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PETITIONER:

ASIAN PAINTS INDIA LTD.

Vs.

RESPONDENT:

COLLECTOR OF CENTRAL EXCISE

DATE OF JUDGMENT23/03/1988

BENCH:

MUKHARJI, SABYASACHI (J)

BENCH:

MUKHARJI, SABYASACHI (J)

RANGNATHAN, S.

CITATION:

1988 AIR 1087 1988 SCR (3) 339

1988 SCC (2) 470 JT 1988 (2) 8

1988 SCALE (1)628

CITATOR INFO :

RF 1991 SC 999 (14)

ACT:

Central Excise and Salt Act, 1944-Section 35L and

Tariff Item Nos. 14(1)(3)(iv) and 14 (1)(v) of the First

Schedule-Classification for purpose of excise levy-Whether

"Decoplast" is plastic emulsion paint-Resort to be made to

the commercial and popular meaning attached to the items by

those dealing in them-Not to scientific and technical

meaning.

Statutory Construction-Excise Act-Sales tax Act-Tariff

Items not defined-Interpretation of-To be construed in

popular sense-Commercial meaning attached to items by people

who deal in them to be given.

HEADNOTE:

%

The question as to whether "Decoplast" manufactured by

the appellant is plastic emulsion paint or not had been

determined in the affirmative by the Revenue, and revision

application before the Government of India was rejected.

Thereafter the appellant moved the Bombay High Court,

which directed the Customs Excise and Gold (Control)

Appellate Tribunal to hear the petition and to decide the

same as an appeal before it. On behalf of the appellant,

elaborate evidence had been adduced before the Tribunal.

Reference was made to the specifications of plastic emulsion

paint and the definition as given by ISI. The Tribunal

addressed itself to the question whether "Decoplast" could

be considered as plastic emulsion paint having regard to (i)

its composition; (ii) its characteristics; (iii) its uses

and (iv) its reputation in trade parlance, and held that

"Decoplast" is a plastic emulsion paint.

Aggrieved by the order the appellant appealed under

Section 35L of the Central Excise and Salt Act, 1944 to this

Court, which.

Dismissing the appeal,

^

HELD: 1.1 The commercial meaning has to be given to the

expressions in Tariff items. Where definition of a word has

not been given, it

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340

must be construed in its popular sense. Popular sense means

that sense which people conversant with the subject-matter

with which the statute is dealing, would attribute to it.

[343G]

1.2 In the instant case the use of these two items and

their composition, when analysed, revealed that in essence

they performed the same functions as plastic emulsion paint

does, though there was some difference in them. The

affidavits of traders and others were examined by the

Tribunal. The Revenue did not adduce evidence in rebuttal.

Therefore, in view of the composition, characteristics, uses

and how it is known in the trade, the Tribunal came to the

conclusion that "Decoplast" was plastic emulsion paint. This

is a finding of fact arrived at on relevant and valid

materials. There was no misdirection in law. [344C-E]

2. In interpreting items in statutes like the Excise

Act or Sales Tax Act, resort should be had, not to the

scientific and technical meaning of the terms or expressions

used, but to the popular meaning, that is to say, the

meaning attached to them by those dealing in them.

[343H; 344A-B]

C.l. T., Andhra Pradesh v. M/s. Taj Mahal Hotel,

Secunderabad [1972] 1 SCR 168 and Indo International

Industries v. Commissioner of Sales Tax, U.P., [1981] 3 SCR

294,referred to.

King v. Planter's Co. [1951] CLR (Ex.) 122 and 'Two

Hundred Chests of Tea', [1824]6 L.Ed. 128, referred to.

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2456 of

1987.

From the Order dated 27.5.1987 of the Customs Excise

and Gold (Control) Appellate Tribunal, New Delhi in Appeal

No. E-2312/85-C.

K.K. Venugopal, R. Narain, S. Ganesh, R. Shah, R.K. Ram

and D.N. Mishra for the Appellant.

The Judgment of the Court was delivered by

SABYASACHI MUKHARJI, J. In this appeal under section

35L of the Central Excise and Salt Act, 1944 (hereinafter

called 'the Act'), the question involved is whether

"Decoplast" manufactured by the Asian Paints India Ltd., the

appellant herein, is plastic emulsion paint

341

and, therefore, classifiable under Tariff Item 14(I)(3)(iv)

of the First Schedule of the Act as plastic emulsion paint

or it should be classifiable under Tariff Item No. 14(I)(v)

that is as "paints not otherwise specified".

The Customs Excise and Gold (Control) Appellate

Tribunal (hereinafter called 'the CEGAT'), by the impugned

order challenged in this appeal held that Decoplast is

plastic emulsion paint. The appellant felt aggrieved

thereby. In so holding the Technical Member of the Tribunal

observed that in view of its composition, characteristics

and uses, Decoplast should be considered as emulsion paint.

The Judicial Member of the Tribunal was of the view that the

Revenue had not adduced any evidence of rebuttal of the

evidence adduced by the appellant as the commercial

understanding but the evidence adduced by the appellant was

intrinsically untrustworthy. Therefore, inspite of the

affidavits and absence of evidence in rebuttal, he agreed

with the other member that Decoplast is plastic emulsion

paint and the appeal before the Tribunal should be

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dismissed.

It appears that the appellants had filed revision

application before the Government of India against the order

of the Revenue authorities. Ultimately, the same was

rejected by the Government of India. It is not necessary to

set out in detail all the events. The appellant had moved

the High Court of Bombay against the order of the Government

of India and the High Court by its order directed as

follows:

"The order dated 17th December, 1979 passed by the

Govt. Of India in revision in the Petitioners'

case is set aside inasmuch as the Revision

Authorities have not controverted or rebutted the

evidence in the form of affidavits relied on by

the Petitioners to show that their product could

not be regarded as a plastic emulsion paint

amongst persons dealing in such products. The

Revision order thus failed to follow the well

established rule of interpreting entries in the

Excise Tariff namely to classify products by their

common parlance and trade understanding and not by

their scientific or technical meaning. It is

necessary that the matter be remanded to the

Revision Authorities to decide the same afresh

according to law. However, as the Revision

Authority under the demanded Central Excise and

Salt Act has been replaced by the Customs Excise

and Gold (Control) Appellate Tribunal, the said

Tribunal is directed to

342

hear the Petitioners' Revision Petition and to

determine the same as an appeal before it. The

Tribunal shall give an opportunity to both the

petitioners and the Excise Authorities to rely on

any evidence and material either on record or

otherwise which they may lead or produce in

support of their case. The parties will be given

full opportunity of affidavits if any during the

hearing".

In pursuance to the said order, the matter came before

the Tribunal. Before the Tribunal it was contended on behalf

of the appellant that the manufacture was water thinable

paint but the same could not be held to be plastic emulsion

paint for the product was not known in the trade as plastic

emulsion paint nor was it bought and sold so. According to

the appellant, the paint essentially comprised of pigment

and a binder or a vehicle and that while the binder and the

vehicle were interchangeable, it was stated that the binder

generally referred to solid part which in this case was

synthetic resin and the solvent could be water or some other

diluent. There was elaborate evidence adduced before the

Tribunal on behalf of the appellant. Reference was made to

the specifications of plastic emulsion paint as given by

ISI. It was contended on behalf of the appellant that

Decoplast could not be considered as plastic emulsion paint

for reasons, inter alia, as follow:

i) Plastic emulsion paint comprises of one

emulsion as against two contained in

Decoplast;

ii) In the case of plastic emulsion drying takes

place by evap oration of water whereas in the

case of decoplast by oxidation of alkyd;

iii) Trade did not recognise decoplast as plastic

emulsion paint;

iv) In the literature published by them,

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decoplast was not described as plastic

emulsion paint;

v) Decoplast was substitute for cement paint;

vi) Even though decoplast could be used both for

interior and exterior use, it was a product

inferior to plastic emulsion paint;

vii) In case of plastic emulsion paint, primer had

to be applied to The surface to be pained

while in the case of Decoplast on

343

coating on Decoplast itself serves as a

primer. A

In support of appellant's contention, affidavits had

been filed by them and the same were considered in extenso

by the Tribunal. Reference has also been made to the Book

"Outlines of Paint Technology" by W.M. Morgan. On the other

hand, on behalf of the Revenue, it was stated that it was

not disputed that Decoplast is a water soluble paint and

that it had got two resins in emulsion form, namely, Polymer

Vinyle Acetate and copolymer alkyds. Attention was drawn to

the Indian Standard Specification for plastic emulsion

paint, which is as follow:

"The material shall consist of pigments with

suitable extenders in suitable proportions, in a

medium consisting of any state synthetic polymer

emulsion in water with other suitable ingredients

as may be necessary to produce a material so also

satisfy the requirements of this standard. "

Our attention was also drawn to the definition given by

ISI, which is as under:

"Generally, a paint in which the medium is an

'emulsion' or an emulsion-like dispersion of an

organic binder in water. Industrially the same is

mainly restricted to those paints in which the

medium is an 'emulsion' of a synthetic resin. The

medium may also be called a latex by analogy with

a natural rubber latex, polyvinyl acetat emulsion

paint is a typical example".

The Tribunal addressed itself to the question whether

Decoplast could be considered as plastic emulsion paint in

view of (i) its composition; (ii) its characteristics; (iii)

its uses; and (iv) its reputation in trade parlance.

It is well settled that the commercial meaning has to

be given to the expressions in Tariff items. Where

definition of a word has not been given, it must be

construed in its popular sense. Popular sense means that

sense which people conversant with the subject-matter with

which the Statute is dealing, would attribute to it. See-

C.I.T., Andhra Pradesh v. M/s. Taj Mahal Hotel,

Secunderabad, [1972] 1 SCR 168. This Court observed in Indo

International Industries v. Commissioner of Sales Tax, U.P.,

[1981] 3 SCR 294 that in interpreting items in statutes like

the Excise Act or Sales Tax Acts, whose primary object

344

was to raise revenue and for which purpose to classify

diverse products, articles and substances, resort should be

had, not to the scientific and technical meaning of the

terms or expressions used but to their popular meaning, that

is to say, the meaning attached to them by those dealing in

them.

Justice Cameron of the Canadian Exchequer Court in King

v. Planter's Co., [1951] CLR (Ex.) 122 and the decision of

the United States Supreme Court in 'Two Hundred Chests of

Tea', [1824] 6 L.Ed. 128 emphasised that commercial

understanding in respect of the tariff items should be

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preferred. It was observed that the legislature does not

suppose our merchants to be naturalists or geologists, or

botanists.

In this case the use of these two items and their

composition when analysed, revealed that in essence they

performed the same functions as plastic emulsion paint does,

though there was some difference in them. Affidavits of

traders and others had been filed. These were examined and

accepted by the Technical Member and these were not rejected

by the Judicial Member. The Revenue did not adduce any

evidence in rebuttal. Therefore, in view of the composition,

characteristics, user and how it is known in the trade, the

Tribunal came to the conclusion that Decoplast was plastic

emulsion paint. This is a finding of fact arrived at on

relevant and valid materials. There was no misdirection in

law. Therefore, there is no ground for interference with the

said order.

In the aforesaid view of the matter, we decline to

entertain the appeal under section 35L of the Act. The

appeal is, therefore, dismissed.

G.N. Appeal dismissed.

345