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TMI Blog1990 (4) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... see is having a factory at Khadki in which different varieties of paper and paper boards are manufactured. The factory does not have a bamboo pulp plant. It uses waste paper and cereal straw which are considered to be unconventional raw materials for the manufacture of paper and paper board. The pulp used by the assessee contains more than 50% of weight of pulp made from these unconventional raw materials. `Paper and paper board' are goods falling under item 17(1) of the first schedule to the Act. Two notifications were issued on 1st March, 1984 under rule 8(1) of the Central Excise Rules, 1944 in respect of the above item. The first of them, being Notification No. 24 of 1984, restricted the excise duty on items falling under the aforesaid item in the manner following :- S. No. Description Rate 1. Printing and writing paper. Ten per cent ad valorem paper plus one thousand and five rupees per metric tonne. 2. All sorts of paper commonly known as kraft paper (including paper and paper boards of the type known as kraft liner or corrugating medium) of a substance equal to or exceeding 65 grammes per square met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 65 grammes per square metre Rs. 730 per metric tonne (iii) Others Rs. 900 per metric tonne. 3. (i) Printing and writing paper Rs. 900 per metric tonne. Provided that the total quantity of clearances of all varieties of paper paper boards in the preceding financial year, by or on behalf of a manufacturer, from one or more factories or from a factory on behalf of one or more manufacturers, exceeded 7, 500 metric tonnes but did not exceed 16, 500 metric tonnes. (ii) All sorts of paper commonly known as kraft paper (including paper paper boards of the type known as kraft liners or corrugating medium) of a substance equal to or exceeding 65 grammes per square metre. Rs. 900 per metric tonne. (iii) Others Rs. 1, 120 per metric tonne. 4. [This para, added by Notification No. 92/84 dated 18-4-1984 added another concessional rate where the clearances exceeded 10, 500 but did not exceed 24, 000 metric tonnes on the same lines as above but this does not need to be set out here]". 4. The grant of the above concessional rates were, however, subject to certain impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly to have paid excise duty on the goods manufactured by it in terms of Notification No. 24/84 but later seems to have thought of claiming the concessional rates prescribed by Notification No. 25/84. The company was manufacturing art paper and chromo paper. It is common ground that these two types of paper fall under category "printing and writing paper". It is also common ground that these two articles also fall under the description "coated paper" used in the second proviso. Since coated paper is taken by the proviso out of the purview of the Notification No. 25 of 1984, the Excise Department refused to permit the assessee to avail of this concession in respect of its manufactured goods. This treatment by the Excise Department has also been confirmed by the Central Excise and Gold Control Appellate Tribunal (CEGAT). The Tribunal disposed of the matter very briefly. It observed :- "37. That brings us to the second question whether art paper and chromo paper were eligible for the exemption granted under Notification No. 25 of 1984. We have carefully considered arguments of the appellants. We have perused the Notification No. 24 of 1984 as amended and note that the second proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso are items of industrial paper, it stands to reason that though `coated paper', in a wider sense, may include all categories of coated paper, the denial of concession by the proviso is to be restricted only to coated paper falling under the industrial variety. In other words, it is submitted that the word `coated paper' should be interpreted by applying the principle of "Noscitur A Sociis" or on the analogy of the "Ejusdem generis" principle. This contention, it is submitted, is re-inforced by two considerations. The first is that the Government must have had some idea or principle in putting together the exceptions and there is no conceivable principle other than the one enunciated. The second consideration is the addition of the words used in parenthesis along with `coated paper' viz. "(including waxed paper)". It is pointed out that waxed paper obviously means coated paper because waxed paper is nothing but paper coated with wax and would have anyhow been covered by the exception. Nevertheless, it was considered necessary, it is said, to specifically include it in order to make it clear by this illustration that only industrial paper like waxed paper is taken out from the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that one such classification is between industrial paper and cultural paper. "The Dictionary of Paper" published by the American Paper and Pulp Association (Second Edition) contains the following definition : Industrial Papers - A very general term which is used for to indicate papers manufactured for industrial uses as opposed to those for cultural purposes. Thus, building papers, insulative papers, matching paper etc. would be considered industrial papers whereas writing and printing papers would be cultural papers. Now the proviso denies the concession extended by Notification No. 25/84 to certain types of papers. It is true that no meticulous reasons can always be made available or discovered for variations in rates of duty as between various types of goods and the absence of some common thread in relation to a set of goods treated alike may not necessarily render the classification irrational or arbitrary. But, at the same time, one can legitimately postulate that the denial of a concession to a group proceeds on the basis of some aspect or feature common to all items in the group. If such a principle can be conceived of which would rationalise the inclusion of all the it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is clear that four out of the five varieties of paper which are denied the benefit of the concession seem to constitute industrial paper. In fact even if, as urged for the Union of India, only three of these items are of the industrial variety while the other two could be either, it will not still be unreasonable (though, may be, a little less plausible) to draw an inference that only industrial paper falling in those two categories are intended to be comprehended in the classification rather than assume, for no detectable reason, that all paper of these two varieties alone are excluded from the concession. We think, therefore, that the appellants are on firm ground in submitting that the expression `coated paper' in the proviso should draw colour from the context in which it is employed and receive an interpretation consistent therewith than its literal one, which in its widest sense, may be comprehensive enough to include all coated paper, industrial or otherwise. 10. The principle of statutory interpretation by which a generic word receives a limited interpretation by reason of its context is well established. In the context with which we are concerned, we can legitimatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e too numerous to need discussion here. It should be sufficient to refer to one of them by way of illustration. In Rainbow Steels Ltd. v. C.S.T. (981-2 S.C.C. 141) this Court had to understand the meaning of the word `old' in the context of an entry in a taxing tariff which read thus : "Old, discarded, unserviceable or absolete machinery, stores or vehicles including waste products" Though the tariff item started with the use of the wide word `old', the Court came to the conclusion that "in order to fall within the expression `old machinery' occurring in the entry, the machinery must be old machinery in the sense that it has become non-functional or non-usable". In other words, not the mere age of the machinery, which would be relevant in the wider sense, but the condition of the machinery analogous to that indicated by the words following it, was considered relevant for the purposes of the statute. 11. The maxim of noscitur a sociis has been described by Diplock, C.J. as a "treacherous one unless one knows the societas to which the socii belong" (vide : Letang v. Coopex, 1965-1 Q.B. 232). The learned Solicitor General also warns that one should not be carried away by labels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. In our view, the only reasonable way of interpreting the proviso is by understanding the words `coated paper' in a narrower sense consistent with the other expressions used therein. 12. In the view we have taken it is unnecessary to consider the other contentions urged before us : (i) whether the words "(including waxed paper)" are words indicative of the limitation sought to be placed on the words "coated paper" or they are only intended to make it clear that even paper impregnated with wax will not be entitled to exemption; and (ii) whether, if the notification is capable of two equally plausible interpretations, the one in favour of the subject should be upheld or the one taken by the Tribunal should be confirmed. 13. For the reasons discussed above, we 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. 14. The appeal is allowed. But we make no order as to costs. - - TaxTMI - TMITax - Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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