and Fibres of India Ltd. Vs. Union of India
& Ors M/S. J.K. Synthetics Ltd., Kota Nirl  INSC 8 (7 January 1997)
AHMADI, SUJATA V. MANOHAR Mrs. Sujata
V. Manohar, J.
APPEAL NO. 3507 OF 1982 WITH
appeals and the transferred appeal rise a common question: whether polymer
chips manufactured by the assesses and used by them in the manufacture of nylon
yarn can be classified, for the purpose of levy of excise duty, under Item 15A
in Schedule I to the Central Excises and Salt Act, 1944, as it stood during the
period 1962 to 1972. For the sake of convenience we are period 1962 to 1972.
For the sake of convenience we are setting out the facts in relation to the
transferred appeal pertaining to M/s. Nirlon Synthetic Fibres and Chemicals
material times the company manufactured nylon yarn, a synthetic man-made fibre
under an industrial licence under an industrial licence granted by the
Government of India. For the manufacture of nylon yarn, the company imported caprolactum
monomer. The company paid customs duty as well as countervailing duty on its
import of caprolactum monomer. This raw material was used by the company for
manufacture of nylon yarn. In the course of processing of caprolactum monomer
the company obtained at an intermediate stage a product called `Polymer Chips',
also known as Nylon 6 Chips, which were consumed in the manufacture of the
finished product, namely, nylon yarn. The question relates to the levy of
excise duty on these polymer chips. The only question which now survives for
our determination is whether these polymer chips can be classified under Item
15A of Schedule I to the Central Excises and Salt Act, 1944 as it stood during
the period 1962-1972, since this period covers all the appeals.
has described the process employed in its factory for polymerisation of caprolactum
monomer. Once caprolactum is polymerised, it becomes nylon. In order to change
the form of this substance and give it the required properties which enable
textile yarn to be produced from it further processing is required in the
course of which, at an intermediate stage, polymer chips are produced. The
chips are obtained for the purpose of removing the remnant monomer so that the
subsequent processing becomes more convenient.
chips which are otherwise called Nylon 6 Chips, are then dried, melted and spun
into continuous filament by the process of extrusion. The spun filament
undergoes further processing in order to get yarn in a saleable form. Polymer
chips which are produced by the assessees companies have a relative viscosity
of 2.22 to 2.30. The average molecular weight ranges from 10,000 to 18,000.
These chips are suited only for the manufacture of textile fibres and are used
exclusively for that purpose.
this background, let us examine whether these polymer chips fall under Entry
15A. Entry 15A was amended on 18th of February, 1974. We, therefore, are
required to consider Entry 15A as it existed prior to 28-2-1964 and the Entry as it existed after 28.2.1964.
Entry 15A as it existed prior to 28-2-1964 was as follows:
15A: PLASTICS, ALL SORTS:
powers, 25% ad valorem granules and flakes (thermosetting and thermoplastic).
fixer, Layflat tubings and P.V.C. sheets (that is to say, polyvinyl chloride
sheets), (iii) Not otherwise specified." The assessee contends that
polymer chips or nylon 6 chips manufactured by the assessee are not known in
the trade as plastics and hence they cannot be classified under Entry 15A which
deals with plastics all sorts.
Britannica, Volume 18, while dealing with "plastics" has this to say
on the subject:
articles called "plastic" generally require shaping by heat during
their fabrication by moulding or extrusion. Since the newer synthetic products
can frequently be used inter-changeably as coatings or as mouldings, the
distinction between resins and plastics become less pronounced.
modern technology shows that the materials which are designated as rubber, fibres,
resins and plastics are of a similar molecular structure and by appropriate
chemical and physical treatment, it is possible to interconvert any of these
materials. It follows that certain structural features are common to all these
products and being common they relate to similarity in physical properties
between materials which are not necessarily chemically related. It might be
argued that rubber is a plastic, since it can be fabricated by procedure
similar to those employed in moulding plastics; but rubber is not generally
considered to be a part of the plastics industry......
the fibre industry is considered to be independent of the plastics industry and
here again the same raw-materials, polyamides (nylon) cellulose and cellulose
acetate are used by both industries. Plastics are also divorced from the
self-supporting type of film production such as the manufacture of photographic
film and celluphone. The term plastic, therefore, is essentially a commercial
classification to which no strictly scientific definition can be applied."
[underlining ours] The term `plastic', therefore, is a commercial
classification which covers various kinds of natural or synthetic materials
which can be shaped by heat during their fabrication either by moulding or by
extrusion and which will retain that shape during use. It is also made clear
that normally, rubber or synthetic material which is used for the manufacture
of fibres and yarn, or for the manufacture of photographic film and celluphone,
is not commercially considered as plastic.
book "Polymers and Resins" by Brage Golding, 1959 Edition,
"plastic" is defined as under:
plastic has been defined in a limited sense as any of a large group of organic
substances, whether natural or synthetic, which can be moulded (Plastikos = fit
for moulding). The noun `Plastic' is usually applied to all polymers which are
not considered to be elastomers or fibres; i.e. which exhibit neither the long
range elasticity of elastomers nor the very high crystallinity of most fibres.
In the engineering sense, however, a plastic is a mixture containing one or
more resins compounded with fillers, plasticizers, lubricants, dyes etc. which
has been subsequently fabricated.
nylon fibres are linear and have molecular weight averages of the order of
12,000 to 20,000.
average molecular weight is below 6,000 little or no fibre formation is
possible; fibres formed from polymers with an average molecular weight of about
6,000 to 10,000 are weak and brittle. As the average molecular weight increases
above this range, the fibre becomes stronger.
if the molecular weight runs much over 20,000 the polymer becomes too difficult
to melt or dissolve. Therefore, the process of polymerisation must be stopped
in the desired average molecular weight range." [underlining ours]
Chamber's Dictionary defines `plastics' as "generic name for certain
natural and synthetic substances which under heat and pressure become plastic
and can then be shaped or cast".
Webster's Third New International Dictionary `plastic' has been described as
- (1) a substance that at some stage in its manufacture or processing can be
shaped by flow (as by application of heat or pressure) with or without fillers,
plasticizers, rainforcing agents, or other compounding ingredients and that can
retain the new solid, often rigid, shape under conditions of use;
any of a large group of materials of high molecular weight that usually contain
as the essential ingredient a synthetic or semi-synthetic organic substance
made by polymerization or condensation (as polystyrene or a phenol-formaldehyde
resin) or derived from a natural material by chemical treatment (as nitro-
cellulose from cellulose), that are molded, cast, extruded, drawn, or laminated
under various conditions (as by heat in the case of thermoplastic materials, by
chemical condensation in the case of thermosetting materials or polyesters, or
by casting during polymerization of monomers) into objects of all sizes and
shapes including films and filaments." Our attention is also drawn to the
American Society for Testing Material Standard which makes a distinction
between "nylon" and "nylon plastics" -- including the
former under the heading `Definition of Textile Terms' and the latter under the
heading `Plastics Nomenclature'. The Indian Standard Institute Glossary also
makes a distinction between "nylon" and "nylon plastics"
and similarly classifies "nylons" under the glossary of textile terms
and "nylon plastics" under the glossary of terms used in plastic
however, urged on behalf of the Revenue that the chemical composition of the
polymer chips (Nylon 6 Chips) which are produced by the assessee is similar to
the chemical composition of material used in plastic industry.
hence, going by the chemical composition of this material, it can be
appropriately classified as a plastic.
contention will have to be examined in the light of the wording of Entry 15A.
Entry 15A does not use any scientific or technical term. It deals with
"plastics, all sorts". As Encyclopaedia Britinnica has described, the
term `plastic' is a commercial classification. When this kind of a term in
commercial use is used in an excise entry which deals with marketable
commodities which are manufacture and which are subject to the levy of excise,
we will have to examine that term in the light of how it is understood in the
trade. If, however, strictly technical or scientific words are used, the
approach for their interpretation may be different.
will refer to only some of the authorities which have been cited before us in
this connection. As far back as in 1891, in the case of Unwin v. Hanson (
2 Q.B. 115 at 119), the court observed, "If the Act is directed to dealing
with matters affecting everybody generally, the words used have the meaning
attached to them in the common and ordinary use of language: if the Act is one
passed with reference to a particular trade, business, or transaction, and
words are used which everybody conversant with that trade, business, or
transaction, knows and understands to have a particular meaning in it then the
words are to be construed as having that particular meaning, though it may
differ from the common or ordinary meaning of the words." In the case of Ramavatar
Budhaiprasad etc. v. Assistant Sales Tax Officer, Akola ( 1 SCR 279), the
Court was concerned with the scope of the word `vegetables' occurring in C.P.
and Berar Sales Tax Act, 1947. The Court said that betel leaves cannot be
classified as vegetables although botanically they may fall in that category,
because betel leaves are not commonly understood as vegetables.
in the case of The Commissioner of Sales Tax, Madhya Pradesh, Indore v. M/s. Jaswant Singh Charan Singh
(AIR 1967 SC 1454) the Court held that the Entry "Coal" under the
Madhya Pradesh General Sales Tax Act would cover charcoal also. The Court said
that while "Coal" is technically understood as a mineral product
while charcoal is manufactured by human agency from products like wood and
other things, it is now well-settled that while interpreting items in statutes
like the Sales Tax Acts, resort should be had, not to the scientific or the
technical meaning of such terms, but to the meaning attached to them by those
dealing in them. (See in this connection South Bihar Sugar Mills Ltd. etc. v.
Union of India & Ors. [(1968) 3 SCR 21] and Dunlop India Ltd. v. Union of India & Ors. [(1976) 2 SCR 98]).
case of Asian Paints India Ltd. v. Collector of Central Excise (1988 (35) ELT
3), Sabyasachi Mukharji J. (as he then was) has summed up the rule of
interpretation in the following words:
is well-settled that the commercial meaning has to be given to the expressions
in Tariff Items.
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
in interpreting items in statutes like the Excise Act or Sales Tax Acts, whose
primary object 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.
present case, since Entry 15A as it then stood, uses a commercial term
"plastics" which is well-known in the trade and is used in the trade,
we should not go into the technical analysis of the composition and character
of a plastic product. We should go by the meaning which is attached to the term
`plastics' in the trade parlance.
as understood in the trade cover all kinds of synthetic materials. As the Encylopaedia
Britannica. Sets out very clearly, there is a distinction made in commercial
parlance between materials used in the production of plastics and materials
used in the production of fibres, films or rubber although they may share
certain structural features. The assessee has also filed affidavits from people
in the trade to say that polymer chips of the kind manufactured by the assessee
are not considered as plastics by those dealing in plastics.
to the assessee's manufacturing these chips in its own plant, the assessee used
to import similar chips for the purpose of manufacture of nylon yarn from BASE.
The product imported was caprolactum Ultramid BS. Our attention is drawn to the
catalogue of BASF products of July 1961, in which captrolactum Ultramid BS is
shown under "Raw materials for synthetic fibres", while there is a
separate head for "Plastics and auxiliaries for plastics" under which
other material such as Ultramid A, Ultramid AK, Ultramid B and Ultramid BM are
shown. This also indicates that material which is used for the production of
nylon yarn is not considered in the trade as a plastic material. The assessee,
therefore, is right when it contends that Item 15A as it stood prior to
28.2.1964 does not cover polymer chips manufactured by it.
15A, however, as amended after 28.2.1964 was as follows:
ARTIFICIAL OR SYNTHETIC RESINS AND PLASTIC MATERIALS, AND ARTICLES THEREOF.
percent and valorem.
Artificial or synthetic resins and plastic materials in any form, whether
solid, liquid or pasty, or as powder, granules or flakes, or in the form of moulding
powders, the following, namely:-
Condensation, Poly-condensation and Poly-addition products, whether or not
modified or polymerised; including Phenoplasts, Aminoplasts Alkyds, Polyurethane,
Polyallyl Esters ad other Unsaturated Polyesters;
and Copolymerisation products including Polyethylene and Polytetrahaloethylene,
Polyisobutylene, Polystyrene, Polyvinyl chloride, Polyvinyl acetate, Polyvinyl Chloroacetate
and other Polyvinyl derivatives, Polyamides, Polyacrylic and Polymethacrylic
derivatives and Coumarone-Indene resins; and
Cellulose acetate (including di-or tri-acetate), Cellulose acetate butyrate and
Cellulose propionate, Cellulose acetate- propionate, Ethyl cellulose, and
Benzyl cellulose whether plasticised or not, and plasticised Cellulose nitrate.
Articles made of plastics, all sorts, including tubes, robs, sheets, foils,
sticks, other rectangular or profile shapes, whether laminated or not, and
whether rigid or flexbile, including layflat tubings and Polyvinyl chloride
For the purpose of sub-item(2), `plastic' means the various artificial or
synthetic resins or plastic material included in sub-tem (1)." The main
heading of this item is now changed to read "Artificial or synethic resins
and plastic materials and articles thereof". Clause (1) refers to
artificial or synethic resins and plastic material in any form, "among
them the following" which are described in sub-clauses (i), (ii) and
(iii). These sub-clauses describe the technical process by which the end
product is derived. Thus in sub- clause (i) for example, the processes which
are referred to, inter alia, are condensation, poly-condensation and poly-
addition and products resulting therefrom. Sub-clause (ii) refers, inter alia,
to polyamides. All these are technical and scientific terms and processes. The
Revenue contends that in the strict sense of the term, polymer chips or Nylon 6
Chips which are manufactured by the assessee are artificial or synthetic resins
as they fall in the category of polyamides in sub-clause (ii) of Clause (I) of
however, contends that artificial or synthetic resins which are covered by Item
15A refer only to plastics and they do not refer to those artificial or
synthetic materials which may be processed in the manner described in
sub-clauses (i) to (iii), but which give rise to products used for the textile
industry such as the polymer chips manufactured by the assessee.
have pointed out that the words "the following" in Clause (1) of Item
15A which precede sub- clauses (i) to (iii) clearly indicate enumeration or
description of the kinds of artificial or synthetic resins and plastic
materials in different forms in sub-clauses (i) to (iii). Therefore, all
products covered by sub-clauses (i) to (iii) must answer the basic description
of "Artificial or synthetic resins and plastic materials". These
sub-clause cannot cover materials not known as artificial or synthetic resins
or plastic material. The assessees further contend that "synthetic
resins" is a term used to describe basic material in plastic industry. It
does not refer to basic raw material used in other industries.
question, therefore, which we have to decide is whether artificial or synthetical
resins should be confined only to those resins which ultimately produce
material having plastic qualities or whether they would include within their
scope other kinds of material derived by similar processes which are described
in sub-clauses (i), (ii) and (iii), but which are suitable for use in other
kinds of industries such as rubber industry, textiles or films.
the words "artificial or synthetic resins" interchangeable with or
linked with the words "plastic material"? Brage Golding in his
treatise on "Polymers and Resins", in Chapter I which deals with
introductory concepts and definitions, after stating that it is unfortunate
that there are no explicit definitions of the words resins and plastics, the
meanings being understood by those who use them, has attempted to define these
expressions as follows:
the closest one can come to a definition of resins is that it is a solid or
semi-solid, natural or synthetic organic substance of relatively high molecular
weight (not necessarily a polymer) which exhibits no sharp melting point,
breaks with a conchoidal fracture, and usually (but not always) is
predominantly amorphous in structure. A plastic has been defined in a limited
sense as any of a large group of organic substances, whether natural or
synthetic, which can be molded (plastikos - fit for molding)." He goes on
term `resin' originally referred to natural products (particularly of vegetable
origin) but now includes the man-made substances. As will be seen from the
physical descriptions of the polymers given in later chapters, the above
definitions of both resin and plastic include many of these polymers, and the
terms are now often used interchangeably." [under-lining ours] Webster's
Dictionary defines "Resins (synthetic)" as:
of a large class of synthetic products (as alkyd resins or phenolic resins)
usually of high molecular weight that have some of the physical properties of
natural resins but typically are very different chemically, that may be
thermoplastic or thermosetting, that are made by polymerization or
condensation, and that are used chiefly as plastics or the essential
ingredients of plastics, in varnishes and other coatings, in adhesives, and in
ion exchanges (when the resin itself is capable of being shaped into a finished
article without a plasticizer, as polystyrene), the terms resin and plastic are
interchangeable for that material - in industrial terminology the unfabricated
material is sometimes called a resin and the fabricated article a
plastic." (underlining ours). Apart from the portion underlined, the
reference to thermoplastic and thermosetting qualities of such resins is also a
reference to their plastic qualities.
British Plastics Year Book of 1967 describes synthetic resins as "resins
produced by chemical reactions, they are of different chemical composition and behaviour
from natural resins. The term is now generally applied to all polymeric
plastics materials with the possible exception of cellulosic and casein
materials. Synthetic resins are classified by the initial reacting materials,
e.g., as phenolic amino, acrylic or vinyl resins, or on chemical composition,
e.g., polyester ad epoxy resins." Sorenson and Campbell in their book
"Preparation Methods of Polymer Chemistry" in Chapter 7 `Cross-linked
synthetic Resins' have said: "Today, `resin' covers a multitude of polymer
types, including the classical phenol- formaldehyde condensation and the
relatively recent epoxy resins, vinyl polymers such a polystyrene and poly
methyl methacrylate and condensation polymers of the polyamide or polyester
class. Most of the application of the term `resin' is to those linear or
cross-linked (or cross-linkable) polymers that are used in molding, casting, or
extruding operations and in surface coatings; and, to most cross- linked (or
cross-linkable) polymers, no matter what the end use (as in adhesives, textile
finishes, etc.). Thus poly methyl methacrylate and various polyamides, both
essentially linear polymers, are termed molding resins when directed to a
molding end use. However, polyamides would not be termed resins by the
synthetic fibre industry in their usage of the material.
other words, "synthetic resin" is a term used in plastic industry and
possibly in other industries, but not in the textile industry to refer usually
to unfabricated material out of which the end product is made.
the first three descriptions/definitions of synthetic resins emphasise the
plastic quality of synthetic resins, the last description clearly brings out
the fact that in the synthetic fibre industry, polyamides which are used as raw
material would not be termed as resins. The term `synthetic resins', therefore,
appears to be used in connection with plastic materials. The British Plastics
Year Book of 1967 quoted earlier also emphasises that the term `synthetic
resins' is now generally applied to all polymeric plastic materials with the
possible exception of cellulosic and casein materials. Webseter's Dictionary
(supra) has also described synthetic resins as those which may be thermoplastic
or thermosetting -- these being typical characteristics of plastic material and
has clearly said that synthetic resins are used chiefly as plastics or
essential ingredients of plastics as also in varnishes and other coatings and
in adhesives and ion exchanges. There is no reference here to their being used
in the manufacture of yarn. Webseter's Dictionary also states that the terms
`resin' and `plastic' are interchangeable and some times the unfabricated
material is called resins and the fabricated material is called a plastic. This
perhaps explains why the words "artificial or synthetic resins" were
added in Entry 15A to "plastics" in order to refer to and cover the
raw material which goes into the manufacture of plastic materials. Encyclopaedia
Britannica also which was quoted earlier by us, states that while the
designation "plastic" is broader generally than the term
"resin", both terms are used indiscriminately with respect to synthetic
the reference material which is produced before us indicates that synthetic
resins are used in connection with plastic material and that often the unfabricated
material is referred to as resin while the fabricated article is referred to as
a plastic. Polyamides which are used for the purpose of manufacture of yarn are
not referred to as synthetic resin in the textile industry.
term `synthetic resin or artificial resin', therefore, far from being
scientifically precise, seems to be as elusive to define as the term
"plastic". The preponderance of view appears to be, however, that the
term `synthetic resin' is used in connection with material which is used for
producing articles of plastic and is not used to refer at least to material
used in the textile industry.
attention has been drawn to "Concise Guide to Plastics" by Simmonds
and Church in which a passage under the heading Polyester Resin is as follows:
the broad sense of the term polyester resins include many types of resinuous
condensation products and collectively represent a broad and expanding field in
the plastics industry... As indicated in other section, alkyd resin are
basically polestar. Saturated liner polyester resins can be film or fibre
forming material, for example, polyethelene, terephathalate".
passage, however, does not assist us in the sense that it does not tell us what
the terms "synthetic resins" or "artificial resins"
generally refer to. It does, however, indicate that the term "polyester
resin" represents the broad and expanding field in the plastic industry
and satured liner polyester resins can be fibre forming. From the passage it is
not clear whether the latter are commonly referred to as synthetic resins or
not. By and large, therefore, one can come to the conclusion that the term
`artificial and synthetic resin' in used in the plastic industry to refer to
various materials derived by the processes which are referred to sub-clauses (i),
(ii) and (iii) of Entry 15A for the purpose of producing material or products
which are suitable in the manufacture of plastics.
processes which are described in sub-clauses (i), (ii) and (iii) are
undoubtedly technical, scientific or chemical processes and the products which
are derived as a result of these processes are also described in technical
terms in the said sub-clauses. Polyamides, for example, which are relevant in
the present case, would cover, by themselves a wide range of products. However,
these sub-clauses come under the main heading of artificial or synthetic resins
or plastic materials. Polyamides of textile grade are not plastic materials nor
are they referred to as synthetic resins in the textile trade. Hence polyamides
of textile grade would not fall under either "Artificial or synthetic
resins" or under "plastic material". They would be outside the
ambit of Entry 15A. The polymer chips which are manufactured by the assessee
would not, therefore, come under the category of artificial or synthetic resins
however, which are capable of producing plastic materials are known in the
plastic trade as synthetic resins and would be covered by Item 15A.
the technical literature and dictionaries which have been cited by us have emphasised
the conjunction of artificial or synthetic resins with plastics, it is not
possible for us to ignore this association. Therefore, even if the term
"Artificial or synthetic resin" is construed as covering products
derived by processes technically described in sub-clauses (i), (ii) and (iii) of
Clause (1) of Entry 15A, that product must answer the basic description as
"artificial or synthetic resin". Polyamides in the form of polymer
chips of textile grade are not known as synthetic resins. They are also not
plastics. Hence Entry 15A does not cover them. The assessee is, therefore,
entitled to succeed.
appeal of the assessee in C.A. No. 3495/82 is allowed and the appeals of the
revenue in Transferred Case No........../96 (arising out of T.P.(C) No. 188/83
being O.A. No. 84 (arising out of T.P. (C) No. 188/83 being O.A. No. 84 of 1970
of the Bombay High Court) and Civil Appeal No. 3507 of 1982 are dismissed. In
the circumstances of the case, there will be no order as to costs.