9911796707
TMI Blog1984 (3) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... rd August, 1976, allowed the appeal filed the petitioners and held that the petitioners were liable to pay duty at the route specified in Tariff Item 68 and not Tariff Item 52. On that basis the petitioners paid duty and were allowed to clear the product. On 15th June, 1977, a show cause notice was issued by the Central Government under Section 36(2) of the Central Excises and Salt Act, 1944. The petitioners submitted their reply to the said show cause notice and also forwarded various enclosures, including the certificates from dealers, consumers and consultants, etc. An opportunity of being heard was also given to the petitioners and vide order dated 31st March, 1978, the Central Government came to the conclusion that the product of the petitioners squarely falls under Tariff Item 52 and therefore the petitioners were directed to pay tax accordingly. Vide order dated 25-4-1978, the applications filed by the petitioners for refund of tax for the period from June, 1971 to June, 1976, and July, 1976 to May, 1977, were also rejected. The petitioners then submitted a new classification list under Tariff Item 52 obviously under protest. A notice for short levy of the duty and claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments on which reliance was placed by the Government for the classification of the petitioners' product. The petitioners submitted their reply together with the relevant evidence. The petitioners were also granted personal hearing by the Joint Secretary to the Government of India when the petitioners furnished further certificates. After appreciating all the evidence on record the Government of India vide order dated 9th September, 1981, came to the conclusion that the product of the petitioners squarely falls under Tariff Item 52. As a result of this finding the petitioners amended the petition. Thus in the present writ petition initial order as well as second order dated 9th September, 1981, are challenged on various grounds. 3. Shri Bhaba, the learned Counsel appearing for the petitioners, contended before us that on the true construction of Item 52, an article which is exclusively a fastener and with no other functional utility alone can fall under 52. This position has been made amply clear by the trade notice issued by the competent authority dated 6th August, 1971, and the said notice would safely be described as contemporaneous exposition of the trade meaning of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus it is clear that, according to the trade understanding nyloc self-locking nuts are not nuts. This position is further clear from the voluminous evidence produced by the petitioners. This position is also accepted in the drawback scheme of the Government of India wherein also nuts are treated differently from nyloc self-locking nuts. The Sectional Committee of the ISI consists of eminent persons in trade, industry and the Government as also consumer and others. The Supreme Court has stated that the view of the ISI as regards that product is known in the trade should be accepted. In support of this proposition he has placed reliance upon the decision in Parrys Confectionery Ltd., Madras v. Government of India, 1980 E.L.T. (Mad.) and Union of India v. Delhi Cloth and General Mills Co. Ltd., 1977 E.L.T. 199 (SC). He has also placed reliance on IS: 1367 and 7002 and contended that according to the understanding of the trade the self-locking nuts with nyloc insert like the petitioners' product are not treated nor are understood as nuts or as fasteners. The petitioners' product are not treated nor are understood as nuts or as fasteners. The petitioners' product is three to four times ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by errors apparent on the face of record and is also contrary to the well established principles of natural justice. 6. On the other hand it is contended by Shri Tipnis, the learned Counsel appearing for the respondents, that in the present case what is obvious is being disputed. From the bare reading of entry 52 it is quite clear that the petitioners' product squarely fall in the said entry. According to Shri Tipnis the Government of India rightly placed reliance upon the representations made by the petitioners to their customers and dealers, it being the best evidence. The major portion of article is manufactured from the base metal. While considering as to whether a particular product falls within a particular entry, it is the article as a whole which will have to be taken into consideration. So construed, it is quite obvious that the petitioners' product is nothing but a threaded nut which is mainly used as a fastener, though it may have some additional advantages. It would at the most be described as special type of fastener or improvised nut. It is basically used as fastener, and therefore it was righly described as nut by the Central Government. Though nylon collar makes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich falls for our consideration is in a very narrow compass. The relevant entry, i.e., entry 52 of the Schedule reads as under : "Bolts and nuts, threaded or tapped, and screws, of base metal or alloys thereof, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. Explanation. - The expression 'bolts and nuts, threaded of tapped, and screws' used in this item shall include bolt ends, screw stuts, screw studding, self-tapped screws, screw hooks and screw rings." It is by now fairly well-settled that the words or expressions describing an article or commodity should be construed in the sense in which it is understood in the trade by a dealer or consumer. It is they who are concerned with it and it is the sense in which they understand it, that constitutes a definitive index of legislative intention. In a taxing statute words of every day use must be construed not in their scientific or technical sense but as understood in common parlance. Therefore the words "bolts and nuts" in Item 52 of the Schedule will have to be interpreted according to their popular sense, meaning that sense which people conversant with the subject-matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t give way where the language of the statute is plain and unambiguous : see K.P. Varghese v. Income-tax Officer, Ernakulam, AIR 1981 SC 1922. If the trade notices were issued by the Government of India itself or the highest authority entrusted with the execution of provisions of the Act, then in a given case the matter might stand on a different footing. However, in the present case these trade notices are issued by different Collectorates and not by the highest authority. Further the language of entry is plain and unambiguous. It is also equally well settled that if a controversy is raised, it is the function of the court to construe the entries and in reaching the correct meaning of the statutory provisions, opinion of the exe- cutive is hardly material. The court cannot abdicate in favour of such opinion. From the plain reading of entry 52 as a whole, it is quite clear that it is worded in generic terms. It is all comprehensive. Therefore it is quite obvious that the expression "exclusively" as used in trade notices is based on misunderstanding. Similar is the position about the Government of India's decision in other matters. From the bare reading of the order of the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Co. Ltd. 7. A certificate from Messrs Ruplas (India) Ltd. 8. A certificate from Messrs Kirloskar Cummins Ltd. 9. A certificate from Messrs Kirloskar Oil Engines Ltd. 10. A certificate from Messrs Ruston and Hornaby (I) Ltd. 11. A certificate from Messrs Mahindra Owen Ltd." We have gone through these documents as well as certificates. We have also carefully gone through the expert evidence as well as Drawback Scheme of the Government of India, the view expressed by ISI and the evidence of traders and consumers and other reports. From the various certificates issued in the name of the petitioners it is quite clear that the product of the petitioners, nylocs, are ordinarily stocked in the auto spare parts market as these nuts are used on special applications on all types of vehicles. They are somewhat different to the ordinary nuts as they have nyloc collar and in view of their special characteristics, such as self-locking, sealing, etc., they are used where vibration is a major problem. They are supplied against specific orders and they are not hardware items. Ordinary consumers of nuts do not purchase nyloc nuts because they are costlier than other types of standard nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iples, different advantages, such as economical and technical, but ultimately it is nothing but a self-locking nut. On a comprehensive consideration of the material before us, there is no escape from the conclusion that nyloc nut is a nut, though it could be described as an improvised or special type of nut. It will make no difference whether it is readily available in the ordinary hardware market or is available only in automobile shops, or is costlier than an ordinary iron nut. It is quite clear that if this nut could not be used basically as a fastener, then all other additional advantages will have no meaning. Therefore it cannot be said that the view taken by the Government of India is not the correct view of the matter. This being the position we have no hesitation in coming to the conclusion that the Government of India was right in holding that the product of the petitioners is covered by entry 52. In any case it cannot be said that the said finding requires any interference in the extraordinary jurisdiction of this Court under article 226 or 227 of the Constitution of India. Though we have heard this writ petition as if it was an appeal, while exercising writ jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the product and is therefore illegal. The decision of the Government of India is not based on visual inspection of the article. It is well-settled that if the inspection of an article is made only for the purpose of understanding the evidence and is not used as a substitute for evidence, then it will not vitiate the finding as the judgment in that behalf is not based solely on the result of the personal inspection : See Ugam Singh v. Kesrimal, AIR 1971 SC 2540. 13. However we find some substance in the contention raised by the petitioners that the demand made by the respondents vide their letter dated 21st April 1975, is illegal and without jurisdiction. It is not disputed that the demand is referable to rule 10 of the Rules. It is not disputed by Shri Tipnis that this demand letter is a direct notice of demand and is not a show cause notice. 14. This being the position obviously the said letter of demand is beyond the cope of rule 10. This is more so when now it is an admitted position that the amount shown therein is not correct. In this context Shri Bhaba has rightly placed reliance upon the decision of this Court in Misc. Petition No. 944 of 1973 - Duke and Sons Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
