Rohit
Pulp and Paper Mills Ltd. Vs. Collector of Central Excise, Baroda [1990] INSC 165 (26 April 1990)
Rangnathan,
S. Rangnathan, S.
Ahmadi, A.M.
(J)
CITATION:
1991 AIR 754 1990 SCR (2) 797 1990 SCC (3) 447 JT 1990 (3) 245 1990 SCALE (1)55
ACT:
Central
Excises And Salt Act, 1944/Central Excise Rules, 1944: Sections 4, 35C/First
Schedule, Item 17, Rule 8(1), and Notification Nos. 24 of 1984, 25 of 1984 and Provisoes
and 45 of 1985--Excise Duty--Concessional rates on paper and paper board
Exception clause--Interpretation of--Art paper, and chromo paper--Whether
entitled to exemp- tion--Principle of noscitur a sociis--Applicability of.
HEAD NOTE:
Notifications
No. 24 and 25 of 1984 under rule (1) of the Central Excise Rules, were issued
on 1.3.1984 in respect of paper and paper board falling under item 17(1) of the
first schedule to the Central Excises and Salt Act, 1944.
While
notification No. 24 of 1984 restricted the excise duty on certain items,
notification No. 25 of 1984 provided for a concession in respect of paper and
paper boards manufactured out of pulp containing not less than 50 per cent by
weight of pulp made from materials (other than bamboo, hardwoods, softwoods,
reeds or rags) and cleared on or after the 1st day of April in any financial year,
subject to certain important conditions set out in the provisoes to the notifi-
cation. Under the provisoes, the concessional rates were applicable only if the
factory did not have plant attached to it for making bamboo, wood pulp and the
exemption would not apply to cigarette tissue, glassing paper, grease proof
paper, coated paper (including waxed paper) and paper of a substance not
exceeding 25 grammes per square metre. Another notification No. 45 of 1985
dated 17.3.1985 was also issued prescribing rates on paper and paper board
failing under the aforesaid item including coated paper.
The
appellant-assessee had a factory in which different varieties of paper and
paper board were being manufactured, using waste paper and cereal straw
containing more than 50 per cent by weight of pulp made from the unconventional
raw materials. The factory did not have a bamboo pulp plant.
The assessee
was manufacturing art paper and chromo paper. These two types of paper
generally fell under catego- ry of printing and writing paper. These two
articles also fell under the description coated 798 paper used in the second
proviso to the notification No. 25 of 1984. The appellant initially paid excise
duty on the goods manufactured by it in terms of notification No. 24 of 1984,
but later claimed concessional rates prescribed by notification No. 25 of 1984.
Since coated paper was taken out of the purview of notification No. 25 of 1984,
by the proviso, the Excise Department refused to permit the asses- see to avail
of this concession in respect of its manufac- tured goods. This was confirmed
by the Central Excise and Gold Control Appellate Tribunal.
In the
appeal before this Court, on behalf of the appel- lantassessee it was contended
that though the expression 'coated paper' had generally a wide connotation and
included coated papers of all varieties, it should be given a re- stricted
meaning in the context in which it appeared in the proviso, that in the paper
business, paper was broadly two varieties, "industrial paper" and
"cultural paper", that while paper used for printing or writing was
treated as cultural paper that used for various purposes, broadly described as
industrial purposes, such as wrapping, packing, sanitary use and the like, was
industrial paper, that since a common strain ran through all the five
categories men- tioned in the proviso, inasmuch the first three varieties,
admittedly fell under the category of industrial paper and the last one was
invariably used for industrial purposes, and so found by the Tribunal, the word
'coated paper', must be read in that context, and should be interpreted by
apply- ing the principle of "Noscitur A Sociis" or on the analogy of
the "Ejusdem generis" principle and that even if the words of the
proviso were capable of being construed in a wider manner so as to deny
exemption to all kinds of coated paper, the Court should apply the
well-established principle of construction of taxing statutes that an ambiguous
provi- sion should be interpreted in favour of the subject.
On behalf
of the respondent it was contended that there was no principle of
interpretation by which the plain and natural meaning of the word 'coated
paper' could be abridged nor was there anything in the context to warrant such
a limitation, that there was no 'clear cut distinction between industrial and
cultural paper, and that it could not be said that light paper could only be
industrial paper.
Allowing
the appeals, this Court,
HELD:
1. 'Coated paper' in the second proviso to notifi- cation No. 25 of 1984 refers
only to coated paper used for industrial purposes and not to coated varieties
of printing and writing paper. The 799 appellant is, therefore, entitled to concessional
rates specified in the notification. [812F-G]
2.1
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, [809G-H]
2.2
The concession of the notification is denied to five kinds of paper. Three of
them are varieties of industrial paper. The fourth is light paper, not
exceeding a particular weight. Light paper is by and large industrial paper and
is also used occasionally for cultural purposes also. The five varieties of
paper are found in serial Nos. 3 and 4 of the 1985 notification and serial Nos.
1 and 3, reflect a con- trast between coated paper and light paper used for
cultural purposes (item No. 1) and that used for other (industrial) purposes
(item No. 3). On this basis, it is clear that four out of the five varieties of
paper which are denied the benefit of the concession constitute industrial
paper. In fact, even if, only three of these items are of the indus- trial
variety, while the other two could be either, it will not still be unreasonably
(though may be, a little less plausible) to draw an inference that only
industrial paper falling in those two categories are intended to be compre- hended
in the classification rather than assume, for no detectable reason, that all
paper of these two varieties alone are excluded from the concession, [809E-G]
2.3
Though 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, it can
legitimately be postulated 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 items, it would be quite reasonable and proper to give effect to a
construction of the notification as will accord with that principle. [808F-G]
2.4 In
interpreting the scope of any notification, the Court has first to keep in mind
the object and purpose of the notification. All parts of it should be read
harmonious- ly in aid of, and not in derogation, of that purpose. [811F] 800
Collector of Central Excise v. Parle Exports (P) Ltd., [1989] 1 SCC 345 and Tata
Oil Mills Co. Ltd. v.C.C.E., [1989] 4 SCC 541, referred to.
In the
instant case, the aim and object of the notifica- tion is to grant a concession
to small scale factories which manufacture paper with unconventional raw
materials. If the proviso had referred only to coated paper no special object
or purpose would have been discernible and perhaps there would have been no justification
to look beyond it and enter into a speculation as to why the notification
should have thought of exempting only coated paper manufactured by these
factories from the purview of the exemption. But the notifi- cation excepts not
one but a group of items. If the items mentioned in the group were totally
dissimilar and it were impossible to see any common thread running through
them, again, it may be permissible to give the exceptions their widest
latitude. But when four of them-undoubtedly, at least three of them-can be
brought under an intelligible classifi- cation and it is also conceivable that
the Government might well have thought that these small scale factories should
not be eligible for the concession contemplated by the notification where they
manufacture paper catering to indus- trial purposes, there is a purpose in the
limitation pre- scribed and there is no reason why the rationally logical
restriction should not be placed on the proviso based on this classification.
[811H; 812A-C] 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. [812D]
3. The
principle of statutory interpretation by which a generic word receives a limited
interpretation by reason of its context is well established. The expression noscitur
a sociis simply means that the meaning of a word is to be judged by the company
it keeps [810A-B] In the context of the instant case, this principle can be
legitimately drawn upon. However, the latin maxims and precedents are not to be
mechanically applied; they are of assistance only in so far as they furnish
guidance by com- pendiously summing up principles based on rules of common
sense and logic. [811E-F] State v. Hospital Mazdoor Sabha, [1960] 2 SCR 866;
Rainbow steels Ltd. v.C.S.T., [1981] 2 SCC 141 and Lethang v. Coopex, [1965] 1
QB 232, referred to.
801
"The Dictionary of Paper" published by the American Paper and Pulp
Association (Second Edition), referred to.
CIVIL
APPELLATE JURISDICTION: Civl Appeal Nos. 17 and 18 of 1989.
From
the Judgment and Order dated 3.10.1988 of the Customs, Excise and Gold
(Control) Appellate Tribunal, New Delhi in Appeal Nos. E/2 123 of 1987-C and
E/2 124 of 1987-C in Order Nos. 738 and 739 of 1988-C, K. Parasaran, V. Balachandran
and M.V. Madhava Rao for the Appellant.
Ashok
H. Desai, Solicitor General, Ms. Indu Malhotra and P. Parmeshwaran for the
Respondents.
The
Judgment of the Court was delivered by RANGANATHAN. J. These are two appeals
under section 35-L of the Central Excises and Salt Act, 1944 (hereinafter
referred to as 'the Act') They arise out of the claim of M/s Rohit Pulp and
Paper Mills Ltd. (hereinafter referred to as 'the assessee') for partial
exemption from excise duty in respect of the art paper and chromo paper
manufactured by it.
The assessee
is having a factory at Khadki in which different varieties of paper and paper
boards are manufac- tured. 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% by 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 Cen- tral
Excises 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:
802 S.
No. Description Rate
1.
Printing and writing paper. Ten per cent ad valorem paper plus one thousand
rupees per metric tonnes.
2. All
sorts of paper commonly Ten per cent ad valorem known as kraft paper (inclu-
plus one thousand three ding paper and paper boards hundred and eighty five of
the type known as kraft rupees per metric tonne. liner or corrugating medium)
of a substance equal to or exceeding 65 grammes per sq. metre
3.
Paper board of the following Ten per cent ad valorem varieties, namely, pulp
board plus one thousand eight duplex board and triplex board. hundred and ten
rupees per metric tonne.
4.
Paper and paper boards, other Ten per cent ad valorem than those specified in S.Nos.
plus one thousand four 1 to 3. hundred and thirty rupees per metric tonne.
The
second notification, notification No. 25 of 1984, is the one with which we are
directly concerned here. It pro- vides for a concession in respect of paper and
paper boards falling under item 17(1) of the Schedule, manufactured out of pulp
containing not less than 50 per cent by weight of pulp made from materials
(other than bamboo, hardwoods, softwoods, reeds or rags) and cleared on or after
the 1st day of April in any financial year. The concessional rates prescribed
were as below:
S. No.
Description Rate Conditions
1. (i)
Printing and wri- Rs.450 per provided that the ting paper metric tonne total
quantity of clearances, if any, of all vari- (ii) All sorts of paper Rs.450 per
eties of paper and commonly known as metric tonne paper boards in the kraft
paper (inclu- preceding financial ding paper & paper year, by or on be-
boards of the type half of a manufac- known as kraft liners turer, from one or or
corrugating medium) more factories, or of a substance equal to from a factory
by or exceeding 65 grammes or on behalf of one per square metre. or more manufactu-
rers did not exce- ed 3,000 metric tonnes. 803 (iii) Others Rs.560 per metric tonne.
2. (i)
Printing and writing Rs.730 per Provided that the writing paper metric tonne. total
quantity of clearances of all varieties of paper (ii) All sorts of papers
Rs.730 per & paper boards in commonly known as metric tonne. the preceding
fin- kraft paper (including ancial year, by or paper and paper boards on behalf
of a ma- of the type known as nufacture, from kraft liners or corru- one or
more facto- gating medium) of a ries or from a substance equal to or factory by
or on exceeding 65 grammes behalf of one or per square metre. more
manufacturers , exceedings 3,000 metric tonnes but did not exceed 7,500 metric
ton- nes. (iii) Others Rs.900 per metric tonne.
3. (i)
Printing and Rs.900 per Provided that the writing paper metric tonne. total
quantity of clearances of all (ii) All sorts of Rs.900 per varieties of paper paper
common- metric tonne. & paper boards in ly known as the preceding fin-
Kraft paper & nancial year, by (including pa- or on behalf of a per &
paper manufacturer, from boards of the one or more facto- type known as kraft ries
or from a fa- liners or corruga- ctory or on behalf ting medium) of a of one or
more substance equal to manufacturers, ex- or exceeding 65 gram- ceeding 7,500
met- mes per square metre. tric tonne but did not exceed 16,500 metric tonnes:
(iii) Others Rs.1.120 per metric tonne.
804
4.
[This para, added by notification no. 92/84 dated 18.4.84 added another concessional
rate where the clearances exceed- ed 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]" The
grant of the above concessional rates were, however, subject to certain
important conditions set out in the provisoes to the notification. These provisoes
read:
"Provided
that the factory does not have a plant attached thereto for making bamboo or
wood pulp.
Provided
further that the exemption contained in this notification shall not apply to
cigarette tissue, glassing paper, grease proof paper, coated paper (including
waxed paper) and paper of a substance not exceeding 25 grammes per square metre."
Another notification No. 45 of 1985 dated 17.3.1985 has been relied upon in
support of the contention of the Union of India and hence this may also be set
out here. It pre- scribed rates on paper and paper board falling under item
17(1) in the following manner:
S. No.
Description Rate
1.
Printing and writing paper- (i) coated paper Ten percent ad valorem plus one
thousand five hundred and five rupees per metric tonne.
(ii) of
a substance not ex- Ten percent ad valorem ceeding 25 grammes per plus one
thousand five square metre hundred and five rupees per metric tonne.
(iii)
Others Ten percent ad valorem plus one thousand five hundred and five rupees
per metric tonne.
2. All
sorts of paper com- Ten percent ad valorem monly known as kraft plus one
thousand five paper (including paper hundred and eighty-five and paper boards
of the rupees per metric type known as kraft liner tonne. or corrugating
medium) of a substance equal to or exceeding 65 grammes per square metre.
805
3.
Coated paper (including Ten percent ad valorem waxed paper) and paper of plus
one thousand nine a substance not exceeding hundred and thirty 25 grammes per
square rupees per metric metre (other than those tonne. specified in Sl. No.1)
4.
Glassine paper, cigarette Ten percent ad valorem tissue and grease proof plus
one thousand nine paper. hundred and thirty rupees per metric tonne
5.
Paper board of the follow- Ten percent ad valorem ing varieties, namely, pulp
plus one thousand eight board, duplex board and hundred and ten rupees triplex
board. per metric tonne.
6.
Paper and boards, other Ten percent ad valorem than those specified in plus one
thousand four Sl. No.1 to 5. hundred and thirty rupees per metric tonne The assessee
seems initially 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
con- cessional 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 descrip- tion
"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
re- spect 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:
806
"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 consid- ered arguments of the appellants. We have
perused the noti- fication No. 24 of 1984 as amended and note that the second
proviso excludes from the exemption, among others, coated paper (including
waxed paper). There is no denial that art paper and chromo paper are coated
papers. It may be correct that these are not, like other papers mentioned in
second proviso, industrial varieties of papers and are writing and printing
varieties. All the same when the proviso, as it is worded, is clear there is no
warrant for us to supply words to the proviso to the notification. We,
therefore, find against the appellants in this regard and hold that art and
chromo paper would not be eligible for exemption under notification No. 25 of
1984." (emphasis added) The assessee is aggrieved by this order of the
Tribunal and hence the present appeals.
Sri K.
Parasaran, appearing for the appellant, raises an ingenious contention. He
urges that though the expression 'coated paper' has generally a wide
connotation and includes coated papers of all varieties, it should be given a
re- stricted meaning in the context in which it appears in the proviso. It is
submitted that in the paper business, paper is broadly of two varieties,
"industrial paper" and "cultur- al paper". Paper used for
printing or writing is treated as cultural paper. On the other hand, industrial
paper is paper which is used for various purposes which may be broadly
described as industrial purposes, such as wrapping, packing sanitary use and
the like. It is submitted that though the notification intended to grant a
concession. to small facto- ries manufacturing paper out of unconventional raw
material.
it was
decided to deny the concession to certain kinds of paper. These exceptions have
been set out in the proviso.
They
are:
(1) cigarette
tissue,
(2) glassing
paper,
(3)grease
proof paper,
(4) coated
paper (including waxed paper), and
(5) paper
of substance not exceeding 25 gm. per square metre in weight (which may be
compendiously described as light paper). It is argued that a common strain runs
through all these five categories. The first three varie- ties, namely,
cigarette tissue, glassing paper and grease proof paper admittedly fall under the
category of industrial paper. Likewise, paper of a substance not exceeding 25
gm. per square metre in weight is invariably used for 807 industrial purposes
and this is so found by the Tribunal.
The
word 'coated paper', it is urged, must be read in this context. Since the other
items set out in the proviso 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 submit- ted, 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 conveivable
principle other than the one enunciated. The second consid- eration 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. Neverthe- less,
it was considered necessary, it is said, to specifi- cally include it in order
to make it clear by this illustra- tion that only industrial paper like waxed
paper is taken out from the concession. The words in parenthesis are, in other
words, the words illustrative of the limitation to be read into the expression
'coated paper'. It is finally argued that, even if the words of the proviso are
capable of being construed in a wider manner so as to deny exemption to all
kinds of coated paper, the Court should apply the well established principle of
construction of taxing statutes that an ambiguous provision should be
interpreted in favour of the subject.
On the
other hand, the learned Solicitor General submits that if there are two
possible views of the proviso, the Court should not interfere with the
conclusion reached by the Tribunal which reflects one of two possible and plausi-
ble views. On the interpretation of the proviso, the Solici- tor General
submits that there is no principle of interpre- tation by which the plain and
natural meaning of the word 'coated paper' can be abridged nor, he says, is
there any- thing in the context to warrant such a limitation. He re- futes the
suggestion that, in commercial parlance, there is a clear cut distinction
between industrial and cultural paper. He does not agree that light paper can
only be indus- trial paper and refers to the terms of the 1985 notification in
support. He points out that if coated paper meant only industrial paper, as
contended for by the assessee, the expression in parenthesis was totally
unnecessary.. He submits that there is a distinction between coated paper and
impregnated paper. As waxed paper could fall under 808 either of these
categories, there was a possibility of some one contending that paper
impregnated with wax is not 'coated paper'; that is why it became necessary to
add the parenthesis to clarify that both kinds will be 'coated paper' for the
purposes of the proviso. He submits for these reasons that the view taken by
the Tribunal was the correct one and that the appeals should be dismissed.
We
have considered the contentions urged on both sides and we have come to the
conclusion that there is force in the appellant's contentions. All the three
notifications we have extracted above draw a distinction between printing and
writing paper on the one hand and other types of paper on the other. They also
show that the duty on printing and writing paper is generally less than that on
the other varieties of paper. Though paper can be classified into various
varieties, it does appear that one such classifica- tion 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 notifica- tion No. 25/84 to
certain types of papers. It is true that no meticulous reasons can always be
made available or dis- covered 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 items, it would
be quite reasonable and proper to give effect to a construction of the notifica-
tion as will accord with that principle. It is this which the appellant has
attempted to do and we are reclined to think that the ratiocination of the exceptions
suggested, far from being artificial or far-fetched, is a plausible and likely
one that the Government could have had in mind and that it should be accepted.
809 As
mentioned earlier, the concession of the notification is denied to five kinds of
paper. Three of them, undoubtedly and indisputably, are varieties of industrial
paper. This is indeed common ground and it has also been supported by reference
to the definitions in the Dictionary of Paper and elsewhere which it is
unnecessary to set out here. The fourth is what we have referred to as 'light
paper' not exceeding a particular weight. On behalf of the assessee, it is
contended that this is also only industrial paper. In support of this
contention, reference is invited to the tables appended to the Dictionary of
Paper which indicate that there cannot be printing and writing paper of weight
less than 26 gms per sq. metre. It is also pointed out that the Tribunal has
also given a finding to this effect in para 37 of its order. The learned Solicitor
General, on the other hand, points out that S. No. 1 (ii) of the 1985
notification itself clearly shows that there can be "printing and writing
paper of a substance not exceeding 25 gramms per sq. metre".
On
behalf of the assessee, on instructions, it is submitted that this
classification proceeds on a totally unreal basis and that there is no such
printing and writing paper in existence. We cannot, however, assume that the
1985 notifi- cation proceeds on an erroneous basis. 1t is sufficient for our purposes
to take it, on the basis of the record in this case, that light paper is, by
and large, industrial paper without altogether excluding all possibility that
it is used occasionally for cultural purposes also. The classification set out
in the 1985 notifications also lends some support to the contentions urged. The
five varieties of paper we are concerned with are found in serial Nos. 3 and 4
of this notification and serial Nos. 1 and 3 reflect a contrast between coated
paper and light paper used for cultural purposes (item No. 1) and that used for
other (industrial) purposes (item No. 4). On this basis, then, it is clear that
tour 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 failing 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 appel- lants 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 interpreta- tion consistent therewith than
its literal one, which in its widest sense, may be comprehensive enough to
include all coated paper, industrial or otherwise.
810
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 legitimately draw upon the "nosci-
tur a sociis" principle. This expression simply means that "the
meaning of a word is to be judged by the company it keeps." Gajendragadkar,
J. explained the scope of the rule in State v. Hospital Mazdoor Sabha, [1960] 2
SCR 866 in the following words:
"This
rule, according to Maxwell, means that, when two or more words which are
susceptible of analogous meaning are coupled together they are understood to be
used in their cognate sense. They take as it were their colour from each other,
that is, the more general is restricted to a sense analogous to a less general.
The same rule is thus inter- preted in "Words and Phrases" (Vo. XIV,
p. 207): "Associated words take their meaning from one another under the
doctrine of nosciture a sociis, the philosophy of which is that the meaning of
a doubtful word may be ascertained by reference to the meaning of words
associated with it; such doctrine is broader than the maxim Ejusdem Generis."
In fact the letter maxim "is only an illustration or specific application
of the broader maxim noscitur a sociis". The argument is that certain
essential features or attributes are invariably associated with the words
"business and trade" as understood in the popular and conventional
sense, and it is the colour of these attributes which is taken by the other
words used in the definition though their normal import may be much wider. We
are not impressed by this argument. It must be borne in mind that noscitur a sociis
is merely a rule of construction and it cannot prevail in cases where it is
clear that the wider words have been deliberately used in order to make the
scope of the defined word correspondingly wider. It is only where the intention
of the Legislature in associating wider words with words of narrower
significance is doubtful, or otherwise not clear that the present rule of
construction can be usefully applied. It can also be applied where the meaning
of the words of wider import is doubtful;
but,
where the object of the Legislature in using wider words is clear and free of
ambiguity, the rule of construc- tion in question cannot be pressed into
service." 811 This principle has been applied in a number of contexts in
judicial decisions where the Court is clear in its mind that the larger meaning
of the word in question could not have been intended in the context in which it
has been used. The cases are 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., [1981] 2 SCC 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 absolute 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 nonusable".
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.
The
maxim of noscitur a sociis has been described by Diplock, C.J. as a
"treacherous one unless one knows "the socictas to which the socii
belong" (vide: Letang v. Coopex, [1965] 1 QB 232). The learned Solicitor
General also warns that one should not be carried away by labels and Latin
maxims when the word to be interpreted is clear and has a wide meaning. We
entirely agree that these maxims and prece- dents are not to be mechanically
applied; they are of as- sistance only in so far as they furnish guidance by compen-
diously summing up principles based on rules of common sense and logic. As
explained in Collector of Central Excise v. Parle Exports (P) Ltd., [1989] 1
SCC 345 at p. 357 and Tata Oil Mills Co. Ltd. v.C.C.E., [1989] 4 SCC 541 at p.
545-6 in interpreting the scope of any notification, the Court has first to
keep in mind the object and purpose of the notifi- cation. All parts of it
should be read harmoniously in aid of, and not in derogation, of that purpose.
In this case, the aim and object of the notification is to grant a conces- sion
to small scale factories which manufacture paper with unconventional raw
materials. The question naturally arises:
Could
there have been any particular object intended to be achieved by introducing
the exceptions set out in the provi- so? Instead of proceeding on the premise
that it is not necessary to look for any reason in a taxing statute, it is
necessary to have a closer look at the wording of the provi- so. If the proviso
had referred only to 'coated paper', no special object or 812 purpose would
have been discernible and perhaps there would have been no justification to
look beyond it and enter into a speculation as to why the notification should
have thought of exempting only 'coated paper' manufactured by these factories
from the purview of the exemption. But the notifi- cation excepts not one but a
group of items. If the items mentioned in the group were totally dissimilar and
it were impossible to see any common thread running through them again, it may
be permissible to give the exceptions their widest latitude. But when tour of
them--undoubtedly, at least three of them--can be brought under an intelligible
classification and it is also conceivable that the Govern- ment might well have
thought that these small scale facto- ries should not be eligible for the
concession contemplated by the notification where they manufacture paper
catering to industrial purposes, there is a purpose in the limitation
prescribed and there is no reason why the rationally logical restriction should
not be placed on the proviso based on this classification. In our view, the
only reason- . able way of interpreting the proviso is by understanding the
words 'coated paper' in a narrower sense consistent with the other expressions
used therein.
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 limi- tation 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.
For
the reasons discussed above, we accept the appel- lant'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 enti- tled to the concessional
rates specified in notification No. 25184.
The
appeals are allowed. But we make no order as to costs.
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