression paper there was no necessity for including definite paper products.. xxx xxxx 11. From the above definition it is clear that in popular parlance, the word paper is understood as meaning a substance which is used for bearing, writing or printing, or for packing or for drawin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to enact, either in express words or by reasonable and necessary implication. 17. The Supreme Court in the case of State Of U.P. And Another reported in AIR 1977 SC 132, has held as under: 7. The word 'paper' admittedly not having been defined either in the U.P. Sales Tax Act, 1948 or the Rules made thereunder, it has to be understood according to the afore-said well established canon of construction in the sense in which persons dealing in and using the article understand it. It is, therefore, necessary to know what is paper as commonly or generally understood. The said word which is derived from the name of reedy plant papyrus and grows abundantly along the Nile river in Egypt is explained in The Shorter Oxford English Dictionary (Volume 2) (Third Edition) as a substance composed of fibres interlaced into a compact web, made from linen and cotton rags, straw, wood, certain grasses, etc., which are macerated into a plup, dried and pressed; it is used for writing, printing, or drawing on, for wrapping things in, for covering the interior of walls, etc. xxx xxx 10. From the above definitions, it is clear that in popular parlance, the word 'paper' is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uffed rice are edible. But, the entry rice seems to us to cover both forms of rice. At any rate, it is wide enough to cover them Even if parched rice and puffed rice could be looked upon as separate in commercial character from rice as grain offered for sale in a market, yet, keeping in view the other matters mentioned above, it could not be presumed that it was intended to exclude from entry 66 , rice , which at any rate, had not so changed its identity as not to be describable as rice at all. Muramaralu was after all rice even though it was puffed. Atukulu even though parched was still called rice. We must also remember that the schedule which we have to interpret is in the English language where the term rice is still found in the rendering or description of pelalu as well as that of muramaralu in the English language. And, in any case, if two interpretations of a provision are possible, we think that we ought to, in such a case, apply the principle that the interpretation which favours the assessee should be preferred. 19. The Supreme Court in the case of Collector of Central Excise, Hyderabad Vs. Bakelite Hylam Ltd. reported in (1997) 10 SCC 350, has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the background of the aforesaid definitions and the interpretation placed on the word 'paper' by the Apex Court and other Courts, we have to interpret Entry No. 69. It is, therefore, necessary to keep in mind the rules of interpretation of a taxing statute. 21. In Attorney-General v. Winstanley, (1831) 2 Dow Clark 302 = 6 ER 740, Lord Tenterden stated as follows:- Now, when we look at the words of an Act of Parliament, which are not applied to any particular science or art, we are to construe them as they are understood in common language. 22. In Grenfell v. Commrs. of Inland Revenue, (1876) 1 Ex D 242 at page 248, Pollock, J. pointed out: As to the construction of the Stamp Act, I think it was very properly urged that the statute is not to be construed according to the strict or technical meaning of the language contained in it, but that it is to be construed in its popular sense, meaning, of course, by the words 'popular sense' that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it. 23. The Apex Court in the case of Collector of Central Excise, Kanpur Vs. Krishna Carbon Paper Co. re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight of the I.S. specifications as noted hereinbefore and there being no other reliable evidence as to how coated paper is understood in the market, except the opinion of the Indian Standard Institute in its specifications, in our opinion, the Tribunal was not right in the view it took. 24. The Apex Court in the case of Union of India and Another Vs. Delhi Cloth and General Mills Co. Ltd. reported in AIR 1963 SC 791 (V.50 C.119), has held as under: 12. It will be unsafe however to base any conclusion on this extract without knowing the entire context in which the statement has been made or what has been said in other parts of the same book. The book itself was not produced before us. It is worth noticing that while the above statement is made by Mr. Bailey in respect of cottonseed oil the oil with which we are concerned is produced from groundnut oil and tilneither of which is cottonseed. Apart from all this we are of opinion that the view of the Indian Standard Institution as regards what is refined oil as known to the trade in India must be preferred to the opinion of this author. In this connection it has also to be mentioned that the affidavits filed on behalf of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. v. Union of India [(1985) 3 SCC 284]. There are a number of factors which have to be taken into consideration for determining the classification of a product. For the purposes of classification the relevant factors, inter alia, are statutory fiscal entry, the basic character, function and use of the goods. When a commodity falls within a tariff entry by virtue of the purpose for which it is put to, the end use to which the product is put to, cannot determine the classification of that product. 28. The Supreme Court in the case of Annapurna Biscuit Manufacturing Co. Vs. Commissioner of Sales Tax, U.P., Lucknow reported in STC V.48 Page 254, has held as under: It is a well settled rule of construction that the words used in a law imposing a tax should be construed in the same way in which they are understood in ordinary parlance in the area in which the law is in force. If an expression is capable of a wider meaning as well as narrower meaning the question whether the wider or the narrower meaning should be given depends on the context and the background of the case. 29. The Supreme Court in the case of Annapurna Carbon Industries Co. V. State of Andhra Pradesh rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... violence to the language, be regarded as textiles . Take for example rayon and nylon fabrics which have now become very popular for making wearing apparel. When they first came to be made, they must have been intruders in the field of textiles because only cotton, silk and woollen fabrics were till then recognised as textiles . But today no one can dispute that rayon and nylon fabrics are textiles and can properly be described as such. We may take another example Which is nearer to the case before us.. It is common knowledge that certain kinds of hats are made out of felt and though felt is not ordinarily used for making wearing apparel, can it be suggested that felt is not a textile ? The character of fabric or material as textile does not depend upon the use to which it may be put. The uses of textiles in a fast developing economy are manifold and it is quite common now to find textiles being, used even for industrial purposes. . 31. The Supreme Court in the case of Dunlop India Ltd. Vs. Union of India and others reported in AIR 1977 SC 597, has held as under: 31. It is well established that in interpreting the meaning of words in a taxing statute, the acceptation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orating, or covering the walls'. Thus, the word 'paper' in the common parlance or in the commercial sense means 'paper' which is used for writing, printing, packing purposes or drawing or decorating or covering the walls. The legislative history of 'paper' indicates that the expression paper has been understood to include all kinds of paper including carbon paper, blotting paper, water proof paper, PVC coated paper, ferro paper, ammonia paper, stencil paper and the like. Therefore, we should not merely be guided either by taking a narrow or common parlance meaning to the expression paper as it is used only for the purposes of writing or printing, when there is such legislative history or practice. It is well settled that where no definition is provided in the statute itself as in this case, for ascertaining the correct meaning of a fiscal entry reference to a dictionary is not always safe. The correct guide, it appears in such a case, is the content and the trade meaning. The word 'paper' is not the term of an art. It is a commercial article to be understood in the sense that people dealing with such an article can understand it and would att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Standard in relation to any article or process. 36. In the case of the assesse itself, the Commissioner of the Central Excise, Customs and Service Tax while dealing with the question of process and manufacture of the goods of the assessee falls under which sub-heading, has passed an order holding that the Electrical Grade Insulation Press Board falls under the heading '4805', which covers 'Other uncoated paper and paperboard, in rolls or sheets, not further worked or processed than as specified in Note.3 to the said Chapter. 37. The entry to be interpreted here is in a taxing statute; full effect should be given to all the words used therein. If a particular article would fall within a description, by the force of words used, it is impermissible to ignore that description and denote the article under another entry, by a process of reasoning. The meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand by them in the usual course. If an expression is capable of a wider meaning as well as narrower meaning, the question whether the wider or the narrower meaning should be give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about which there could be some doubt as to whether they are covered or not by the main entry. The item about which there is no scope for doubt or there is comparatively less scope for doubt would accordingly stand automatically covered by the main items in the entry. In the absence of any inclusion or exclusion of words in the expression paper , it must be held that it includes 'all kinds of paper'. In this background, when we look at serial No.69, 'papers of all kinds' should include all types of paper. In various judgments, the Courts have held that waste paper, paper waste or newspaper are not included in the word 'paper'. The legislature now has consciously included this paper in Serial No.69. However, after using the words 'paper of all kinds', they have used the word 'including', it means, the types of papers set out after the word including was not included in the word 'paper of all kinds'. The reason appears to be again because of some judgments, there was a doubt whether ammonia paper, blotting paper, carbon paper, cellophane, PVC coated paper, stencil paper, tissue paper, water proof paper, art boards, card boards, corruga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the layers, they get bonded together by hydrogen bonding with water only. After removal of excess moisture content and no adhesive is used in between two ply. By the above mentioned process, the petitioner can achieve thickness for 0.8 mm to 6 mm and a wet board is formed. Thereafter, the wet board placed between two stainless steel wire mesh is taken through a conveyor to a hydraulic press where the Board will be subjected to pressing and drying. The drying is carried out by heating the metal plates and the board is then taken to the finishing section where the Board is trimmed and cut to required sizes. Finally, the finished products are packed either in the polythene bags or in the wooden pallets depending upon the size and quantity. Then insulation paper and paper board of electrical grade are used in the electrical transformers as conductor wrapping and insulation barriers between winding coils. These items are used in transformers as insulation products. Thus, the Electrical Insulation Press Board manufactured is under Electrical Grade Insulation Board products. If we go through this process, one thing is clear that though the raw material used is a wood pulp or sulphat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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